Phoenix New Media Limited Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 20-F ooREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIESEXCHANGE ACT OF 1934 OR xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017. OR ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 OR ooSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934. For the transition period from to Commission file number 001-35158 Phoenix New Media Limited(Exact name of Registrant as specified in its charter) Cayman Islands(Jurisdiction of incorporation or organization) Sinolight Plaza, Floor 16No. 4 Qiyang RoadWangjing, Chaoyang District,Beijing 100102People’s Republic of China(Address of principal executive offices) Contact Person: Ms. Betty Yip HoChief Financial Officer(86 10) 6067-6869Sinolight Plaza, Floor 16No. 4 Qiyang RoadWangjing, Chaoyang District,Beijing 100102People’s Republic of China*(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each className of each exchange on which registeredAmerican Depositary Shares, each representing eight Class A ordinary sharesNew York Stock Exchange, Inc.Class A ordinary shares, par value $0.01 per share*New York Stock Exchange, Inc. * Not for trading, but only in connection with the registration of American Depositary Shares representing such Class A ordinary shares pursuant to therequirements of the Securities and Exchange Commission. Securities registered or to be registered pursuant to Section 12(g) of the Act: None Table of Contents Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.260,001,486 Class A ordinary shares were outstanding as of December 31, 2017317,325,360 Class B ordinary shares were outstanding as of December 31, 2017 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.o Yes x No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934.o Yes x No Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registration was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.x Yes o No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files).x Yes o No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See thedefinitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer x Non-accelerated filer o Emerging growth company o If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected notto use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of theExchange Act. o †The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012. Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issuedby the International Accounting Standards Board o Other o If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.o Item 17 o Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).o Yes x No (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o Yes o No Table of Contents PHOENIX NEW MEDIA LIMITED FORM 20-F ANNUAL REPORTFISCAL YEAR ENDED DECEMBER 31, 2017 Page PART I2ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS2ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE2ITEM 3. KEY INFORMATION2ITEM 4. INFORMATION ON THE COMPANY46ITEM 4A. UNRESOLVED STAFF COMMENTS83ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS83ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES105ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS111ITEM 8. FINANCIAL INFORMATION115ITEM 9. THE OFFER AND LISTING115ITEM 10. ADDITIONAL INFORMATION117ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK122ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES123PART II124ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES124ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS124ITEM 15. CONTROLS AND PROCEDURES125ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT125ITEM 16B. CODE OF ETHICS125ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES126ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES127ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS127ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT127ITEM 16G. CORPORATE GOVERNANCE127ITEM 16H. MINE SAFETY127PART III127ITEM 17. FINANCIAL STATEMENTS127ITEM 18. FINANCIAL STATEMENTS127ITEM 19. EXHIBIT INDEX127 iTable of Contents Conventions that Apply to this Annual Report on Form 20-F In this annual report, unless otherwise indicated: · “ADSs” refers to our American depositary shares, each of which represents eight Class A ordinary shares and “ADRs” refers to the Americandepositary receipts that may evidence our ADSs; · “affiliated consolidated entities” refer to Yifeng Lianhe (Beijing) Technology Co., Ltd., Beijing Tianying Jiuzhou Network Technology Co., Ltd.,and Beijing Chenhuan Technology Co., Ltd., each of which is a PRC domestic company. Substantially all of our operations in China are conductedby our affiliated consolidated entities, in which we do not own any equity interest, through our contractual arrangements. We treat all of these threePRC domestic companies as variable interest entities and have consolidated their financial results in our financial statements in accordance withgenerally accepted accounting principles in the United States, or U.S. GAAP. As such, unless otherwise specified herein, references to “affiliatedconsolidated entities” in this annual report include Yifeng Lianhe, Tianying Jiuzhou and Chenhuan; · “Chenhuan” refers to Beijing Chenhuan Technology Co., Ltd., a PRC domestic company and one of our affiliated consolidated entities; · “China” or “PRC” refers to the People’s Republic of China, excluding, for the purposes of this annual report on Form 20-F only, Taiwan, HongKong and Macau; · “Class A ordinary shares” refer to our Class A ordinary shares, par value US$0.01 per share; · “Class B ordinary shares” refer to our Class B ordinary shares, par value US$0.01 per share, each of which shall be entitled to 1.3 votes on all matterssubject to shareholders’ vote; · “Fenghuang On-line” refers to Fenghuang On-line (Beijing) Information Technology Co., Ltd., a wholly foreign-owned PRC entity; ·· “Fengyu Network” refers to Beijing Fengyu Network Technology Co., Ltd., a PRC domestic company and a subsidiary of Tianying Jiuzhou. · “Huanyou Tianxia” refers to Beijing Huanyou Tianxia Technology Co., Ltd., a PRC domestic company and an indirect subsidiary of Chenhuan; · “Qieyiyou” refers to Qieyiyou (Beijing) Information Technology Co., Ltd., a wholly foreign-owned PRC entity; · “ordinary shares” refer to our Class A ordinary shares and Class B ordinary shares, collectively; ·· “Phoenix TV” refers to Phoenix Media Investment (Holdings) Limited; ·· “Phoenix TV (BVI)” refers to Phoenix Satellite Television (B.V.I) Holding Limited, a wholly owned direct subsidiary of Phoenix TV, which directlyowned 54.8% of our share capital as of March 31, 2018. ·· “Phoenix TV Group” refers to Phoenix TV and its subsidiaries, not including our company. ·· “PRC subsidiaries” refer to Fenghuang On-line (Beijing) Information Technology Co., Ltd., Beijing Fenghuang Yutian Software TechnologyCo., Ltd., Fenghuang Feiyang (Beijing) New Media Information Technology Co., Ltd., Beijing Fenghuang Borui Software Technology Co., Ltd.,Qieyiyou (Beijing) Information Technology Co. and any other companies established in the PRC in which we hold direct or indirect certain equityinterests and whose financial results are consolidated into our financial statements in accordance with U.S. GAAP; and unless otherwise specifiedherein, references to “PRC subsidiaries” in this annual report do not include the companies established in the PRC in which we do not hold directlyor indirectly any equity interest but whose financial results are consolidated into our financial statements as variable interest entities in accordancewith U.S. GAAP. ·· “RMB” or “Renminbi” refers to the legal currency of China; “$”, “dollars”, “US$” and “U.S. dollars” refer to the legal currency of the United States; ·· “Tianying Jiuzhou” refers to Beijing Tianying Jiuzhou Network Technology Co., Ltd., a PRC domestic company and one of our affiliatedconsolidated entities; ·· “we”, “us”, “our company”, “our” and “Phoenix New Media” refer to Phoenix New Media Limited, a Cayman Islands company and its predecessorentities and subsidiaries, and, unless the context otherwise requires, our affiliated consolidated entities and their subsidiaries in China; and ·· “Yifeng Lianhe” refers to Yifeng Lianhe (Beijing) Technology Co., Ltd., a PRC domestic company and one of our affiliated consolidated entities. This annual report contains statistical data that we obtained from various government and private publications, as well as a database issued byShanghai iResearch Co., Ltd, a third-party PRC consulting and market research firm focused on Internet media markets. We have not independently verifiedthe data in these reports and database. Statistical data in these publications also include projections based on a number of assumptions. If any one of theassumptions underlying the statistical data turns out to be incorrect, actual results may differ from the projections based on these assumptions. This annual report on Form 20-F includes our audited consolidated financial statements for the years ended December 31, 2015, 2016 and 2017, and asof December 31, 2016 and 2017. Our ADSs are listed on the New York Stock Exchange under the symbol “FENG.” 1Table of Contents PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not required. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not required. ITEM 3. KEY INFORMATION A. Selected Financial Data The selected consolidated financial data shown below should be read in conjunction with “Item 5. Operating and Financial Review and Prospects,” andthe financial statements and the notes to those statements included elsewhere in this annual report on Form 20-F. The selected consolidated statements ofcomprehensive income data for the years ended December 31, 2015, 2016 and 2017 and the selected consolidated balance sheet data as of December 31,2016 and 2017 have been derived from our audited consolidated financial statements, which are included elsewhere in this annual report on Form 20-F. Theselected consolidated statements of comprehensive income data for the years ended December 31, 2013 and 2014 and the selected balance sheet data as ofDecember 31, 2013, 2014 and 2015 have been derived from our audited financial statements not included in this annual report on Form 20-F. The historicalresults are not necessarily indicative of results to be expected in any future period. For the Years Ended December 31, 2013 2014 2015 2016 2017 RMB RMB RMB RMB RMB US$ (In thousands, except for number of shares and per share (or ADS) data) Consolidated Statements ofComprehensive Income DataRevenues:Net advertising revenues863,7371,190,1581,226,5161,232,2101,353,480208,026Paid services revenues560,738447,702382,680212,697221,61234,061Total revenues1,424,4751,637,8601,609,1961,444,9071,575,092242,087Cost of revenues (1)(696,355)(781,632)(829,386)(726,807)(727,197)(111,768)Gross profit728,120856,228779,810718,100847,895130,319Operating expenses (1) :Sales and marketing expenses(273,399)(330,777)(346,133)(339,171)(493,664)(75,875)General and administrative expenses(97,849)(137,818)(183,989)(181,677)(146,923)(22,582)Technology and product developmentexpenses(108,683)(149,996)(170,714)(161,880)(192,325)(29,560)Total operating expenses(479,931)(618,591)(700,836)(682,728)(832,912)(128,017)Income from operations248,189237,63778,97435,37214,9832,302Other income, net67,42272,85918,92856,93734,2245,261Income before tax315,611310,49697,90292,30949,2077,563Income tax expense(37,588)(48,377)(25,517)(14,089)(14,783)(2,272)Net income278,023262,11972,38578,22034,4245,291Net loss attributable to noncontrollinginterests1,5319721,1992,3913,048468Net income attributable to Phoenix NewMedia Limited279,554263,09173,58480,61137,4725,759Net income278,023262,11972,38578,22034,4245,291Other comprehensive income, net of tax:fair value remeasurement for available-for-sale investments—40,28315,869247,336321,53849,419Other comprehensive (loss)/income, net oftax: foreign currency translationadjustment(23,179)4,50322,81327,669(49,640)(7,630)Comprehensive income254,844306,905111,067353,225306,32247,080Comprehensive loss attributable tononcontrolling interests1,5319721,1992,3913,048468Comprehensive income attributable toPhoenix New Media Limited256,375307,877112,266355,616309,37047,548Net income attributable to Phoenix NewMedia Limited279,554263,09173,58480,61137,4725,759Net income per Class A and Class Bordinary share:Basic0.460.440.130.140.070.01Diluted0.450.430.130.140.060.01Net income per ADS (1 ADS represents 8Class A ordinary shares):Basic3.693.521.031.120.520.08Diluted3.593.421.011.120.510.08Weighted average number of Class A andClass B ordinary shares used incomputing net income per share:Basic605,988,397597,616,623571,247,723573,521,536574,786,887574,786,887Diluted622,420,459614,620,110580,785,256577,037,906590,433,907590,433,907 2Table of Contents Note: (1) Includes share-based compensation as follows: For the Years Ended December 31,20132014 2015 2016 2017RMBRMB RMB RMB RMB US$(In thousands)Allocation of share-based compensation:Cost of revenues7,29316,2956,335(4,367)5,017771Sales and marketing expenses3,92210,2003,043(2,842)1,877288General and administrative expenses3,66220,92721,83611,02510,7961,659Technology and product developmentexpenses1,8465,7593,140(1,926)3,162486Total share-based compensation includedin cost of revenues and operatingexpenses16,72353,18134,3541,89020,8523,204 As of December 31,20132014 2015 2016 2017RMBRMB RMB RMB RMB US$(In thousands)Consolidated Balance Sheet DataCash and cash equivalents845,1381,285,847310,669202,694362,86255,771Term deposits and short term investments556,67240,000769,681781,298737,657113,376Accounts receivable, net353,379493,569506,351405,033458,74470,508Total current assets*1,918,2592,038,3431,894,9532,068,3852,243,266344,784Total assets2,056,7602,326,8302,567,2063,168,5423,599,108553,173Current liabilities469,494591,993742,840983,0791,071,931164,753Non-current liabilities12,23118,17919,68023,03526,0264,000Total liabilities481,725610,172762,5201,006,1141,097,957168,753Total shareholders’ equity1,575,0351,716,6581,804,6862,162,4282,501,151384,420 * In 2017, we adopted the guidance of ASU 2015-17 issued by FASB in November 2015, which requires entities to present deferred tax assets and deferredtax liabilities as noncurrent in a classified balance sheet. Pursuant to the guidance, the deferred tax assets have been reclassified from current assets aspresented in the previously audited financial statements to noncurrent assets in the above balance sheets information as of December 31, 2013, 2014, 2015and 2016. For the Years Ended December 31, 2013 2014 2015 2016 2017 RMB RMB RMB RMB RMB US$ (In thousands)Non-GAAP gross profit (2)735,413872,523786,145713,733852,912131,090Non-GAAP income from operations (2)264,912290,818113,32837,26235,8355,506Non-GAAP adjusted net incomeattributable to Phoenix New MediaLimited (3)296,277305,150145,15684,27752,0287,995 Notes: (2) Non-GAAP gross profit and non-GAAP income from operations are both non-GAAP financial measures. Non-GAAP gross profit is gross profit excludingshare-based compensation. Non-GAAP income from operations is income from operations excluding share-based compensation. (3) We define non-GAAP adjusted net income attributable to Phoenix New Media Limited as net income attributable to Phoenix New Media Limitedexcluding share-based compensation, income or loss from equity investments, including impairments, gain on disposal of subsidiaries and acquisition ofequity investments, and gain on disposal of an equity investment and acquisition of available-for-sale investments. We believe the separate analysis and exclusion of the following non-GAAP to GAAP reconciling items add clarity to the constituent parts of ourperformances. We review non-GAAP gross profit, non-GAAP income from operations and non-GAAP adjusted net income attributable to Phoenix New MediaLimited together with gross profit, income from operations and net income attributable to Phoenix New Media Limited to obtain a better understanding ofour operating performance. We use these non-GAAP financial measures for planning and forecasting and measuring results against the forecast. Using thesenon-GAAP financial measures to evaluate our business allows us and our investors to assess our relative performance against our competitors and ultimatelymonitor our capacity to generate returns for our investors. We also believe it is useful supplemental information for investors and analysts to assess ouroperating performance without the effect of items like share-based compensation, income or loss from equity investments, including impairments, which havebeen and will continue to be significant recurring items, and without the effect of gain on disposal of subsidiaries and acquisition of equity investments, andgain on disposal of an equity investment and acquisition of available-for-sale investments, which have been significant and one-time items. However, the useof non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they donot include all items that impact our gross profit, income from operations and net income attributable to Phoenix New Media Limited for the period. Inaddition, because non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similar titledmeasures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures in isolation from or as analternative to the financial measures prepared in accordance with U.S. GAAP. 3Table of Contents Non-GAAP to GAAP reconciling items have no income tax effect. Our non-GAAP gross profit, non-GAAP income from operations and non-GAAP adjusted net income attributable to Phoenix New Media Limited arecalculated as follows for the years presented: For the Years Ended December 31,20132014 2015 2016 2017RMBRMB RMB RMB RMB US$(In thousands)Gross Profit728,120856,228779,810718,100847,895130,319Excluding:Share-based compensation7,29316,2956,335(4,367)5,017771Non-GAAP gross profit735,413872,523786,145713,733852,912131,090 Income from operations248,189237,63778,97435,37214,9832,302Excluding:Share-based compensation16,72353,18134,3541,89020,8523,204Non-GAAP income from operations264,912290,818113,32837,26235,8355,506 Net income attributable to Phoenix New MediaLimited279,554263,09173,58480,61137,4725,759Excluding:Share-based compensation16,72353,18134,3541,89020,8523,204Loss/(income) from equity investments,including impairments—18,53841,8611,776(6,296)(968)Gain on disposal of subsidiaries and acquisitionof equity investments—(29,660)————Gain on disposal of an equity investment andacquisition of available-for-sale investments——(4,643)———Non-GAAP adjusted net income attributable toPhoenix New Media Limited296,277305,150145,15684,27752,0287,995 Currency Translation and Exchange Rates We have translated certain Renminbi, or RMB, amounts included in this annual report on Form 20-F into U.S. dollars for the convenience of thereaders. The rate we used for the translations was RMB6.5063 = US$1.00, which was the noon buying rate on December 29, 2017 in New York for cabletransfers in Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board. The translation does not mean that RMB could actuallybe converted into U.S. dollars at that rate. The following table shows the noon buying rate for RMB express in RMB per US$1.00. Noon Buying RatePeriod Period End Average Low High(RMB per US$1.00)20136.05376.14126.24386.053720146.20466.17046.25916.040220156.47786.28276.48966.187020166.94306.64006.95806.448020176.50636.73506.95756.4773October6.63286.62546.65336.5712November6.60906.62006.63856.5967December6.50636.59326.62106.50632018January6.28416.42336.52636.2841February6.32806.31836.34716.2649March6.27266.31746.35656.2685April (through April 20, 2018)6.29456.28596.30456.2655 (1) Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the relevantperiod. B. Capitalization and Indebtedness Not required. C. Reasons for the Offer and Use of Proceeds Not required. 4Table of Contents D. Risk Factors Risks Relating to Our Business and Industry Due to the rapidly evolving market in which we operate, our historical results may not be indicative of our future performance and there can be noassurance that we will be able to meet internal or external expectations of future performance. Our Internet media convergence business model is new in China, where the Internet industry is rapidly evolving and new products, new businessmodels and new players emerge on a regular basis, and we may not be able to achieve results or growth in future periods as we did in past periods. Due to therapidly evolving market in which we operate, our historical year-over-year and quarter-over-quarter trends may not provide an accurate or reliable indicationof our future performance. For certain lines of our business, we have experienced high growth rates in the past and there may be expectations that thesegrowth rates will continue. For other lines of our business, we have experienced declining trends. Our ability to achieve and maintain profitability dependson, among other factors, the growth of the Internet advertising market and mobile Internet services industry in China, our ability to maintain cooperativerelationships with Phoenix TV and mobile operators, our ability to control our costs and expenses and the continued relevance and usage of our various paidservices. We may not be able to achieve or sustain profitability on a quarterly or annual basis. Accordingly, our historical growth rates may not be indicativeof our future performance. In addition, our online advertising business may suffer from price competition from other online advertising companies. We mayhave to reduce our profit margins or operate at a loss in order to adequately fund critical innovations that we believe will create value for our company andstrengthen our market position over the long term. In the past our operating results have failed to meet expectations of industry analysts and investors, andour future operating results may also fail to meet such expectations. There can be no assurance that we will be able to meet internal or external expectationsof future performance, and our share price may decline as a result of any failure to meet such expectations. We expect to continue to rely on advertising to drive a significant portion of our future revenues, and if we fail to retain existing advertisers or attract newadvertisers for our advertising services, our business, operating results and growth prospects could be materially affected. In 2015, 2016, and 2017, we generated 76.2%, 85.3% and 85.9% of our total revenues from advertising services, respectively. Going forward, we expectour net advertising revenues to contribute an increasing portion of our total revenues. Our ability to generate and maintain substantial advertising revenueswill depend on a number of factors, many of which are ultimately beyond our control, including but not limited to: · the acceptance of online (including mobile and PC-based) advertising as an effective way for advertisers to market their businesses; · the maintenance and enhancement of our brand; · the maintenance and development of advertising technology, such as the maintenance of advertising data base and advertising placementplatform, and the ability to prevent computer virus attack; · the maintenance and development of our programmatic advertising platforms. We launched our self-developed demand-side platform Fengyuin the second quarter of 2017 and our revenue generated from programmatic advertising has increased significantly since then. Our ability tomaintain and upgrade Fengyu and its related platforms, such as data management platform and advertisement exchange platform is crucial toour advertising services; · the development of independent and reliable means of measuring online traffic and verifying the effectiveness of our online advertisingservices; · the development and retention of a large user base with attractive demographics for advertisers; and · our ability to have continued success with innovative advertising services. Our advertisers may choose to reduce or discontinue their business with us if they believe their advertising spending has not generated or would notgenerate enough sales to end customers or has not improved or would not effectively improve their brand recognition. In addition, certain technologies couldpotentially be developed and applied to block the display of our online advertisements and other marketing products on PC websites, mobile applicationsand mobile websites, which may in turn cause us to lose advertisers and adversely affect our operating results. Moreover, changes in government policiescould restrict or curtail our online advertising services. Failure to retain our existing advertisers or attract new advertisers for our advertising services couldseriously harm our business, operating results and growth prospects. 5Table of Contents We may not be successful in growing our mobile Internet related business and our revenue growth could be negatively impacted. Mobile Internet services and applications, is an emerging market in China. The growth of this market and the level of demand and market acceptance ofour services are subject to many uncertainties. The development of this market and our ability to derive revenues from this market depends on a number offactors, some of which are beyond our control, including but not limited to: · the growth rate of mobile Internet industry in China; · changes in consumer demographics and preferences; · development in mobile device platform technologies and mobile Internet distribution channels; · changes in government policies, regulations or their enforcement with respect to various types of mobile Internet services and applications;and · potential competition from more established companies that decide to enter the mobile Internet market. We rely in part on application marketplaces, Internet search engines, navigation sites, web browsers and pre-installations on handsets to drive traffic toour PC websites, mobile applications and mobile websites, and if we fail to appear near the top of such search results or rankings or to retain partnershipwith certain handset manufacturers, traffic to our PC websites, mobile applications and mobile websites could decline and our business and operatingresults could be adversely affected. We rely on application marketplaces, such as Apple’s iOS App Store, and other handset manufactures’ Android App Store, to drive downloads ofmobile applications of our products, including ifeng News, ifeng Video, and the digital reading application Fanyue Novel, among others. In the future, iOSApp Store, Android stores or other operators of application marketplaces may make changes to their marketplaces which could hinder or impede access to ourproducts and services. We also depend in part on Internet search engines, navigation sites and web browsers, such as Baidu, Sougou, Hao123, Hao360, UCBrowser, 360 Browser and Cheetah Browser, to drive traffic to our PC websites and referrals to our mobile applications and mobile websites. For example,when a user types an inquiry into a search engine, we rely on a high organic search result ranking of our webpages in these search results to refer users to ourwebsites. However, our ability to maintain high organic search result rankings is not totally within our control. Our competitors’ search engine optimization,or SEO, efforts may result in their websites receiving a higher search result page ranking than ours, or Internet search engines could revise theirmethodologies in a way that would adversely affect our search result rankings. If Internet search engines modify their search algorithms or othermethodologies in ways that are detrimental to us, or if our competitors’ SEO efforts are more successful than ours, the growth in our user base could beadversely affected. In addition, navigation websites or web browsers might reduce the recommendation of our products for various reasons from time to time. We also rely on pre-installations on handsets to increase traffic to our mobile applications. By partnering with mobile handset manufacturers, we canhave our mobile applications exposed directly to our users without downloading from application stores once they buy certain handsets. In this way, users aremore inclined to use our mobile applications for convenience reasons. Any reduction in the number of users directed to our PC websites, mobile applicationsand mobile websites through application marketplaces, Internet search engines, navigation sites, web browsers and pre-installations could harm our businessand operating results. If we are unable to successfully expand our mobile strategy and increase our mobile advertising revenues, our business, operating results and growthprospects could be materially affected. Use of mobile devices for consumption of news and other media content by consumers in China has been increasing rapidly in recent years. This shifttowards mobile has brought with it both challenges and opportunities. We encountered weaker demand for PC-based advertising in 2016 and 2017 butachieved year-over-year growth in mobile advertising revenues during the same period. We see mobile devices as the primary gateway for news consumptiongoing forward and our ability to maintain and increase our mobile advertising revenues will be critical to our future business prospects. While we are takingmeasures to expand our user base across our various mobile applications, optimize our targeting technology and integrate next-generation high-efficiencyadvertising solutions, there can be no assurance that these measures will be effective. User preferences and behaviors on mobile devices are rapidly evolvingand we may not be able to successfully adapt to these changes. The variety of technical and other configurations across different mobile devices, platformsand applications also increases the challenges associated with our mobile expansion. Although we have taken strict control over operating expenses, we havewitnessed significant increase in our traffic acquisition expenses. Our traffic acquisition expenses may continue to increase in the future which will adverselyimpact our financial results. Our mobile strategy is also subject to risks relating to changes in government policies, regulations or their enforcement withrespect to mobile Internet services and applications. Any change to laws and regulations applicable to the mobile Internet industry, such as those relating tocontent, user privacy, pricing, copyrights and distribution, may impede the growth of mobile Internet in China or make it more difficult for us to carry out ourmobile advertising business. If we cannot successfully grow our user base and capitalize on emerging monetization opportunities on mobile devices, we maynot be able to maintain or grow our advertising revenues, which could materially and adversely affect our operating results and growth prospects. 6Table of Contents Yidian Zixun is one of our most important investments in our mobile strategy. If we are unable to successfully realize the anticipated benefits from thisinvestment or lose our option to consolidate Particle Inc. in the future, our mobile strategy and growth prospects could be materially affected. As part of our mobile strategy, we have made substantial investments in Particle Inc., or Particle, in the form of investments and loans. Particle operatesYidian Zixun (“—点资讯”), or Yidian, a personalized news and life-style information application in China that allows users to define and explore desiredcontent on their mobile devices. As of the date hereof, we held Series B, Series C and Series D1 convertible redeemable preferred shares of Particle, which hadbeen accounted for as available-for-sale investments, representing an aggregate of approximately 41.8% equity interest of Particle on an as-if converted basis.The fair value of our available-for-sale investments in Particle was RMB1,196.3 million (US$183.9 million) as of December 31, 2017. As of the date hereof,we also had two outstanding unsecured short-term loans to Particle, including (i) a convertible loan granted in August 2016 with a principal amount ofUS$14.8 million at an interest rate of 4.35% per annum due in August 2018 after several extensions, which can be converted into Series D1 convertibleredeemable preferred shares of Particle at a conversion price of US$1.071803 per share before August 9, 2018, and (ii) a loan granted in January 2017 with aprincipal amount of RMB74.0 million (US$10.8 million) at an interest rate of 9% per annum due in July 2018 after one extension. Pursuant to an agreementamong our company, Particle and Long De Cheng Zhang Culture Communication (Tianjin) Co., Ltd. (“Long De”), we are expected to assign to Long De orits designated affiliates our rights under the convertible loan granted in August 2016, and Long De or its affiliates should pay us approximately US$17.0million for the assignment. While we do not have control over, and therefore do not consolidate Particle, we may consolidate Particle as a subsidiary onceYidian’s user base reaches a certain level. We have also been collaborating closely with Particle in executing our mobile strategy. As such, if Yidian fails togrow its user base and expand its business, our mobile strategy may be materially and adversely affected, we may not be able to realize anticipated benefitsfrom consolidating Particle as a subsidiary, and we may lose our entire investments in Particle. In addition, as Particle has engaged and may continue toengage in additional onshore and offshore financing activities, as additional investors are brought in as new shareholders of Particle or any of its principalsubsidiaries or affiliated consolidated entity, and as certain special rights are granted to some of these new shareholders, our equity interest in Particle may bediluted, we may not be able to consolidate Particle as a subsidiary, and Particle may lose its right to consolidate its current consolidated affiliated entity. Anyof the above could have a material adverse effect on our business, financial condition and operating results. News feed advertising is becoming an important mobile advertising format in China. If we are unable to successfully develop our news feed advertisingsolution and adapt to new changes in advertising formats and trends, our mobile advertising revenues and growth may be materially and adverselyaffected. News feed advertising is the practice of constantly updating lists of advertisements alongside news and information. It effectively helps mobileapplications enlarge their advertising inventory by inserting advertisements into the flow of content, while improving the user experience based on nativeappearance and contextual relevance, implying greater monetization potential. We expect news feed advertising to maintain strong growth momentum andbecome an increasingly important mobile advertising format in China. While we had developed and added news feed advertising into our mobileapplications and mobile websites in late 2016, we are facing an increasingly competitive environment. For example, several mobile applications of othercompanies, such as Jinri Toutiao, Tiantian Kuaibao and QQ news (Tencent), UC Toutiao (Alibaba) and Baidu app, are all competing in news feed advertising.If we are unable to successfully develop our news feed advertising solution and deliver better return on investment, or ROI, to our advertising clients, ourfuture mobile advertising revenues may be materially and adversely affected. Except for news feed advertising, we believe that more types of innovativemobile advertising formats may emerge in the future. If we are unable to swiftly develop and adapt to new changes in advertising formats and trends, ourmobile advertising revenues may be materially and adversely affected. Any failure to retain large advertising agencies or attract new agencies on reasonable terms could materially and adversely affect our business. Ifadvertising agencies demand higher service fees, our gross margin may be negatively affected. Approximately 73.4%, 66.4% and 78.5% of our net advertising revenues in China were derived from advertising agencies in 2015, 2016 and 2017,respectively. We primarily serve our advertisers through advertising agencies and rely on these agencies for sourcing our advertisers and collectingadvertising revenue. In consideration for these agencies’ services, the agencies earn advertising agency service fees which are deducted from our grossadvertising revenues. While advertising agencies in China commonly increase their agency service fees on a sliding scale basis along with increased volumeof business, if our agency service fees increase at a materially disproportional rate relative to our gross advertising revenues, our operating results may benegatively affected. We do not have long-term or exclusive arrangements with these agencies, and we cannot assure you that we will continue to maintainfavorable relationships with them. If we fail to maintain favorable relationships with large advertising agencies or attract additional agencies, we may not beable to retain existing advertisers or attract new advertisers and our business and operating results could be materially and adversely affected. 7Table of Contents Over the years, there has been some consolidation among advertising agencies in China. If the consolidation trend continues and the market iseffectively controlled by a small number of large advertising agencies, such advertising agencies may be in a position to demand higher advertising agencyservice fees based on increased bargaining power, which could reduce our net advertising revenues. If we fail to continue to anticipate user preferences and provide high quality content that attracts and retains users, or if we have to limit our services orcease providing certain content in order to comply with changing regulatory requirements, we may not be able to generate sufficient user traffic to remaincompetitive. Our success depends on our ability to generate sufficient user traffic through the provision of attractive content. If we are not able to license orotherwise obtain popular premium content (such as we-media content, professionally-generated content, or PGC and; user-generated content, or UGC andetc.) at commercially reasonable terms, if our desired premium content becomes exclusive to our competitors, or if we do not continue to possess the licenseand priority over any third party to broadcast Phoenix TV’s content, the attractiveness of our offerings to users may be severely impaired. We may also be required to limit our services or be prevented from providing certain content to our users due to regulatory requirements or sanctions.For example, we received a public notice issued by the State Administration of Press, Publication, Radio, Film and Television of the People’s Republic ofChina, or the SAPPRFT, on June 22, 2017 in connection with our and certain other Internet companies’ regulatory non-compliances. The notice required usto suspend our ifeng video and audio services due to our lack of the Internet audio-visual program transmission license and our certain commentary programsthat violates government regulations. We have cooperated with SAPPRFT to make the necessary changes to our ifeng video and audio services, and we nolonger distribute any video and audio content from Phoenix TV accordingly. We are not sure when we can distribute this kind of content again, and whetherour ifeng video and audio services will not be ordered to suspend again in the future. Regulatory authorities in China have also increased their supervision of the content we distribute and made regulatory inquiries and oral warnings to usfrom time to time. In a couple of instances, the regulatory authority even ordered suspension of downloads of our mobile applications and prohibited us fromproviding any update to some of our content for a short period of time. We cannot assure you that similar events will not occur in the future. Any of theseevents could severely impair the attractiveness of our applications and websites to users, reduce our user traffic and affect our revenue. We also produce content in-house, and intend to continue to invest resources in producing original content. If we are unable to continue to procurepremium and distinctive licensed content or produce in-house content that meets users’ tastes and preferences, we may lose users, and our operating resultsmay suffer. In addition, we rely on our team of skilled editors to edit and repackage our sourced content in a timely and professional manner for our users andany deterioration in our editing team’s capabilities or losses in personnel may materially and adversely affect our operating results. If our content fails to caterto the needs and preferences of our users, we may suffer from reduced user traffic and our business and operating results may be materially and adverselyaffected. We may experience continued decline in demand for our MVAS business and any expected economic benefits from this business may not be realized. In 2015, 2016 and 2017, revenues from our mobile value-added services, or MVAS, accounted for 18.2%, 8.1% and 7.4%, respectively, of our totalrevenues, due to lower demand from mobile users. For more information about our MVAS, see “Item 4. Information of the Company — B. Business Overview— Our Channels —Our Operations with the Telecom Operators.” In addition, we cannot assure you that we will be successful in developing our MVASbusiness, which will depend, among other things, on our ability to: · respond to market developments, including the development of new channels and technologies, and changes in pricing and distributionmodels; · maintain and diversify our distribution channels, including through our own mobile Internet site, the platforms of China MobileCommunications Corporation, or China Mobile, and the other Chinese mobile operators, mobile device manufacturers and mobileapplication stores; · develop new high quality MVAS that can achieve significant market acceptance, and improve our existing MVAS in a timely manner toextend their life spans and to maintain their competitiveness in the Chinese mobile market; · develop and upgrade our technologies; and · execute our MVAS business and marketing strategies successfully. 8Table of Contents Due to the uncertainties of our MVAS business and the MVAS industry in China generally, our MVAS will contribute less to our future revenues. Anyfailure to successfully develop this business could have a negative impact on our business, financial condition and operating results. If we fail to successfully develop and introduce new products and services to meet the preferences of users, our competitive position and ability to generaterevenues could be harmed. The preferences of viewers are continuously evolving and we must continue to develop new products and services. If we fail to react to changes in userpreferences in a timely manner or fall behind our competitors in providing innovative products and services, we may lose user traffic, which would negativelyaffect our operating results. In addition, the planned timing or introduction of new products and services is subject to risks and uncertainties. Actual timingmay differ materially from original plans. Unexpected technical, operational, distribution or other problems could delay or prevent the introduction of one ormore of our new products or services. Moreover, we cannot assure you that our new products and services will achieve widespread market acceptance orgenerate incremental revenues. At the same time, other new media providers may be more successful in developing more attractive products and services. Ifour efforts to develop market and sell new products and services to the market are not successful, our financial position, operating results and cash flowscould be materially adversely affected, the price of our ordinary shares could decline and you could lose part or all of your investment. As devices other than personal computers, such as mobile phones, tablets and other Internet-enabled mobile devices, are increasingly used to access theInternet, we have to develop products and applications for such devices if we are to maintain or increase our market share and revenues, and we may notbe successful in doing so. Devices other than personal computers, such as mobile phones, tablets, wearable devices and other Internet-enabled mobile devices, are usedincreasingly in China and in overseas markets to access the Internet. We believe that, for our business to be successful, we will need to design, develop,promote and operate new products and applications that will be compatible with such devices and attractive to users. The design and development of newproducts and applications may not be successful. We may encounter difficulties with the development and installation of such new products and applicationsfor mobile devices, and such products and applications may not function smoothly. As new devices are released or updated, we may encounter difficulties indeveloping and upgrading our products or applications for use on mobile devices and we may need to devote significant resources to the creation, supportand maintenance of such products or applications for mobile devices, and we may not be successful in doing so. If these efforts are unsuccessful and we arethereby unable to maintain or increase our market share and revenues, our business, operating results and growth prospects could be materially and adverselyaffected. We operate in highly competitive markets and we may not be able to compete successfully against our competitors. We face significant competition in the new media industry in China, including competition from major Internet portals, mobile news and informationapplication operators, Internet video companies, online video sites of major TV broadcasters, online digital reading companies, interactive and socialnetwork service providers, online and mobile gaming companies, mobile Internet services providers and other companies with strong media, online videoand paid services businesses. Some of our competitors have longer operating histories and significantly greater financial resources than we do, which mayallow them to attract and retain more users and advertisers. Our competitors may compete with us in a variety of ways, including by obtaining exclusiveonline distribution rights for popular content, conducting more aggressive brand promotions and other marketing activities and making acquisitions toincrease their user bases. If any of our competitors achieves greater market acceptance or are able to offer more attractive online content, interactive servicesor paid services than us, our user traffic and our market share may decrease, which may result in a loss of advertisers and have a material and adverse effect onour business, financial condition and operating results. We also face competition from traditional advertising media such as television, newspapers,magazines, billboards and radio. We have contracted with third-party content providers and we may lose users and revenues if these relationships deteriorate or arrangements areterminated. If third-party content providers increase their content licensing fees, our operating results may be negatively affected. We have relied and will continue to rely mostly on third parties for the content we distribute across our channels. If these parties fail to develop andmaintain high-quality and engaging content or raise their licensing fees, or if a large number of our existing relationships are terminated, we could lose usersand advertisers and our brand could be materially harmed. License fees for third-party content showed an increasing trend in 2017. If such license feescontinue to increase significantly in the future, our income from operations may be negatively affected. In addition, the Chinese government has the abilityto restrict or prevent state-owned media from cooperating with us in providing certain content to us, which, if exercised, would result in a significant decreasein the amount of content we are able to source for our PC websites, mobile applications and mobile websites and negatively impact our operating results. 9Table of Contents We may not be able to continue to receive the same level of support from Phoenix TV Group in the future. We could lose our license and priority over anythird party to broadcast Phoenix TV Group’s content and licensed trademarks, which would have an adverse effect on our paid services business, andwould also negatively affect our video advertising business. Together, these impacts could have an adverse effect on our business and operating results. Phoenix TV, our majority shareholder, is a leading global Chinese language TV network broadcasting premium content globally and into China. InNovember 2009, our PRC subsidiary, Fenghuang On-line, entered into a cooperation agreement with Phoenix TV, or the Phoenix TV CooperationAgreement, under which Fenghuang On-line and Phoenix TV agreed to certain cooperative arrangements in the areas of content, branding, promotion andtechnology. Pursuant to the Phoenix TV Cooperation Agreement, in November 2009 each of Tianying Jiuzhou and Yifeng Lianhe entered into a programcontent license agreement, or Content License Agreement, with Phoenix Satellite Television Company Limited and a trademark license agreement, or OldTrademark License Agreement, with Phoenix Satellite Television Trademark Limited. Considering the significant growth and changes in our business sinceexecution of these agreements in 2009, we and Phoenix TV Group entered into a new set of agreements in May 2016 and December 2017, or the NewAgreements, to amend and replace the previous agreements and provide the terms of our continued cooperation. The New Agreements include ProgramResource License Agreements and Program Text/Graphics Resource License Agreements, or the Program License Agreements, between Phoenix SatelliteTelevision Company Limited and each of Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network, and new trademark license agreements by and betweenPhoenix Satellite Television Trademark Limited and each of Tianying Jiuzhou and Yifeng Lianhe, or the New Trademark License Agreements. Unlike the previous agreements, the New Agreements do not grant us the right to sublicense Phoenix TV Group’s copyrighted content to third parties.While we are in the process of negotiating with Phoenix TV Group to potentially re-acquire such right of sublicense, we cannot assure you that we will beable to re-acquire such right at reasonable costs or at all. We benefit from the license with priority over any third party granted to Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network by Phoenix SatelliteTelevision Company Limited, a wholly owned subsidiary of Phoenix TV, to broadcast Phoenix TV Group’s copyrighted content from three televisionchannels of Phoenix TV Group on ifeng.com (our main Internet channel), i.ifeng.com (a mobile Internet channel of ours), and ifeng News, ifeng Video andifeng VIP (three mobile applications of ours) in China (excluding Hong Kong, Macau and Taiwan) concurrently with such content broadcasted on the threetelevision channels of Phoenix TV Group, pursuant to the Program License Agreements. This license with priority helps to distinguish our content offeringsfrom those of other Internet and new media companies in China. The fees payable to Phoenix TV Group by us for all content licenses described above isRMB10.0 million for the first year of the agreements, which will incrementally increase by 15% for each subsequent year of the agreements. Each of theparties to the Program License Agreements has the right to terminate the Program License Agreements before their expiration date by 6-month prior writtennotice to the other party. In addition, each of the Program License Agreements can be terminated earlier (i) by the non-breaching party in the event of abreach and if the breach is not cured within ten business days after receipt of notice of breach from the non-breaching party, (ii) in the event of bankruptcy orthe cessation of business operations of either party, or a change in the shareholder or equity structure of the relevant affiliated consolidated entity, other thanin connection with the contractual arrangements, (iii) by Phoenix Satellite Television Company Limited in the event that our shareholders or ownershipstructure change so that the shares held by Phoenix TV Group account for 50% or less of our actual total issued shares, or in the event that we lose control ofTianying Jiuzhou, Yifeng Lianhe or Fengyu Network; or if Tianying Jiuzhou, Yifeng Lianhe or Fengyu Network, as applicable, ceases its business operation;(iv) if either party’s performance of its obligations is held unlawful under PRC law; or (v) if an event occurs that adversely affects the performance by eitherparty of its obligations and upon written notice by the unaffected party. The Program License Agreements will, unless extended further, expire onMay 26, 2019. If the aforementioned existing agreements expire and we cannot reach new agreements with Phoenix TV Group before the expiration, we may not beable to obtain rights to use Phoenix TV Group’s content and licensed trademarks on our platforms on commercially reasonable terms, with any priority or atall, which would have an effect on our paid services business, and may also negatively affect our video advertising business. Together, these impacts couldhave a material and adverse effect on our business, operating results and financial condition. We received a public notice issued by SAPPRFT on June 22, 2017 in connection with our and certain other internet companies’ regulatory non-compliances. The notice required us to suspend our ifeng video and audio services due to our lack of the Internet audio-visual program transmission licenseand our certain commentary programs that violated government regulations. We have cooperated with SAPPRFT to make the necessary changes to our ifengvideo and audio services and we no longer distribute any video and audio the content from Phoenix TV accordingly. We are not sure when we can distributethis kind of content again, and whether our ifeng video and audio services will not be ordered to suspend again in the future. 10Table of Contents In addition, Tianying Jiuzhou and Yifeng Lianhe are able to use certain of Phoenix TV Group’s logos pursuant to the Old Trademark LicenseAgreement and the New Trademark License Agreements. We believe that our use of these logos helps to affiliate us with the brand of Phoenix TV Group,which helps to enhance our own brand. Different from the Old Trademark License Agreement, however, the New Trademark License Agreements no longerallow us to use the double-phoenix logo of Phoenix TV Group on a stand-alone basis and increased the annual license fee payable to Phoenix TV Group froma total of US$10,000 to the greater of 2% of the annual revenues of Tianying Jiuzhou or Yifeng Lianhe (as the case may be) or US$100,000 for eachcompany. For illustrative purpose only, Tianying Jiuzhou and Yifeng Lianhe had total annual revenues of RMB570.4 million in 2016 and RMB413.8million in 2017 in accordance with U.S.GAAP, which meant that the annual license fee payable to Phoenix TV Group would have been RMB11.4 millionand RMB8.3 million in 2016 and 2017, respectively, if the New Trademark License Agreements had been implemented since January 2016. Each of the NewTrademark License Agreements has an initial term of three years and may be extended prior to expiration of its term with the written confirmation of PhoenixTV Group, and may be terminated earlier by Phoenix TV Group in the event of a material breach by us of any covenant or a material failure by us to performany of our obligation and if the breach or failure, as applicable, is not rectified within a reasonable time or ten days of receipt of written notice from PhoenixTV Group. For example, we may in practice use such logos beyond the scope authorized by Phoenix TV Group, which may constitute a breach of suchagreements and cause Phoenix TV Group to terminate such New Trademark License Agreements. We cannot assure you that we will be able to continue to usePhoenix TV Group’s logos in order to help maintain our brand affiliation with Phoenix TV Group. If our brand image deteriorates as a result of a weaker brandaffiliation with Phoenix TV Group, our business and the price of your ADSs could be negatively affected. On March 17, 2017, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Issuing theAdministrative Measures for Special Tax Adjustment and Investigation and Mutual Consultation Procedures, or SAT Circular 6, which became effective onMay 1, 2017, and replaced the Circular on Enterprise Income Tax Issues concerning Disbursement of Expense by Enterprises to Overseas Related Parties.Pursuant to SAT Circular 6, tax authorities carry out special tax adjustment monitoring and management of enterprises via review of the reporting ofconnected transactions, management of contemporaneous documentation, profit level monitoring and other means. When enterprises are found to havespecial tax adjustment risks, they will send notices to such enterprises, suggesting the existence of a tax risk. The tax authorities will pay special attention toan enterprise with the risk characteristics in the implementation of the special tax investigation. Such risk characteristics include but are not limited to:(i) engaging in connected transactions with affiliates in countries (regions) subject to lower tax rates; (ii)no distribution or reduced distribution of profitwithout reasonable business needs by an enterprise that is established in a country (region) where the actual tax burden is less than 12.5% controlled byresident enterprises and/or Chinese resident individuals; or (iii) other tax planning or arrangements that do not have reasonable business purposes. Accordingto SAT Circular 6, payments made by our PRC subsidiaries and affiliated consolidated entities to Phoenix TV or its offshore affiliates under the abovearrangements may be subject to stringent supervision by competent tax authority. Any negative development in Phoenix TV’s market position, harm to Phoenix TV’s brand or operations, or regulatory actions or legal proceedingsaffecting Phoenix TV’s intellectual properties on which our business relies could materially and adversely affect our business and operating results. Our business benefits significantly from our association with Phoenix TV’s brand. Many of our users and advertisers are attracted to the “Phoenix” (“鳳凰”) brand, with which our brand, “ifeng.com” (“鳳凰網”) shares a similar Chinese name. Any negative development in Phoenix TV’s market position orbrand recognition may materially and adversely affect our marketing efforts and the popularity of our business. Any negative development in Phoenix TV’soperations or attractiveness to users or advertisers may materially and adversely affect our business and operating results. Moreover, as we benefit from thecontent licensed to us by Phoenix TV, any regulatory actions or legal proceedings against Phoenix TV related to such content could have a material adverseimpact on our operating results. If we are unable to keep pace with rapid technological changes in the PC and mobile Internet industries, our business may suffer. The Internet and mobile Internet industries have been experiencing rapid technological changes. For example, with the advances of search engines andsocial networking sites, Internet users may choose to access information through search engines or social networking sites instead of web portals or similarwebsites. With the advances in Internet interactivity, the interests and preferences of Internet users may increasingly shift to UGC and we-media content, suchas WeChat, blogs, micro-blogs, and video podcasts. As broadband becomes more accessible, Internet users may increasingly demand content in pictorial,audio-rich and video-rich format. With the development of the mobile Internet in China, mobile users may shift from the current predominant text messagingservices and other MVAS to newer services, such as mobile video streaming and mobile digital reading services. Our future success will depend on our abilityto anticipate, adapt and support new technologies and industry standards. If we fail to anticipate and adapt to these and other technological changes, ourmarket share and our profitability could suffer. 11Table of Contents Our lack of an Internet audio-visual program transmission license has exposed, and may continue to expose, us to administrative sanctions, including thebanning of our paid mobile video services and video advertising services, which would materially and adversely affect our business and results ofoperation. The PRC government regulates the Internet industry extensively, including foreign ownership of, and the licensing requirements pertaining to,companies in the Internet industry. A number of regulatory agencies, including the Ministry of Culture, or the MOC, the Ministry of Industry and InformationTechnology, or MIIT, the State Administration of Radio and Television, or SAPPRFT, (formerly the Generate Administration of Press, Publication, Radio,Film and Television, or GAPPRFT), the State Council Information Office, or the SCIO, the Cyberspace Administrator of China, or CAC, and othergovernmental authorities, jointly regulate all major aspects of the Internet industry. Operators are required to obtain various government approvals andlicenses prior to providing the relevant Internet information services. Pursuant to the Administrative Provisions on Internet Audio-visual Program Service , or the Audio-visual Program Provisions, which was issued by theState Administration of Radio, Film and Television (the predecessor of SAPPRFT), or SARFT and MIIT on December 20, 2007, came into effect onJanuary 31, 2008 and was revised on August 28, 2015, online transmission of audio and video programs requires an Internet audio-visual programtransmission license and online audio-visual service providers must be either wholly state-owned or state-controlled. In a press conference jointly held bySARFT and MIIT to answer questions with respect to the Audio-visual Program Provisions in February 2008, SARFT and MIIT clarified that online audio-visual service providers that already had been operating lawfully prior to the issuance of the Audio-visual Program Provisions may re-register and continue tooperate without becoming state-owned or controlled, provided that such providers have not engaged in any unlawful activities. See “Item 4. Information onthe Company—B. Business Overview—Regulatory Matters—Regulation of Online Transmission of Audio-Visual Programs.” We started offering Internet audio-visual program services through Tianying Jiuzhou in China prior to the issuance of the Audio-visual ProgramProvisions. Tianying Jiuzhou submitted an application to SAPPRFT to apply for the Internet audio-visual program transmission license when the relevantregulation came into effect. However, as of the date of this annual report, SAPPRFT has not issued Tianying Jiuzhou an Internet audio-visual programtransmission license. Although we have been communicating with the relevant government authorities, such government authorities have not informed us asto when they will make a decision on whether to issue such license to Tianying Jiuzhou. In June 2017, SAPPRFT issued a notice requiring us to suspend ourifeng video and audio services due to our lack of Internet audio-visual program transmission license and certain commentary programs that violatedgovernment regulations. While we have been able to continue our video and audio operation notwithstanding the notice by cooperating with SAPPRFT tomake the necessary changes to our ifeng video and audio services, complying with government regulation and continuing to improve the management andoperation of the ifeng video and audio business, we cannot assure you that we will not receive similar or other notices or be subject to other penalties ordisciplinary action from the relevant governmental authorities in the future regarding our dissemination of audio-visual programs through our PC websites,mobile applications and mobile websites without such license. We cannot assure you that Tianying Jiuzhou will be able to obtain the Internet audio-visualprogram transmission license. Based on the opinion of our PRC counsel, Zhong Lun Law Firm, due to Tianying Jiuzhou’s lack of an Internet audio-visualprogram transmission license, the applicable local counterpart of SAPPRFT may issue further warnings, order us to rectify our violating activity and imposefines on us. In case of severe contravention as determined by SAPPRFT or its applicable local counterpart in its discretion, the applicable local counterpart ofSAPPRFT may ban the violating operations, seize our equipment in connection with such operations and impose a penalty of one to two times the amount ofthe total investment in such operations. The banning of our paid mobile video services and video advertising services would materially and adversely affectour business and operating results. Our lack of an Internet news license may expose us to administrative sanctions, including an order to cease our Internet information services or to ceasethe Internet access services provided by third parties to us. In 2017, approximately 92.6% of our total revenues were derived from Internet informationservices and services that relied on Internet access services from third parties. We are required to obtain an Internet news license from CAC for the dissemination of news through our PC websites, mobile applications and mobilewebsites. See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulation of Internet News Dissemination.” TianyingJiuzhou submitted an application to the CAC to apply for the Internet news license when the relevant regulation came into effect. However, as of the date ofthis annual report, the CAC has not issued an Internet news license to Tianying Jiuzhou. Based on the opinion of our PRC counsel, Zhong Lun Law Firm, as aresult of Tianying Jiuzhou’s lack of an Internet news license, the CAC or applicable cyberspace administrator at the provincial level may order us to cease ourInternet information services or to cease the Internet access services provided by third parties to us and impose a fine on us of not more than RMB30,000. In2017, approximately 92.6% of our total revenues were derived from Internet information services and services that relied on Internet access services fromthird parties; and therefore if we are ordered to cease such services, our business, financial condition and results of operation will be materially and adverselyaffected. 12Table of Contents Our business and operating results may be harmed by service disruptions, or by our failure to timely and effectively scale and adapt our existingtechnology and infrastructure. The continual accessibility of our PC websites, mobile applications and mobile websites and the performance and reliability of our networkinfrastructure are critical to our reputation and our ability to attract and retain users, advertisers and partners. Any system failure or performance inadequacythat causes interruptions in the availability of our services or increases the response time of our services could reduce our appeal to users and consumers.Factors that could significantly disrupt our operations include system failures and outages caused by fire, floods, earthquakes, power loss, andtelecommunications failures and similar events. Despite we have endeavored efforts to implement network security measures to our systems, it may also bevulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering, and security breaches related to the storage and transmissionof proprietary information, such as personal information. If we were to suffer a sustained system failure or an extended decline in performance that interruptsor reduces speed of access to our services, our reputation may be harmed, we may fail to attract or retain users, advertisers and partners, and our business andoperating results may be harmed as a result. Security breaches or computer virus attacks could have a material adverse effect on our business prospects and operating results. Any significant breach of security of our products could significantly harm our business, reputation and operating results. We have in the pastexperienced security breaches by third parties, including redirecting our user traffic to other websites, and we were able to rectify the security breacheswithout significant impact to our operations. However, we cannot assure you that our IT systems will be completely secure from future security breaches orcomputer virus attacks. Anyone who is able to circumvent our security measures could misappropriate proprietary information, including the personalinformation of our users. To cope with these circumventions, we have (i) organized a professional technical team in cyber security, who are experts indevising cyber security strategies, conducting security audits of operating source code, tracking and analyzing risks, and solving technology related troubles,(ii) communicated closely with several external security organizations, to acquire zero-day vulnerability information, (iii) purchased third-party securityservices, including vulnerability scanning services, and penetration and vulnerability testing every three years. Although we have already taken suchmeasures, any circumvention of these security measures may still cause interruptions in our operations or damage our brand image and reputation, whichcould have a material adverse effect on our business prospects and operating results. New technologies could block our advertisements, desktop clients and mobile applications and may enable technical measures that could limit our trafficgrowth and new monetization opportunities. Technologies have been developed that can disable the display of our advertisements and that provide tools to users to opt out of our advertisingproducts. Most of our revenues are derived from fees paid to us by advertisers in connection with the display of advertisements on webpages to our users. Inaddition, our traffic growth is significantly dependent on content viewing via mobile devices, such as smart phones and tablets. Technologies and tools forPCs and mobile devices, such as operating systems, Internet browsers, anti-virus software and other applications, as well as mobile application downloadstores could set up technical measures to direct away Internet traffic, require a fee for the download of our products or block our products all together, whichcould adversely affect our overall traffic and ability to monetize our services. If we fail to maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results in accordance withU.S. GAAP may be materially and adversely affected. In addition, investor confidence in us and the market price of our ADSs may decline significantly. We are subject to reporting obligations under U.S. securities laws. Among other things, the United States Securities and Exchange Commission, or theSEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, adopted rules requiring every public company, including us, to include areport from management on the effectiveness of its internal control over financial reporting in its annual report on Form 20-F starting in the annual report forits second fiscal year as a public company. In addition, beginning at the same time, an independent registered public accounting firm must attest to and reporton the effectiveness of such public company’s internal control over financial reporting. We were subject to these requirements for the first time with respect toour annual report on Form 20-F for the fiscal year ended December 31, 2012. As of December 31, 2017, our management has concluded that our internal control over financial reporting is effective. See “Item 15. Controls andProcedures—Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued anattestation report, which has concluded that our internal control over financial reporting is effective as of December 31, 2017. 13Table of Contents However, if we fail to maintain effective internal control over financial reporting in the future, our management and our independent registered publicaccounting firm may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. This could inturn result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our ADSs. Furthermore,we have incurred and anticipate that we will continue to incur considerable costs, management time and other resources in an effort to maintain compliancewith Section 404 and other requirements of the Sarbanes-Oxley Act. We depend on China Mobile, a related party, and other PRC mobile telecommunications operators for the majority of our MVAS revenues, and anytermination or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations andthe loss of the majority of our MVAS revenues. We derive majority of MVAS revenues, such as WVAS, mobile video, mobile newspaper, and mobile games from the provision of content or servicesthrough the networks of the PRC telecommunications operators. In particular, we rely primarily on the networks of China Mobile, a shareholder of PhoenixTV since August 2006 with an equity interest of 19.69% as of March 31, 2018 to deliver our services. In 2015, 2016 and 2017, we derived approximately71.5%, 57.7% and 62.6% of our paid services revenues from China Mobile, respectively. Within these revenues, we generated a portion through fixed feearrangements with China Mobile for our mobile newspaper services. The remainders of our MVAS revenues were derived from China UnitedTelecommunications Corporation, or China Unicom, and China Telecommunications Corporation, or China Telecom. We have entered into a series of agreements with China Mobile and other Chinese mobile operators and their provincial subsidiaries to provide MVASthrough their networks. These mobile operators could terminate cooperation with us or refuse to perform their obligations to pay for the MVAS we provideunder the terms of our agreements with them for a variety of reasons, including failure to meet specified performance standards, the provision of poor servicesthat gives rise to a high level of customer complaints or the delivery of content that violates the relevant operator’s policies and applicable law. In addition,our agreements with the mobile operators are generally for terms of one year or less. There is no assurance that we will be able to renew these agreements oncommercially reasonable terms, or at all. If any of the Chinese mobile operators ceases to cooperate with us, it is unlikely that such operator’s customers willcontinue to use our mobile services. In particular, if China Mobile ceases to cooperate with us, it is unlikely that we will be able to build up sufficient newcustomers through the networks of other Chinese mobile operators to develop a customer base comparable to that which we have developed through ChinaMobile. Due to our reliance on China Mobile and other Chinese mobile operators to deliver our MVAS to our customers, any termination or deterioration ofour relationship with China Mobile or other Chinese mobile operators may result in severe disruptions to our business operations and the loss of the majorityof our MVAS revenues, and could have a negative impact on our financial condition and operating results. In addition, our negotiating leverage with China Mobile and other Chinese mobile operators is limited because China Mobile and other Chinesemobile operators operate the mobile networks through which a large number of service and content providers deliver their products to mobile phone users inChina. We cannot assure you that such operators will not adopt business strategies that could have a material adverse effect on our business. In addition, ourability to develop certain new MVAS businesses going forward may be restricted by the business policies of China Mobile or other Chinese mobileoperations. Due to our limited negotiating leverage with these mobile operators, we cannot exert any influence on their business decisions. Therefore, wecannot assure you that China Mobile or other Chinese mobile operators will not implement business strategies or policies that could have a negative impacton our results of operation and financial condition, or limit our ability to grow our MVAS businesses in the future. Our efforts to develop additional distribution channels for our MVAS may not succeed or may be restricted or halted by telecommunications operators. Cooperation with mobile service providers, which we refer to as our “channel partners,” and mobile device manufacturers has provided us withimportant distribution channels for our MVAS businesses. We sell a certain amount of our premium content and services through our channel partners’platforms. In addition, we pre-install into the menus of certain mobile devices certain of our MVAS icons and short codes for products offered on themultimedia messaging service, or MMS, short message service, or SMS, etc. A consumer who buys a new mobile device pre-installed with our MVAS iconsand codes can access and subscribe to our services quickly and easily. Channel partners and mobile device manufacturers have, through our cooperation withthem, become important distribution channels. However, we cannot assure you that we will continue to maintain a growing or stable number of suitablechannel partners in the future. In addition, in recent years, China Mobile and other telecommunications operators have entered into cooperation agreementswith mobile handset manufacturers similar to our agreements with mobile handset manufacturers. We cannot guarantee that mobile device manufacturers willcontinue their direct cooperation with us or maintain their current revenue sharing arrangements with us. In addition, we cannot guarantee that MIIT or telecommunications operators will not restrict or halt our cooperation with handset manufacturers, or takeother actions to limit or halt our use of mobile handsets as a distribution channel. Any such other actions could have a negative impact on our business andoperating results. 14Table of Contents Our dependence on the billing systems and records of mobile operators may require us to estimate portions of our reported revenues and cost of revenuesfor most of our MVAS, which may require subsequent adjustments to our financial statements. We depend largely on the billing systems and records of the telecommunications operators to record the volume of our MVAS provided, bill ourcustomers, collect payments and remit to us our portion of the revenues. We record revenues based on monthly statements from the mobile operatorsconfirming the value of our services that the mobile operators billed to customers during the month. Due to our past experience with the timing of receipt ofthe monthly statements from the mobile operators, we expect that we may need to rely on our own internal estimates for the portion of our reported revenuesand cost of revenues for which we will not have received monthly statements. In such instances, our internal estimates would be based on our own internaldata of expected revenues and related fees from services provided. As a result of such reliance on internal estimates, we may overstate or understate ourrevenues and cost of revenues for the relevant reporting period, and may be required to make adjustments in our financial reports when we actually receivethe mobile operators’ monthly statements for such period. We endeavor to reduce the discrepancy between our revenue estimates and the revenues calculatedby the mobile operators and their subsidiaries; however, we cannot assure you that these efforts will be successful. In addition, we generally do not have theability to independently verify or challenge the accuracy of the billing systems of the mobile operators. We cannot assure you that any negotiations betweenus and mobile operators to reconcile billing discrepancies would be resolved in our favor or that our financial condition and operating results would not bematerially and adversely affected as a result. Historically, there has been no significant difference between our revenue estimates and the mobile operators’billing statements. Significant changes in the policies or guidelines of China Mobile or other Chinese mobile operators with respect to services provided by us may result inlower revenues or additional costs for us and negatively impact our business operations, financial condition and operating results. China Mobile or other Chinese mobile operators may from time to time issue policies or guidelines, requesting or stating their preferences for certainactions to be taken by all mobile Internet service providers using their networks. Due to our reliance on China Mobile and other Chinese mobile operators, asignificant change in their policies or guidelines may cause our revenues to decrease or operating costs to increase. We cannot assure you that our financialcondition and operating results will not be negatively impacted by policy or guideline changes by China Mobile or other Chinese mobile operators. We cannot assure you that China Mobile or other Chinese mobile operators will not introduce additional requirements with respect to the proceduresfor ordering monthly subscriptions or single-transaction downloads of our MVAS, notifications to customers, the billing of customers or other consumer-protection measures or adopt other policies that may require significant changes in the way we promote and sell our MVAS, any of which could have anegative impact on our financial condition and operating results. Our quarterly revenues and operating results may fluctuate, which makes our operating results difficult to predict and may cause our quarterly operatingresults to fall short of expectations. Our quarterly revenues and operating results have fluctuated in the past and may continue to fluctuate depending upon a number of factors, many ofwhich are out of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not relyon our past results as an indication of our future performance. Our quarterly and annual revenues and costs and expenses as a percentage of our revenues maybe significantly different from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events couldcause the price of our ADSs to fall. Other factors that may affect our financial results include, among others: · China macro-economic conditions; · our ability to maintain and increase user traffic; · our ability to attract and retain advertisers; · changes in the policies of mobile operators; · changes in government policies or regulations, or their enforcement; and · geopolitical events or natural disasters such as war, threat of war, earthquake or epidemics. 15Table of Contents Our operating results tend to be seasonal. For instance, we may generate less revenue from brand advertising sales and paid services revenues duringnational holidays in China, in particular during the Chinese New Year holidays in the first quarter of each year. We may have higher net advertising revenuesduring the fourth quarter of each year primarily due to greater advertising spending by our advertisers near the end of the year when they spend the remainingportions of their annual budgets. In addition, advertising spending in China has historically been cyclical, reflecting overall economic conditions as well asthe budgeting and buying patterns of our customers. Failure to obtain SAPPRFT’s approval for introducing and broadcasting foreign television programs could have a material adverse effect on our abilityto conduct our business. A substantial amount of the video content on our PC websites, mobile applications and mobile websites is closely linked to or is the online version ofthe TV content of Phoenix TV. PRC law requires approval from SAPPRFT for introducing and broadcasting foreign television programs into China. InSeptember 2004, SARFT promulgated certain regulations of the Administrative Regulations on the Introduction and Broadcasting of Foreign TelevisionPrograms, pursuant to which only organizations designated by SAPPRFT are qualified to apply to SAPPRFT or its authorized entities for the introduction orbroadcasting of foreign television programs. In addition, on July 6, 2004, SARFT issued the Measures for the Administration of Publication of Audio-VisualPrograms through the Internet or Other Information Networks, or the 2004 A/V Measures, which explicitly prohibit Internet service providers frombroadcasting any foreign television program over an information network and state that any violation may result in warnings, monetary penalties or, in severecases, criminal liabilities. On November 19, 2009, SARFT issued a notice which extended this prohibition to broadcasting over mobile phones. InDecember 2007 and March 2009, however, SARFT issued two notices which provide that certain foreign audio-visual programs may be published throughthe Internet provided that certain regulatory requirements have been met and certain permits have been obtained, thereby implying that the absoluterestriction against broadcasting foreign television programs on the Internet as set forth in the 2004 A/V Measures has been lifted. On April 25, 2016,SAPPRFT issued the Administrative Provisions on Audio-Visual Program Services through Private Network and Targeted Communication, the 2016 A/VProvisions, which replaced the 2004 Internet A/V Measures. The 2016 A/V Provisions does not explicitly specify whether broadcasting foreign televisionprogram is permitted. See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulation of Foreign Television Programsand Satellite Channels.” As of the date of this annual report, we have not obtained an approval from SAPPRFT for introducing and broadcasting foreign TVprograms produced by Phoenix TV or other foreign TV stations in China. We have made oral inquiries with SARFT, and were orally informed that suchoperations do not violate the regulations on the introduction and distribution of foreign TV programs. Therefore, there is considerable uncertainty as towhether we are permitted to transmit foreign television programs through the online video services that we offer. If SAPPRFT or its local branch requires us toobtain its approval for our introduction and online broadcasting of overseas TV programs, we may not be able to obtain such approval in a timely manner orat all. Based on the opinion of our PRC counsel, Zhong Lun Law Firm, in such case, the PRC government would have the power to, among other things, levyfines against us, confiscate our income, order us to cease certain content service, or require us to temporarily or permanently discontinue the affected portionof our business. Failure to obtain certain permits for our health and Chinese medicine verticals would subject us to penalties. Entities in China are not allowed to provide drug-related or medical care information services online before obtaining an Internet Medicine InformationService Qualification Certificate and a Consent Letter for Internet Medical Care Information from the relevant local government agencies. See “Item 4.Information on the Company—B. Business Overview—Regulatory Matters—Regulation of Certain Internet Content.” Certain of our verticals, such as ourhealth and traditional Chinese medicine verticals contain drug-related information and certain online health diagnoses and treatment advices provided byour users. We do not currently have such certificate or consent letter, but have engaged an agency to assist us in applying for such certificate and consentletter. We are in the process of undertaking the necessary steps for preparing this application. We cannot assure you that we may be able to obtain thecertificate and consent letter. Without them, we may be subject to administrative warnings, termination of any Internet drug-related services and online healthdiagnoses and treatment services on our PC websites, mobile applications and mobile websites, and other penalties that are not clearly provided for in therelevant regulations. 16Table of Contents If we fail to obtain or maintain all applicable permits and approvals, or fail to comply with PRC regulations, relating to online games, our ability toconduct our online game business and certain other businesses could be affected and we could be subject to penalties and other administrative sanctions. Pursuant to PRC regulations regulating online games, online games (including mobile games) are categorized as a type of “online cultural product”and the provision of online games is deemed an Internet publication activity. Therefore, in order to operate an online game business, an operator shouldobtain an Online Culture Operating Permit from the MOC (with a business scope covering operation of online games) and a Network Publication ServiceLicense from SAPPRFT in order to directly make its online games publicly available in China. Furthermore, pursuant to the Provisional Measures on theAdministration of Online Games promulgated by the MOC on June 3, 2010, an online mobile games operator should make a filing with the MOC in respectof each domestic game within 30 days of commencing operations. In addition, each online game must be screened by SAPPRFT by way of an approvalprocess before it is first published and made publicly available. See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulation of Online Cultural Activities, Online Games and Internet Music.” As of the date of this annual report, Tianying Jiuzhou, Yifeng Lianhe and Huanyou Tianxia have obtained Online Culture Operating Permits from theMOC with respect to its operation of online games. Tianying Jiuzhou has obtained an Internet Publication License from SAPPRFT with respect to books andperiodicals published on the Internet, including the mobile Internet, and online and mobile games. However, neither of Yifeng Lianhe and Huanyou Tianxiahas obtained an Internet Publication License or a Network Publication Service License. In addition, we license almost all of our online and mobile gamesfrom other game operators and share profits with these game operators. We require these game operators to obtain the requisite approvals from SAPPRFT, andmake the filings with the MOC, for relevant online and mobile games. As of the date of this annual report, we have not obtained advanced approval for someof our mobile games from SAPPRFT or completed filing with the MOC. We cannot assure you that (i) Yifeng Lianhe and Huanyou Tianxia can obtain aNetwork Publication Service License; or (ii) we or such game operators can obtain all the required approvals and complete the relevant filing procedures withthe relevant government authorities for each game we operate in a timely manner or at all. If the relevant authority challenges the commercial operation ofour games and determines that we are in violation of the relevant laws and regulations regarding online and mobile games, it would have the power to, amongother things, levy fines against us, confiscate our income and require us to discontinue our online game business. In addition, if we were deemed to be inviolation of the relevant laws and regulations regarding online and mobile games, SAPPRFT would have the ability to withdraw the Internet PublicationLicense that it granted to Tianying Jiuzhou on April 15, 2011, which may affect, directly or indirectly, our ability to conduct our online digital readingservices and game services. In addition, the MOC and the Ministry of Commerce, or MOFCOM, jointly issued in 2009 the Notice on Strengthening the Administration of OnlineGame Virtual Currency, or the Virtual Currency Notice, which requires online game operators to report the total amount of their issued virtual currency on aquarterly basis, and game operators are prohibited from issuing disproportionate amounts of virtual currency in order to generate revenues. The VirtualCurrency Notice also reiterates that virtual currency can only be provided to users in exchange for an RMB payment and can only be used to pay for virtualgoods and services of the issuers. We provide extra free virtual currencies to game users as they buy virtual currencies, which is not in compliance with theVirtual Currency Notice. Therefore, we may be ordered to remedy such noncompliance within the timeframe specified by the MOC or MOFCOM. If we fail toremedy any noncompliance within the specified timeframe, the MOC and MOFCOM would have the power to, among other things, levy fines against us,confiscate our income and order us to cease certain services. Furthermore, Tianying Jiuzhou is engaged in online performance through its live broadcasting vertical, FENG Live. As of the date of this annual report,Tianying Jiuzhou has been granted an Online Culture Operating Permit with a permitted business scope of the operation of online music, art andentertainment products, online game products (including virtual currencies for online games), art products, play performance, animation products andorganization of exhibition or race of the online cultural products. However, the Online Culture Operating Permit of Tianying Jiuzhou currently does notcover the operation of online performance. We are in the process of applying for the expansion of the permitted business scope to cover online performance.If we fail to expand the permitted business scope in a timely manner, the MOC would have the power to, among other things, order us to make correctionswithin a prescribed period, confiscate our income from such business, levy fines against us or even withdraw the Online Culture Operating Permit that itgranted to Tianying Jiuzhou. Our affiliated consolidated entities and their respective shareholders do not own all the trademarks used in their value-added telecommunications services,which may subject them to revocation of their licenses or other penalties or sanctions. Pursuant to the Notice on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services issued on July 13,2006 by MIIT, or the MIIT 2006 Notice, domestic telecommunications service providers are prohibited from leasing, transferring or sellingtelecommunications business operating licenses to any foreign investors in any form, or providing any resources, sites or facilities to any foreign investors fortheir operation of telecommunications businesses in China. According to the MIIT 2006 Notice, the holder of a value-added telecommunications businessoperating license, or ICP License, or its shareholders must directly own the domain names and trademarks used in their value-added telecommunicationsbusiness operations. After the promulgation of the MIIT 2006 Notice in July 2006, the MIIT issued a subsequent notice in October 2006, or the MIITOctober Notice, urging value-added telecommunication service operators to conduct self-examination regarding any noncompliance with the MIIT 2006Notice prior to November 1, 2006. Pursuant to the MIIT October Notice, ICP License-holders who were not in compliance with the MIIT 2006 Notice wereallowed to submit a self-correction report to the local provincial-level branch of MIIT by November 20, 2006. 17Table of Contents Tianying Jiuzhou and Yifeng Lianhe are currently engaged in the provision of value-added telecommunications services and each of them hasobtained ICP Licenses from MIIT or its local counterpart in Beijing. In addition, Tianying Jiuzhou owns our material domain names, including ifeng.com,and, as of March 31, 2018, owned six registered trademarks that were transferred to it from Phoenix Satellite Television Trademark Limited. Yifeng Lianheowned 20 registered trademarks, and Tianying Jiuzhou and Yifeng Lianhe continue to use certain of Phoenix TV’s logos that are licensed from PhoenixSatellite Television Trademark Limited, a wholly owned subsidiary of Phoenix TV, in their value-added telecommunications services. Therefore, we are notcurrently in compliance with the MIIT 2006 Notice. We have designed propriety logos for use in the respective businesses of Tianying Jiuzhou and Yifeng Lianhe. As of March 31, 2018, Tianying Jiuzhouowned 189 PRC registered trademarks, six of which were transferred from Phoenix Satellite Trademark Limited, and Yifeng Lianhe owned 20 PRC registeredtrademarks. In addition, Tianying Jiuzhou had submitted 293 registration applications relating to 57 logo designs to the PRC Trademark Office. Despite ourhaving registered many trademarks used in our value-added telecommunications business operations, we may continue to use certain of Phoenix TV’s logosthat are licensed from Phoenix Satellite Television Trademark Limited. Although neither of our affiliated consolidated entities has been required by the MIIT or its local counterpart to obtain and hold the ownership of therelevant trademarks related to our value-added telecommunications services to date, the provincial-level counterpart of MIIT may enforce the MIIT 2006Notice on our affiliated consolidated entities. In such case, the provincial-level counterpart of MIIT could order our affiliated consolidated entities to own theregistered trademarks used in their value-added telecommunications business within a specified period of time. We do not have knowledge about the periodof time that MIIT would provide us to complete the necessary remediation measures. We are also not aware that since issuing the MIIT October Notice, MIIThas promulgated any additional notices or guidelines with respect to timelines for self-examination or remediation of noncompliance with the MIIT 2006Notice. Moreover, the MIIT October Notice does not specify how much time the MIIT allows for ICP License-holders to remedy their noncompliance issues.If we fail to remedy any noncompliance within the time frame specified by the provincial counterpart of MIIT, the relevant governmental authority wouldhave the discretion to revoke our affiliated consolidated entities’ licenses for value-added telecommunications or subject them to other penalties orsanctions, which would have a material and adverse effect on our business, financial condition, operating results and prospects. We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet businesses and companies, including limitationson our ability to own key assets, such as our PC websites, mobile applications and mobile websites. The Chinese government heavily regulates the Internet industry, including foreign investment in the Chinese Internet industry, content on the Internetand license and permit requirements for service providers in the Internet industry. Since some of the laws, regulations and legal requirements with respect tothe Internet are relatively new and evolving, their interpretation and enforcement involve significant uncertainties. In addition, the Chinese legal system isbased on written statutes and so that prior court decisions can only be cited for reference and have little precedential value. As a result, in many cases it isdifficult to determine what actions or omissions may result in liabilities. Issues, risks and uncertainties relating to China’s government regulation of theChinese Internet sector include the following: · We operate our PC websites, mobile applications and mobile websites in China through contractual arrangements due to restrictions onforeign investment in businesses providing value-added telecommunication services, including substantially all of our paid services andadvertising services. · Uncertainties relating to the regulation of the Internet business in China, including evolving licensing practices, give rise to the risk thatsome of our permits, licenses or operations may be subject to challenge, which may be disruptive to our business, subject us to sanctions orrequire us to increase capital, compromise the enforceability of relevant contractual arrangements, or have other adverse effects on us. Thenumerous and often vague restrictions on acceptable content in China subject us to potential civil and criminal liability, temporary blockageof our PC websites, mobile applications and mobile websites or complete shut-down of the above-mentioned sites. For example, the StateSecrecy Bureau, which is directly responsible for the protection of state secrets of all Chinese government and Chinese Communist Partyorganizations, is authorized to block any websites or mobile applications it deems to be leaking state secrets or failing to meet the relevantregulations relating to the protection of state secrets in the distribution of online information. In addition, the newly amended Law onPreservation of State Secrets which became effective on October 1, 2010 provides that whenever an Internet service provider detects anyleakage of state secrets in the distribution of online information, it should stop the distribution of such information and report to theauthorities of state security and public security. As per request of the authorities of state security, public security or state secrecy, the Internetservice provider should delete any contents on its websites or mobile applications that may lead to disclosure of state secrets. Failure to do soon a timely and adequate basis may subject the service provider to liability and certain penalties imposed by the State Security Bureau,Ministry of Public Security and/or MIIT or their respective local counterparts. 18Table of Contents · Under the Cyber Security Law of the People’s Republic of China, or Cyber Security Law, which became effective on June 1, 2017, whennetwork operators, such as us, provide users with information publication services, instant messaging services and other services, they shallrequire users to provide real identity information at the time of signing agreements with users or confirming the provision of services. Whereusers do not provide real identify information, network operators shall not provide them with relevant services. If network operators fail tocomply with these requirements, relevant competent authorities may order the operators to rectify, and if they fail to rectify or if thecircumstances are serious, a fine may be imposed, and the relevant competent authorities may order the operators to suspend operation, closedown the website, and revoke their relevant business permits and licenses; and a fine of no less than RMB10,000 but no more thanRMB100,000 may be imposed on the persons directly in charge and other directly responsible persons. · On September 28, 2009, the General Administration of Press and Publication (the predecessor of SAPPRFT), or GAPP and the National Officeof Combating Pornography and Illegal Publications jointly published a circular expressly prohibiting foreign investors from participating inInternet game operating business via wholly owned, equity joint venture or cooperative joint venture investments in China, and fromcontrolling and participating in such businesses directly or indirectly through contractual or technical support arrangements. On February 4,2016, the SAPPRFT and the MIIT jointly issued the Administrative Measures on Network Publication, which took effect in March 10, 2016and prohibit wholly foreign-owned enterprises, Sino-foreign equity joint ventures and Sino-foreign cooperative enterprises from engaging inthe provision of web publishing services. In addition, project cooperation between an Internet publishing service provider and a whollyforeign-owned enterprise, Sino-foreign equity joint venture, or Sino-foreign cooperative enterprise within China or an overseas organizationor individual involving Internet publishing services shall be subject to examination and approval by the SAPPRFT in advance. Due to the increasing popularity and use of the Internet and other online services, it is possible that a number of laws and regulations may be adoptedwith respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution, antitrust and characteristicsand quality of products and services. The adoption of additional laws or regulations may impede the growth of the Internet or other online services, whichcould, in turn, decrease the demand for our products and services and increase our cost of doing business. Moreover, the applicability to the Internet andother online services of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes, libel and personal privacy isuncertain and may take years to resolve. Any new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do notcurrently apply to our business, or the application of existing laws and regulations to the Internet and other online services could significantly disrupt ouroperations or subject us to penalties. The interpretation and application of existing PRC laws, regulations and policies, the stated positions of relevant PRC government authorities andpossible new laws, regulations or policies have created substantial uncertainties regarding the legality of existing and future foreign investments in, and thebusinesses and activities of, Internet businesses in China, including our business. The Chinese government may prevent us from advertising or distributing content, including UGC, that it believes is inappropriate and we may be subject topenalties for such content or we may have to interrupt or stop the operation of our PC websites, mobile applications and mobile websites. China has enacted regulations governing Internet access and the distribution of news and other information. In the past, the Chinese government hasstopped the distribution of information over the Internet or through mobile Internet devices that it believes violates Chinese law, including content that itbelieves is obscene or defamatory, incites violence, endangers the national security, or contravenes the national interest. In addition, certain news items, suchas news relating to national security, may not be published without permission from the Chinese government. If the Chinese government were to take anyaction to limit or prohibit the distribution of information through our PC websites, mobile applications and mobile websites, or through our services, or tolimit or regulate any current or future content or services available to users on our network, our business could be significantly harmed. In addition to professionally produced content, content from Phoenix TV and our in-house produced content, we allow our users to upload text andimages (UGC) to our PC websites, mobile applications and mobile websites. We have a content screening team of 13 full-time editors and more than 100outsourced staff members who are responsible for monitoring and preventing the public release of inappropriate or illegal content, including UGC, on our PCwebsites, mobile applications and mobile websites or through our services. Although we have adopted internal procedures to monitor the content displayedon our PC websites, mobile applications and mobile websites, due to the significant amount of UGC uploaded by our users, we may not be able to identify allthe UGC that may violate relevant laws and regulations. Failure to identify and prevent inappropriate or illegal content from being displayed on our PCwebsites, mobile applications and mobile websites may subject us to liability. 19Table of Contents Moreover, because the definition and interpretation of prohibited content is in many cases vague and subjective, it is not always possible to determineor predict what content might be prohibited under existing restrictions or restrictions that might be imposed in the future. For example, in 2005, SARFTissued a notice prohibiting commercials for WVAS related to “fortune-telling” from airing on radio and television stations effective in February 2005.SAPPRFT or other Chinese government authorities may prohibit the marketing of other MVAS via a channel we depend on to generate revenues, whichcould have a material adverse effect on our business, operating results or financial position. Content provided on our PC websites, mobile applications and mobile websites may expose us to libel or other legal claims which may result in costlylegal damages. Claims have been threatened and filed against alleging for libel, defamation, invasion of privacy and other matters based on the nature and content ofthe materials posted on our PC websites, mobile applications and mobile websites. While we screen our content for such potential liability, there is noassurance that our screening process will identify all potential liability, especially liability arising from UGC and content we license from third parties. In thepast, some of the claims brought against us have resulted in liability. Although to date none of such claims resulting material loss, we cannot assure you wewill not be subject to future claims that could be costly, encourage similar lawsuits, distract our management team or harm our reputation and possibly ourbusiness. For more information, see “Item 4. Information on the Company—B. Business Overview—Legal and Administrative Proceedings.” Advertisements on our PC websites, mobile applications and mobile websites may subject us to penalties and other administrative actions. Under PRC advertising laws and regulations, we are obligated to monitor the advertising content shown on our PC websites, mobile applications andmobile websites to ensure that such content is true, accurate and in full compliance with applicable laws and regulations. In addition, where a specialgovernment review is required for specific types of advertisements prior to websites or mobile application posting, such as advertisements relating to medicaltreatment, pharmaceuticals, medical instruments, agrochemicals, veterinary pharmaceuticals and health food, we are obligated to confirm that such review hasbeen performed and approval has been obtained from relevant governmental authorities, which include the local branch of the SAIC, the local branch of theState Food and Drug Administration, the local branch of the Ministry of Health and the local branch of the State Administration of Traditional ChineseMedicine. On April 24, 2015, the Standing Committee of the National People’s Congress issued the Advertisement Law, which took effect on September 1,2015, to further strengthen the supervision and management of advertisement services. In addition, on July 4, 2016, SAIC issued the Interim Measures for theAdministration of Internet Advertising, the New Interim Measures, to further regulate Internet advertising activities. Pursuant to these laws and regulations,any advertisement that contains false or misleading information to deceive or mislead consumers shall be deemed false advertising. Furthermore, theAdvertisement Law explicitly stipulates detailed requirements for the content of several different kinds of advertisement, including advertisements formedical treatment, pharmaceuticals, medical instruments, health food, alcoholic drinks, education or training, products or services having an expected returnon investment, real estate, pesticides, feed and feed additives, and some other agriculture-related advertisement. Also, according to the New Interim Measures,no advertisement of such special commodities or services which are subject to examination by an advertising examination authority shall be publishedunless it has passed such examination. In addition, an Internet advertisement shall be identifiable and clearly identified as an “advertisement” so thatconsumers will know that it is an advertisement. Paid search advertisements shall be clearly distinguished from natural search results. We may be subject toenhanced supervision and more serious penalties in case of a violation (if any) pursuant to such new Advertisement Law and the New Interim Measures. Tofulfill these monitoring functions, we include clauses in most of our advertising contracts requiring that all advertising content provided by advertisers mustcomply with relevant laws and regulations. Pursuant to the contracts between us and advertising agencies, advertising agencies are liable for all damages tous caused by their breach of such representations. Before a sale is confirmed and the advertisement is publicly posted on our PC websites or mobileapplications and mobile websites, our account execution personnel, who comprise a separate back-office team, are required to review all advertising materialsto ensure there is no racial, violent, pornographic or any other improper content, and will request the advertiser to provide proof of governmental approval ifthe advertisement is subject to special government review. Violation of these laws and regulations may subject us to penalties, including fines, confiscationof our advertising income, orders to cease dissemination of the advertisements and orders to eliminate the effect of illegal advertisement. PRC governmentalauthorities may even force us to terminate our advertising operation or revoke our licenses in circumstances involving serious violations. 20Table of Contents A majority of the advertisements shown on our PC websites, mobile applications and mobile websites are provided to us by third-party advertisingagencies on behalf of advertisers. We cannot assure you that all of the content contained in such advertisements is true and accurate as required by theadvertising laws and regulations. For example, the Advertisement Law provides that an advertisement operator who posts false or fraudulent advertisementsrelated to the life and health of the consumers, or who knows or should have known other kind of posted advertisement is false or fraudulent will be subject tojoint and several liabilities. Under the Detailed Implementation Rules on the Administrative Regulations for Advertisement, PC websites or mobileapplications and mobile websites must not post any advertisements that are untrue or lacking the requisite governmental approval if such type ofadvertisements are subject to special governmental review. The New Interim Measures provides that Internet advertisement publishers shall verify relatedsupporting documents, check the contents of the advertisement and be prohibited from publishing any advertisement with nonconforming contents orwithout all the necessary certification documents. However, for the determination of the truth and accuracy of the advertisements, there are no implementingrules or official interpretations, and such a determination is at the sole discretion of the relevant local branch of the SAIC, which results in uncertainty in theapplication of these laws and regulations. If we are found to be in violation of applicable PRC advertising laws and regulations in the future, we may besubject to penalties and our reputation may be harmed, which may have a material and adverse effect on our business, financial condition, operating resultsand prospects. In addition, online information distributors and related service providers, as well as marketplace platform operators, are required to conduct businessesin full compliance with the Anti-unfair Competition Law in China, and may not unfairly compete with others or cause disruption to social and economicorders, including but not limited to carrying out any false or misleading commercial promotions, inserting a link into an online product or service legallyprovided by another business operator to compel a destination jump without the approval of such business operator. In November 2017, the Anti-unfairCompetition Law of the PRC was amended, which further emphasized that a business operator that engage in production and business activities utilizing theinformation network shall abide by all the provisions of the Anti-unfair Competition Law, and may not engage in any false or misleading publicity for itsproducts or services. Violation of these provisions may subject the relevant business operators to various penalties, including an order from the competentgovernmental authorities to cease its illegal acts and fines, or in case of a severe violation, revocation of business licenses. Ineffective implementation of the separation of our advertising sales and regulatory compliance functions may result in insufficient supervision over thecontent of advertisements shown on our PC websites, mobile applications and mobile websites and may subject us to penalties or administrative actions. We keep our advertising sales function separate from our team that is in charge of government compliance in order to prevent potential conflictsbetween our advertising business and our compliance with relevant PRC advertising laws and regulations. Before a sale is confirmed and the relevantadvertisements are publicly posted on our PC websites, mobile applications and mobile websites, our account execution personnel, who comprise a separateback-office team that does not interface directly with advertisers, are required to review all advertising materials to ensure that the relevant advertisements donot contain any racial, violent, pornographic or any other improper content. These personnel will request an advertiser to provide proof of governmentalapproval if its advertisement is subject to special governmental review. Such procedures are designed to enhance our regulatory compliance efforts. However,in the event that the separation of advertising sales and regulatory compliance functions is not effectively implemented, the content of our advertisementsmay not be in full compliance with applicable laws and regulations. If we are found to be in violation of applicable laws and regulations in the future, we maybe subject to penalties and our reputation may be harmed. This may have a material and adverse effect on our business, financial condition and operatingresults. We prioritize product innovation and user experience over short-term operating results, which may harm our revenue and operating results. We encourage employees to quickly develop and help us launch new and innovative features. We focus on improving the user experience for ourproducts and services and on developing new and improved products and services for the advertisers on our platforms. We frequently make product andservice decisions that may negatively impact our short-term operating results if we believe that the decisions are consistent with our goals to improve userexperience and performance for advertisers, which we believe will improve our operating results over the long term. These decisions may not be consistentwith the short-term expectations of investors and may not produce the long-term benefits that we expect, in which case our user growth and user engagement,our relationships with advertisers and our business and operating results could be harmed. In addition, our focus on user experience may negatively impactour relationships with our existing or prospective customers. This could result in a loss of customers and platforms partners, which could harm our revenueand operating results. 21Table of Contents The continuing and collaborative efforts of our senior management, key employees and other employees are crucial to our success, and our business maybe harmed if we were to lose their services. Our success depends on the continuous efforts and services of Mr. Shuang Liu, our director and Chief Executive Officer, Ms. Betty Yip Ho, our directorand Chief Financial Officer and Ms. Xiaoyan Chi, our Senior Vice President. If, however, one or more of our executives or other key personnel are unable orunwilling to continue to provide services to us, we may not be able to find suitable replacements easily or at all. Competition for management and keypersonnel is intense and the pool of qualified candidates is limited. We may not be able to retain the services of our executives or key personnel, or attractand retain experienced executives or key personnel in the future. We do not maintain key-man life insurance for any of our key personnel. If any of ourexecutive officers or key employees joins a competitor or forms a competing company, we may lose advertisers, know-how and key professionals and staffmembers. Each of our executive officers and key employees has entered into an employment agreement and a non-compete agreement with us. However, ifany dispute arises between us and our executives or key employees, these agreements may not be enforceable in China, where these executives and keyemployees reside, in light of uncertainties with China’s legal system. See “—Risks Relating to Doing Business in China—Uncertainties with respect to thePRC legal system could limit the protections available to you and us.” Our future success will also depend on our ability to attract and retain highly skilled technical, managerial, editorial, finance, marketing, sales andcustomer service employees. Qualified individuals are in high demand, and we may not be able to successfully attract, assimilate or retain the personnel weneed to succeed. We have granted, and may continue to grant, stock options, restricted shares and restricted share units under our share incentive plans or adopt new shareincentive plans in the future, which may result in increased share-based compensation. We adopted a share option plan in June 2008 and a restricted share and restricted share unit plan in March 2011. As of March 31, 2018, 3,901,246contingently issuable shares and options to purchase 36,516,603 Class A ordinary shares were outstanding. We implemented an option exchange program in2016 whereby our directors, employees and consultants exchanged options to purchase 21,011,951 Class A ordinary shares with various exercise pricesgreater than US$0.4823 per share for new options with a new exercise price of US$0.4823 per share and a new vesting schedule. See “Item 6. Directors, SeniorManagement and Employees—B. Compensation of Directors, Supervisors and Executive Directors—Share Incentive Plans.” For the years endedDecember 31, 2015, 2016 and 2017, we recorded RMB34.4 million, RMB1.9 million and RMB20.9 million (US$3.2 million), respectively, in share-basedcompensation. We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees,and we will continue to grant stock options to employees in the future. We intend to grant additional stock options to our employees going forward, and wemay implement additional option exchange program in the future, which we expect will further increase our share-based compensation. If we continue togrant share options in the future, our share-based compensation will increase accordingly. We have been and expect we will continue to be exposed to intellectual property infringement and other claims, including claims based on content postedon our PC websites, mobile applications and mobile websites, which could be time-consuming and costly to defend and may result in substantial damageawards and/or court orders that may prevent us from continuing to provide certain of our existing services. Our success depends, in large part, on our ability to operate our business without infringing third-party rights, including third-party intellectualproperty rights. Companies in the Internet, technology and media industries own, and are seeking to obtain, a large number of patents, copyrights, trademarksand trade secrets, and they are frequently involved in litigation based on allegations of infringement or other violations of intellectual property rights orother related legal rights. There may be patents issued or pending that are held by others that cover significant aspects of our technologies, products, businessmethods or services. We license our premium licensed content from third parties. We also derive profits from online and mobile games that are based onintellectual property licensed to us by third parties. Although our license agreements with our licensors generally require that the licensors have the legalright to license such content to us and give us the right to promptly remove any content that we have been notified contains infringing material, we cannotensure that each licensor has such authorization and we may not receive notification of infringement. If any purported licensor does not actually havesufficient authorization relating to the premium licensed content or right to license a work of authorship provided to us, we may be subject to claims ofcopyright infringement from third parties and penalties imposed by competent government authorities, and we cannot ensure we can be fully indemnified bythe relevant licensor for all losses we may incur from such claims. 22Table of Contents In order to strengthen the protection of intellectual property right, Chinese government and courts are improving the judicial system for resolvingintellectual property disputes in China. As intellectual property litigation is becoming more common in China, we face increased risk of being sued forpotential intellectual property infringements. Third parties may take action and file claims against us if they believe that certain content on our site violatestheir copyrights or other related legal rights. We have been subject to such claims in the PRC. From January 1, 2017 to March 31, 2018, we have been subjectto 95 cases in the PRC, 67 of which have been concluded. The aggregate amount of damages awards and settlements paid by us under these cases wasRMB5.5 million. Government authorities may also impose administrative penalties on us if they find that we have infringed third parties’ intellectualproperty rights. In October 2015, the National Copyright Bureau imposed a fine of RMB250,000 on one of our consolidated affiliated entities fordisseminating on our PC websites, mobile applications and mobile websites one work of literature that we licensed from third parties that were alleged tohave no legal rights to license such work. In November 2016, China Youth Book Inc. and Dewey Press LLC filed a claim against Tianying Jiuzhou and ourcompany for intellectual property infringement of such work, the related claim for damage was approximately RMB235.8 million, however, the actualincome we generated from such work was less than RMB1,500. This claim was withdrawn by the plaintiffs in January 2018. In April 2018, we receivednotices from the local court that the plaintiffs have filed a lawsuit against us again for the same claim, with the related claim for damages reduced toapproximately RMB99.8 million. As of the date of this annual report, this case is still pending. In 2017, we also received some complaints and claims fromthird parties alleging intellectual property infringements by us, although some of the complainants have not provided necessary proofs of title orinfringements. While we are negotiating with theses complainants and some of these claims are still pending as of the date of this annual report, we cannotassure you that we will not be proved to have infringed their intellectual property rights or be required to pay any compensation. As litigation is subject toinherent uncertainties and this case is at its preliminary stage, and based on the legal advice, we are currently unable to make an estimation of the reasonablypossible loss or range of possible loss, if any. However, our view of these matters may change in the future and will review the need for any such liability on aregular basis. For more information, see “Item 4. Information on the Company—B. Business Overview—Legal and Administrative Proceedings.” In addition, our platforms are open to Internet users for uploading text and images and our we-media vertical obtained content produced by over550,000 we-media publishers as of the end of 2017, such as we-media outlets, public intellectual, commentators, scholars, KOLS and professors. As a result,content posted by our users, including we-media publishers and other Internet users, may expose us to allegations by third parties of infringement ofintellectual property rights, invasion of privacy, defamation and other violations of third-party rights. Pursuant to our user agreement, users agree not to useour services in a way that is illegal, obscene or may otherwise violate generally accepted codes of ethics. However, given the volume of content uploaded it isnot possible, and we do not attempt to identify and remove all potentially infringing content uploaded or published by our users, which may subject us tovarious claims by third parties. Moreover, as we continue to hire additional personnel to expand our product development teams, we may be subject to allegations and claims thatsome of our new employees may have disclosed trade secrets or other proprietary information of their former employers to us, especially when suchemployees were previously employed by our competitors or companies with similar businesses as ours. Any such allegation or claim, even if unfounded,could have a negative impact on our reputation, and our financial condition and operating results may suffer as a result. We cannot assure you that we have not become subject to copyright laws in other jurisdictions, such as the United States, by virtue of our listing in theUnited States, the ability of users to access our videos in the United States and other jurisdictions, the ownership of our ADSs by investors, the extraterritorialapplication of foreign law by foreign courts or otherwise. Although we have not previously been subject to legal actions for copyright infringement injurisdictions other than China, it is possible that we may be subject to such claims in the future. Any such claims in China, U.S., or elsewhere, regardless oftheir merit, could be time-consuming and costly to defend, and may result in litigation and divert management’s attention and resources. Furthermore, anadverse determination in any such litigation or proceedings to which we may become a party in China, U.S. or elsewhere could cause us to pay substantialdamages. For example, statutory damage awards in the U.S. can range from US$750 to US$30,000 per infringement, and if the infringement is found to beintentional, can be as high as US$150,000 per infringement. Additionally, the risk of an adverse determination in such litigation or an actual adversedetermination may result in harm to our reputation or in adverse publicity. The risk of an adverse result or the actual adverse result in litigation may alsorequire us to seek licenses from third parties, pay ongoing royalties or become subject to injunctions requiring us to remove content or take other steps toprevent infringement, each of which could prevent us from pursuing some or all of our business and result in our users and advertisers or potential users andadvertising customers deferring or limiting their use of our services, which could materially adversely affect our financial condition and operating results. 23Table of Contents We may not be able to adequately protect our intellectual property, which could cause us to be less competitive. We rely on a combination of copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Despiteour efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our copyrighted content and otherintellectual property. Monitoring such unauthorized use is difficult and costly, and we cannot be certain that the steps we have taken will preventmisappropriation. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs anddiversion of our resources. The PRC is increasing the protection to a company’s intellectual property, but has historically afforded less protection than theUnited States and the Cayman Islands, and therefore companies such as ours operating in the PRC face an increased risk of intellectual property piracy. The discontinuation of any of the preferential tax treatments available to us in China could materially and adversely affect our operating results andfinancial condition. Under PRC tax laws and regulations, our PRC subsidiary, Beijing Fenghuang Yutian Software Technology Co., Ltd., or Fenghuang Yutian, BeijingFenghuang Borui Software Technology Co., Ltd., or Fenghuang Borui, Fenghuang On-line and Tianying Jiuzhou enjoyed, or are qualified to enjoy, certainpreferential income tax benefits. The PRC Corporate Income Taxes Law (“CIT Law”), effective on January 1, 2008, and further amended on February 24,2017, and its implementation rules significantly curtail tax incentives granted to foreign-invested enterprises. The CIT Law generally applies an income taxrate of 25% to all enterprises, but grants preferential tax treatment to High and New Technology Enterprises (“HNTEs”) and Software Enterprises. Under thesepreferential tax treatments, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years andSoftware Enterprises are entitled to an income tax exemption for two years beginning from its first profitable year and a 50% reduction to a rate of 12.5% forthe subsequent three years. Fenghuang On-line had been qualified as an HNTE in November 2014 and August 2017, respectively, and was entitled to a preferential tax rate of15%. Therefore, Fenghuang On-line was subject to a 15% income tax rate for the years from 2015 to 2017 and would be subject to a 15% income tax ratefrom 2018 to 2019. Tianying Jiuzhou resubmitted applications for qualification and was approved as an HNTE in 2014 and 2017, respectively, and therefore,Tianying Jiuzhou was subject to a 15% income tax rate from 2015 to 2017 and would be subject to a 15% income tax rate from 2018 to 2019. In 2012,Fenghuang Yutian was qualified as a Software Enterprise. As 2013 was the first year Fenghuang Yutian generated taxable profit, it was exempted fromincome taxes for the years 2013 and 2014, and was subject to a 12.5% income tax rate from 2015 to 2017. In 2017, Fenghuang Yutian had been qualified asan HNTE, and therefore, Fenghuang Yutian would be subject to a 15% income tax rate from 2018 to 2019. In 2016, Fenghuang Borui was qualified as aSoftware Enterprise. As 2016 was the first year Fenghuang Borui generated taxable profit, it was exempted from income taxes for the years 2016 and 2017,and would be subject to a 12.5% income tax rate from 2018 to 2020. See “Item 10. Additional Information—E. Taxation.” We have limited business insurance coverage. The insurance industry in China is still young and the business insurance products offered in China are limited. We do not have any business liabilityor disruption insurance coverage for our operations. Any business disruption, litigation or natural disaster may cause us to incur substantial costs and divertour resources. A prolonged slowdown in the global or PRC economies may materially and adversely affect our operating results, financial condition, prospects andfuture expansion plans. The global financial markets experienced opportunities and challenges side by side in 2017. Since United Kingdom has voted for the exit of EuropeUnion, the global economies have been impacted extensively. For the United States of America aspect, the U.S Tax Reform Bill was finally signed by the U.SPresident in December 2017. In addition, China has launched the One Belt, One Road Strategy, which has brought new economic growth engine worldwide.All these events and other international affairs may have influence on the macroeconomic conditions. Economic conditions in the PRC are sensitive to macroeconomic conditions. In part due to lower export demand resulting from slow economicrecoveries in the United States and Europe and a weak economic environment in Japan, China’s GDP growth decelerated since 2012. China’s year-over-yearGDP growth rate in 2017, 6.9%, remained stable as compared to 6.7% in 2016 and 6.9% in 2015. In addition, there is uncertainty regarding the scale and theeffects of a real estate bubble alleged by some to have reached a critical stage in the PRC. Since demand for our paid and advertising services are sensitive tomacro-economic conditions globally and in the PRC, our business prospects may be affected by the macroeconomic environment. Any prolonged slowdownin the global or PRC economy may have a material adverse effect on our business, operating results and financial condition, and continued turbulence in theinternational markets may materially and adversely affect our ability to access the capital markets to meet liquidity needs. 24Table of Contents PRC regulations establish complex procedures for certain acquisitions of PRC companies by foreign investors, which could make it more difficult for us topursue growth through acquisitions in China. On August 8, 2006, six PRC regulatory authorities, including the CSRC, jointly promulgated the Regulations on Mergers and Acquisitions ofDomestic Enterprises by Foreign Investors, or the 2006 M&A Rules, which were later amended on June 22, 2009. The 2006 M&A Rules establish proceduresand requirements that could make some acquisitions of PRC companies by foreign investors more time-consuming and complex, including requirements insome instances that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domesticenterprise. In addition, national security review rules issued by the PRC governmental authorities in 2011 require acquisitions by foreign investors ofdomestic companies engaged in military related or certain other industries that are crucial to national security to be subject to prior security review.According to the MOFCOM Security Review Rules, a security review is required for mergers and acquisitions of PRC domestic enterprises by foreigninvestors (i) having “national defense and security” concerns, and (ii) where the foreign investors may acquire the “de facto control” of the PRC domesticenterprises having national security concerns such as key farm products, key energy and resources, and key infrastructure, transportation, technology andmajor equipment manufacturing industries. Circular No. 6, however, does not define the term of “key” or “major,” nor has it exhausted all the industries thatmay be deemed as sensitive industries subject to the security review. We may expand our business in part by acquiring complementary businesses. Complying with the requirements of the 2006 M&A Rules, theMOFCOM Security Review Rules, if applicable, and other PRC regulations to complete such transactions could be time-consuming, and any requiredapproval processes, including obtaining approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect ourability to expand our business or maintain our market share. However, it is also uncertain whether the 2006 M&A Rules, the MOFCOM Security ReviewRules or the other PRC regulations regarding the acquisitions of PRC companies by foreign investors will be materially repealed or amended shouldMOFCOM’s proposed Foreign Investment Law, or the Draft FIL, become effective in the future. Any adverse change in rules or regulations may have amaterial adverse effect on our business and operating results. There is a substantial risk we will be classified as a passive foreign investment company, or PFIC, for 2017, which could result in adverse United Statesfederal income tax consequences to United States Holders (as defined below). Based upon the composition of our income, assets, including goodwill, and valuation of our assets, we believe there is a substantial risk that we will beclassified as a “passive foreign investment company,” or PFIC, for 2017. The determination of whether or not we are a PFIC is made on an annual basis andwill depend on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for United States federal income taxpurposes for any taxable year in which: (i) at least 75% of our gross income in a taxable year is passive income, or (ii) at least 50% of the value (determinedbased on a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. The calculation of the valueof our assets will be based, in part, on the quarterly market value of our ADSs, which is subject to change. See “Item 10. Additional Information—E. Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company.” In addition, there are substantial uncertainties as to the treatment of our corporate structure and ownership of our affiliated consolidated entities forUnited States federal income tax purposes. If it is determined that we do not own the stock of our affiliated consolidated entities for United States federalincome tax purposes (for instance, because the relevant PRC authorities do not respect these arrangements), we are more likely to be treated as a PFIC. Such characterization as a PFIC could result in adverse United States federal income tax consequences to you if you are a United States Holder, asdefined under “Taxation—Material United States Federal Income Tax Consequences.” For example, you may become subject to increased tax liabilitiesunder United States federal income tax laws and regulations, and will become subject to burdensome reporting requirements. If we are a PFIC for any year during which a United States Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFICfor all succeeding years during which such United States Holder holds our ADSs or ordinary shares. See “Item 10. Additional Information —E. Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company.” The determination of our PFIC status is based on anannual analysis that investigation includes ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of incomewe earn. Because this involves extensive factual investigation and cannot be completed until the close of a taxable year, our U.S. counsel expresses noopinion with respect to our PFIC status. 25Table of Contents Our strategy of acquiring complementary assets, technologies and businesses may fail and may result in equity or earnings dilution. As part of our business strategy, we intend to identify and acquire assets, technologies and businesses that are complementary to our business. Acquiredbusinesses or assets may not yield the results we expect. In addition, acquisitions could result in the use of substantial amounts of cash, potentially dilutiveissuances of equity securities, significant amortization expenses related to intangible assets and exposure to potential unknown liabilities of the acquiredbusiness. Moreover, the cost of identifying and consummating acquisitions, and integrating the acquired businesses into ours, may be significant, and theintegration of acquired business may be disruptive to our business operations. In addition, we may have to obtain approval from the relevant PRCgovernmental authorities for the acquisitions and comply with any applicable PRC rules and regulations, which may be costly. In the event our acquisitionsare not successful, our financial condition and results of operation may be materially and adversely affected. Failure of our business strategies through our subsidiaries, affiliates and other business alliance partners could negatively affect our financial condition,operating results and reputation. Aligned with our business strategies, we have made and may undertake in the future investments in subsidiaries, affiliates and other business alliancepartners in various Internet-related businesses. In March 2014, IDG-Accel China Growth Fund III L.P. and IDG-Accel China III Investors L.P., or the IDG-Accel Funds, acquired US$3.0 millionconvertible preferred shares of Phoenix FM Limited, or Phoenix FM, previously a subsidiary of us, to accelerate development of the ifeng applicationbusiness. Despite holding 100% ordinary shares of Phoenix FM, we accounted for our investment in Phoenix FM as an equity method investment since wedid not control Phoenix FM due to substantive participating rights that have been provided to the IDG-Accel Funds. As of December 31, 2017, the carryingvalue of our equity investment in Phoenix FM was nil. In April 2014, we established Shenzhen Fenghuang Jingcai Network Technology Co., Ltd, or Fenghuang Jingcai, a company engaged in online lotteryticket distribution with capitalization of RMB2.0 million. Subsequently, we invested additional RMB2.5 million in Fenghuang Jingcai. In 2014 and 2016,Fenghuang Jingcai obtained capital injection from other independent third parties. We held approximately 31.54% of the equity interests in FenghuangJingcai as of December 31, 2017 and accounted it as an equity method investment. Since March 2015, Fenghuang Jingcai had suspended all of its onlinelottery ticket distribution businesses, in response to the Notice related to Self-Inspection and Self-Remedy of Unauthorized Online Lottery Sales, or the Self-Inspection Notice, which was jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sports of thePeople’s Republic of China. As of December 31, 2017, there had been no change in the Self-Inspection Notice. Our management believes that the regulatorychange brought about by the Self-Inspection Notice will continue to have negatively impact to the cash flows of Fenghuang Jingcai in the future, and thatthe value of Fenghuang Jingcai may not be fully recoverable. In December 2015, we recorded RMB3.2 million impairment loss for our equity investment inFenghuang Jingcai. As of December 31, 2017, the carrying value of our equity investment in Fenghuang Jingcai was nil. We are unlikely to recover anyvalue of Fenghuang Jingcai in the future. We have made substantial investments in Particle in the form of investments and loans. Particle operates Yidian, a personalized news and life-styleinformation application in China that allows users to define and explore desired content on their mobile devices. As of the date hereof, we held Series B,Series C and Series D1 convertible redeemable preferred shares of Particle, which had been accounted for as available-for-sale investments, representing anaggregate of approximately 41.8% equity interest of Particle on an as-if converted basis. The fair value of our available-for-sale investments in Particle wasRMB1,196.3 million (US$183.9 million) as of December 31, 2017. As of the date hereof, we also had two outstanding unsecured short-term loans to Particle,including (i) a convertible loan granted in August 2016 with a principal amount of US$14.8 million at an interest rate of 4.35% per annum due inAugust 2018 after several extensions, which can be converted into Series D1 convertible redeemable preferred shares of Particle at a conversion price ofUS$1.071803 per share before August 9, 2018; and (ii) a loan granted in January 2017 with a principal amount of RMB74.0 million (US$10.8 million) at aninterest rate of 9% per annum due in July 2018 after one extension. Pursuant to an agreement among us, Particle and Long De, we are expected to assign toLong De or its designated affiliates our rights under the convertible loan granted in August 2016, and Long De or its affiliates should pay us approximatelyUS$17.0 million for the assignment. In December 2014, we lost control over Beijing Fenghuang Tianbo Network Technology Co., Ltd., or Tianbo, a previously consolidated subsidiary, asthe result of disposal of certain equity interest of Tianbo, and we currently still hold 50% of the equity interests in Tianbo. As we have significant influenceover financial and operating decision-making after deconsolidation, we account for the retained 50% equity interests by using the equity method ofaccounting. Tianbo is principally engaged in operation of the real property channel and sales of real property advertisements for ifeng.com. As ofDecember 31, 2016 and 2017, the carrying value of equity investment in Tianbo was RMB8.2 million and RMB15.1 million (US$2.3 million), respectively. 26Table of Contents In January 2015, in order to leverage our brand, content platform and large user base to expand into more entertainment related businesses, weestablished a new subsidiary, Shanghai Meowpaw Info&Tech Co., Ltd., or Meowpaw. Meowpaw is engaged in creating intellectual properties, related games,books, movies and animations, etc. Meowpaw will apply for the necessary licenses and permits when required. As of the date of this annual report, we held75% of Meowpaw’s equity interest, and its noncontrolling shareholder, who is an individual, held the remaining 25%. Meowpaw’s share capital was notsufficient to support its operations. In addition to the capital injection, we provided a long-term financing of RMB79.0 million to support its operations. In January 2015, we acquired 5% equity interest of Beijing Phoenix Lilita Information Technology Co., Ltd., or Lilita, from a family member of thechairman of Phoenix TV, for an aggregate purchase price of RMB0.5 million. Lilita is principally engaged in P2P lending and reward-based crowd-fundingbusinesses. In July 2016, Lilita completed its Series A round of financing and the percentage of our equity interest in Lilita decreased to 4.69%. We accountfor our equity interest in Lilita by using the cost method of accounting. Based on our other-than-temporary impairment assessment on equity investments andcollectability assessment on the long overdue accounts receivables, we have fully written off our entire investment in Lilita with an amount of RMB0.5million (US$0.08 million) and made bad debt provision to receivable from Lilita with a total amount of RMB1.0 million (US$0.2 million) in 2017. In February 2015, we invested approximately RMB4.5 million in Hangzhou Qike Technology Co., Ltd., or Hangzhou Qike, a company engaged inproviding risk management and credit control assessment based on big data analysis to enterprises and eventually directly to individual customers. We hold45% equity interest of Hangzhou Qike and account for it by using the equity method of accounting. Based on our other-than-temporary impairmentassessment on equity investments, we have fully written off our entire investment in Hangzhou Qike with an amount of RMB0.04 million (US$0.01 million),therefore, as of December 31, 2017, the carrying value of equity investment in Hangzhou Qike was nil. In April 2015, we acquired 0.3% equity interest of Lifeix Inc., an Internet company that operates L99.com and Lifeix.com, for an aggregate purchaseprice of US$1.0 million. We account for our equity investment in Lifeix by using the cost method of accounting. In December 2015, in view of businessperformance and near-term business outlook that were below our previous expectation, based on the other-than-temporary impairment assessment, werecorded an impairment loss of US$1.0 million (RMB6.4 million) to fully write down the equity investment. In August 2017, we acquired 8% equity interest of Shenzhenshi Kuailai Technology Co., Ltd. (“Kuailai”) with a consideration of RMB0.2 million(US$0.04 million). Kuailai operates Xunhutai, a life-style information application in China. It is uncertain whether we will receive the expected benefits from these investments, due to any adverse regulatory changes, worsening of economicconditions, increased competition or other factors that may negatively affect the related business activities. We accounted for some of our investments in affiliates under the equity method. Therefore, net losses incurred by equity method investees may causeus to record our share of the net losses. Furthermore, we may lose the capital which we have invested in affiliates and other business alliances or may incurimpairment losses on securities acquired in such alliances. For example, as Particle has engaged in and may continue to engage in additional onshore andoffshore financing activities, as additional investors are brought in as new shareholders of Particle or any of its principal subsidiaries or affiliatedconsolidated entity, and as certain special rights are granted to some of these new shareholders, our equity interest in Particle may be diluted, we may lose ouroption to consolidate Particle as a subsidiary, and Particle may lose its right to consolidate its current consolidated affiliated entity, which may materiallyand adversely affect the value of our investments in Particle. Furthermore, Yidian, which is operated by Particle, is subject to various risks in its industry,which may negatively affect its business and financial performance and frustrate our financial or operational expectations of it. For example, Yidian usesnews content provided by third parties, and it may be subject to copyright infringement claims. As a result, our investment value in Particle may substantiallydecrease. While we do not have such arrangements in place, we may in the future be required under contractual or other arrangements to provide financialsupport, including credit support and equity investments, to our business alliance partners in the future. Additionally, we may also incur credit costs from ourcredit exposure to such business alliance partners. If there is any negative news coverage about our business alliance partners, our reputation may also beharmed as a result of our affiliation with them. 27Table of Contents Some of the businesses we have invested in are subject to intensive regulation. As a result of such regulations which are beyond our control, ourbusiness strategies may fail. For example, Fenghuang Jingcai suspended all of its businesses operation in 2015 due to changes in regulations of online lotteryticket distribution business in China, and we recorded a RMB3.2 million impairment loss for our equity investment in Fenghuang Jingcai in 2015. Similaradverse regulatory change may have a material adverse impact on the business and financial performance of our subsidiaries, affiliates and other businessalliance partners. Furthermore, unanticipated costs and liabilities may be incurred in connection with those business strategies, including liabilities from theclaims related to the businesses prior to our business alliances, and cost from actions by regulatory authorities. We may have conflicts of interest with some of the affiliated companies we have invested in and, because some of our board members and executive officersalso hold positions and have other interests in such companies, we may not be able to resolve such conflicts on terms favorable for us. We may have conflicts of interests with some of the affiliated companies we have invested in. Certain of our board members and executive officers holddirectorship and/or senior management positions and own shares, restricted share units and/or options in these affiliated companies. For example, Mr. ShuangLiu, our director and Chief Executive Officer, also serves as the chairman of Particle. Mr. Shuang Liu has been granted or promised options by Particle asincentive share compensation. These affiliated companies may continue to grant or promise incentive share compensation to certain of our board membersand executive officers from time to time. These relationships could create, or appear to create, conflicts of interest when these persons are faced with decisionswith potentially different implications for these affiliated companies and us. In addition, we do not have a non-compete agreement with most of theseaffiliated companies and therefore neither we nor they are prohibited from entering into competition with each other in respect of our respective currentbusinesses or new businesses. As such, we may not be able to resolve potential conflicts, and even if we do so, the resolution may be less favorable to us thanif we were dealing with unrelated parties. Risks Relating to Our Corporate Structure Phoenix TV (BVI) owns our Class B ordinary shares with 1.3 votes per share, allowing it and Phoenix TV to exercise significant influence over matterssubject to shareholder approval, and their interests may not be aligned with the interests of our other shareholders. Phoenix TV (BVI), a wholly owned direct subsidiary of Phoenix TV, owned 54.8% of our total issued and outstanding shares as of March 31, 2018.Moreover, all shares held by Phoenix TV (BVI) are Class B ordinary shares with 1.3 votes per share. As a result, Phoenix TV (BVI) held 61.2% of the totalvoting power of our ordinary shares as of March 31, 2018. Accordingly, Phoenix TV (BVI), and Phoenix TV through Phoenix TV (BVI), have substantialcontrol over the outcome of corporate actions requiring shareholder approval, including the election of directors, any merger, consolidation or sale of all orsubstantially all of our assets or any other significant corporate transaction, and their interests may not align with the interests of our other shareholders.Phoenix TV (BVI) may take actions that are not in the best interest of us or our other shareholders and may also delay or prevent a change of control orotherwise discourage a potential acquirer from attempting to obtain control of us, even if such a change of control would benefit our other shareholders. Thissignificant concentration of share ownership may adversely affect the trading price of our ADSs due to investors’ perception that conflicts of interest mayexist or arise. We may have conflicts of interest with Phoenix TV and, because of Phoenix TV’s controlling beneficial ownership interest in our company, may not beable to resolve such conflicts on terms favorable for us. Conflicts of interest may arise between Phoenix TV and us in a number of areas relating to our past and ongoing relationships. Potential conflicts ofinterest that we have identified include the following: · Our board members or executive officers may have conflicts of interest. Certain of our board members and executive officers own shares,restricted share units and/or options in Phoenix TV, and also hold senior management positions in Phoenix TV. Phoenix TV may continue togrant incentive share compensation to certain of our board members and executive officers from time to time. These relationships couldcreate, or appear to create, conflicts of interest when these persons are faced with decisions with potentially different implications for PhoenixTV and us. · Sale of shares in our company. Phoenix TV (BVI) may decide to sell all or a portion of our shares that it beneficially owns to a third party,including to one of our competitors, thereby giving that third party substantial influence over our business and our affairs. Such a sale couldbe contrary to the interests of certain of our shareholders, including our employees or public shareholders. 28Table of Contents · Competition. We do not have a non-compete agreement with Phoenix TV and its subsidiaries and affiliates, therefore neither we nor PhoenixTV is prohibited from entering into competition with each other in respect of our respective current businesses or new businesses. · Allocation of business opportunities. Business opportunities may arise that both we and Phoenix TV find attractive, and which wouldcomplement our respective businesses. We and Phoenix TV do not have an agreement governing the allocation of new business opportunitiespresented to us and Phoenix TV in the future, and therefore, it is not certain which company will have the priority to pursue such businessopportunities when such opportunities arise. Although our company is a separate, stand-alone entity, Phoenix TV (BVI), a wholly owned direct subsidiary of Phoenix TV, owns Class B ordinaryshares, each of which will be entitled to 1.3 votes on all matter subject to shareholders’ vote, and we operate as a part of the Phoenix TV Group. Phoenix TVmay from time to time make strategic decisions that it believes are in the best interests of its business as a whole, including our company. These decisionsmay be different from the decisions that we would have made on our own. Phoenix TV’s decisions with respect to us or our business may be resolved in waysthat favor Phoenix TV and therefore Phoenix TV’s own shareholders, which may not coincide with the interests of our other shareholders. We may not be ableto resolve any potential conflicts, and even if we do so, the resolution may be less favorable to us than if we were dealing with non-controlling shareholder.Even if both parties seek to transact business on terms intended to approximate those that could have been achieved among unaffiliated parties, this may notsucceed in practice. If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmentalrestrictions on foreign investment in Internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we wouldbe subject to severe penalties or be forced to relinquish our interests in those operations. Current PRC laws and regulations place certain restrictions on foreign ownership of companies that engage in Internet and mobile businesses.Specifically, pursuant to the Regulations for Administration of Foreign-Invested Telecommunications Enterprises issued by the State Council onDecember 11, 2001 and amended on September 10, 2008 and February 6, 2016, foreign ownership in an Internet content provider or other value-addedtelecommunication service providers may not exceed 50%. We conduct our operations in China principally through contractual arrangements among ourwholly-owned PRC subsidiary, Fenghuang On-line and Qieyiyou, and three affiliated consolidated entities in the PRC, namely, Yifeng Lianhe, TianyingJiuzhou and Chenhuan, and their respective shareholders. Yifeng Lianhe holds the licenses and permits necessary to conduct our mobile business in China,while Tianying Jiuzhou holds the licenses and permits necessary to conduct our Internet portal, video, mobile business, and Internet advertising and relatedbusinesses in China. Our contractual arrangements with Yifeng Lianhe, Tianying Jiuzhou and Chenhuan, and their respective shareholders enable us toexercise effective control over these entities and hence treat them as our affiliated consolidated entities and consolidate their results. For a detailed discussionof these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” We cannot assure you, however, that we will be able to enforce these contracts. Although we believe we are in compliance with current PRCregulations, we cannot assure you that the PRC government would agree that these contractual arrangements comply with PRC licensing, registration or otherregulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. PRC laws and regulations governing thevalidity of these contractual arrangements are uncertain and the relevant government authorities have broad discretion in interpreting these laws andregulations. For example, it is uncertain that how the Draft FIL, should it come in force, or its implementation rules, may impact the viability of our currentcorporate structure in the future. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Substantial uncertainties existwith respect to the enactment timetable, interpretation and implementation of the draft Foreign Investment Law and how it may impact the viability of ourcurrent corporate structure, corporate governance and business operations.” If the PRC government determines that we do not comply with applicable lawsand regulations, it could revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues,block our PC websites or mobile applications and mobile websites, require us to restructure our operations, impose additional conditions or requirementswith which we may not be able to comply, or take other regulatory or enforcement actions against us that could be harmful to our business. The imposition ofany of these penalties would result in a material and adverse effect on our ability to conduct our business. 29Table of Contents In August 2011, MOFCOM promulgated the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitionsof Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Rules, to implement the Notice of the General Office of the State Councilon Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011, orCircular No. 6. The MOFCOM Security Review Rules came into effect on September 1, 2011 and replaced the Interim Provisions of MOFCOM on MattersRelating to the Implementation of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated byMOFCOM in March 2011. According to these circulars and rules, a security review is required for mergers and acquisitions by foreign investors having“national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterpriseshaving “national security” concerns. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors issubject to the security review, MOFCOM will look into the substance and actual impact of the transaction. The MOFCOM Security Review Rules furtherprohibit foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases,loans, control through contractual arrangements or offshore transactions. There is no explicit provision or official interpretation stating that our online gamebusiness falls into the scope subject to the security review, and there is no requirement for foreign investors in those mergers and acquisitions transactionsalready completed prior to the promulgation of Circular No. 6 to submit such transactions to MOFCOM for security review. As we have already obtained the“de facto control” over our variable interest entities prior to the effectiveness of these circulars and rules and our current business would not have concerns on“national defense and security” or “national security,” we do not believe we are required to submit our existing contractual arrangement to MOFCOM forsecurity review. However, as there is a lack of clear statutory interpretation on the implementation of these circulars and rules, there is no assurance thatMOFCOM will have the same view as we do when applying. We rely on contractual arrangements with our affiliated consolidated entities in China, and their shareholders, for our business operations, which may notbe as effective in providing operational control or enabling us to derive economic benefits as through ownership of controlling equity interest. We rely on and expect to continue to rely on contractual arrangements with our affiliated consolidated entities in China and their respectiveshareholders to operate our Internet and mobile businesses. These contractual arrangements may not be as effective in providing us with control over theaffiliated consolidated entities as ownership of controlling equity interests would be in providing us with control over, or enabling us to derive economicbenefits from the operations of, the affiliated consolidated entities. If we had direct ownership of the affiliated consolidated entities, we would be able toexercise our rights as a shareholder to (i) effect changes in the board of directors of those entities, which in turn could effect changes, subject to anyapplicable fiduciary obligations, at the management level, and (ii) derive economic benefits from the operations of the affiliated consolidated entities bycausing them to declare and pay dividends. However, under the current contractual arrangements, as a legal matter, if any of the affiliated consolidatedentities or any of their shareholders fails to perform its, his or her respective obligations under these contractual arrangements, we may have to incursubstantial costs and resources to enforce such arrangements, and rely on legal remedies available under PRC laws, including seeking specific performance orinjunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if shareholders of an affiliated consolidated entity wereto refuse to transfer their equity interests in such affiliated consolidated entity to us or our designated persons when we exercise the purchase option pursuantto these contractual arrangements, we may have to take a legal action to compel them to fulfill their contractual obligations. If (i) the applicable PRC authorities invalidate these contractual arrangements for violation of PRC laws, rules and regulations, (ii) any affiliatedconsolidated entity or its shareholders terminate the contractual arrangements or (iii) any affiliated consolidated entity or its shareholders fail to perform theirobligations under these contractual arrangements, our business operations in China would be adversely and materially affected, and the value of your ADSswould substantially decrease. Further, if we fail to renew these contractual arrangements upon their expiration, we would not be able to continue our businessoperations unless the then current PRC law allows us to directly operate the applicable businesses in China. In addition, if any affiliate consolidated entity or all or part of its assets become subject to liens or rights of third-party creditors, we may be unable tocontinue some or all of our business activities, which could materially and adversely affect our business, financial condition and operating results. If any ofthe affiliated consolidated entities undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claimrights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, ourability to generate revenue and the market price of your ADSs. All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. The legalenvironment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system couldlimit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exerteffective control over our operating entities, and our ability to conduct our business may be negatively affected. 30Table of Contents The shareholders of our affiliated consolidated entities may have potential conflicts of interest with us. Current PRC laws and regulations place certain restrictions on foreign ownership of companies that engage in Internet and mobile businesses. Theshareholders of our affiliated consolidated entities are individuals who are PRC citizens. None of the shareholders of our affiliated consolidated entities aresignificant shareholders of our company. In addition, one of the shareholders, Ms. Yinxia Liu, does not own any shares or rights to purchase any shares of ourcompany. Therefore, the interests of these individuals as shareholders of the affiliated consolidated entities and the interests of our company may conflict. Wecannot assure you that when conflicts of interest arise, any or all of these individuals will act in the best interests of our company or that any conflict ofinterest will be resolved in our favor. In addition, these individuals may breach or cause the affiliated consolidated entities that they beneficially own tobreach or refuse to renew the existing contractual arrangements, which will have an adverse effect on our ability to effectively control our affiliatedconsolidated entities and receive economic benefits from them. Currently, we do not have existing arrangements to address potential conflicts of interestbetween these shareholders and our company. We rely on these shareholders to abide by the laws of the Cayman Islands and China. If we cannot resolve anyconflicts of interest or disputes between us and the shareholders of the affiliated consolidated entities, we would have to rely on legal proceedings, theoutcome of which is uncertain and which could be disruptive to our business. The contractual arrangements with the affiliated consolidated entities may be subject to scrutiny by the PRC tax authorities and may result in a findingthat we owe additional taxes or are ineligible for tax exemption, or both, which could substantially increase our taxes owed and thereby reduce our netincome. Under applicable PRC laws, rules and regulations, arrangements and transactions between related parties may be subject to audits or challenges by thePRC tax authorities. If any of the transactions we have entered into between our wholly-owned subsidiary in China and any of the affiliated consolidatedentities and their respective shareholders are determined by the PRC tax authorities not to be on an arm’s length basis, or are found to result in animpermissible reduction in taxes under applicable PRC laws, rules and regulations, the PRC tax authorities may adjust the profits and losses of such affiliatedconsolidated entity and assess more taxes on it. In addition, the PRC tax authorities may impose late payment fees and other penalties to such affiliatedconsolidated entity for under-paid taxes. Our net income may be adversely and materially affected if the tax liabilities of any of the affiliated consolidatedentities increase or if it is found to be subject to late payment fees or other penalties. We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we have, and anylimitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business. We and our non-PRC subsidiaries rely on dividends and other distributions on equity paid by our PRC subsidiaries, for our cash requirements,including the funds necessary to repay the short-term loans or service any debt we may incur. If our PRC subsidiaries incur debt on its own behalf in thefuture, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities mayrequire us to adjust our taxable income under the contractual arrangements Fenghuang On-line and Qieyiyou currently have in place with the respectiveaffiliated consolidated entities in a manner that would materially and adversely affect the ability of Fenghuang On-line and Qieyiyou to pay dividends andother distributions to us. Further, relevant PRC laws, rules and regulations permit payments of dividends by our PRC subsidiaries only out of their retainedearnings, if any, determined in accordance with accounting standards and regulations of China. Our PRC subsidiaries must set aside at least 10% of after-taxincome each year to reserve funds prior to payment of dividends until the cumulative fund reaches 50% of their respective registered capital. As a result ofthese PRC laws, rules and regulations, our PRC subsidiaries are restricted from transferring a portion of their net assets to us whether in the form of dividends.As of December 31, 2017, our consolidated retained earnings were RMB229.3 million, out of which our PRC subsidiaries’ retained earnings wereapproximately RMB993.1 million. Any limitation on the ability of our PRC subsidiaries to pay dividends to us and our non-PRC subsidiaries couldmaterially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, repay loans orotherwise fund and conduct our business. Strengthened scrutiny over acquisition and disposition transactions by the PRC tax authorities may have a negative impact on us or your disposition ofour shares or ADS. Our operations and transactions are subject to review by the PRC tax authorities pursuant to relevant PRC laws and regulations. However, these laws,regulations and legal requirements change frequently, and their interpretation and enforcement involve uncertainties. For example, on April 30, 2009, theMinistry of Finance and the State Administration of Taxation jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in EnterpriseRestructuring Business, or Circular 59. On December 10, 2009, the State Administration of Taxation issued the Notice on Strengthening the Management onEnterprise Income Tax for Equity Transfers of Non-resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively onJanuary 1, 2008. Pursuant to the two circulars, in the event that we dispose of any equity interests in WOFE, whether directly or indirectly, we may be subjectto income tax on capital gains generated from disposal of such equity interests. The PRC tax authorities have the discretion under Circular 59 and Circular698 to make adjustments to taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of thecorresponding investment. If the PRC tax authorities make such an adjustment, our income tax costs will be increased. 31Table of Contents By promulgating and implementing the circulars, the PRC tax authorities have strengthened their scrutiny over the direct or indirect transfer by non-resident enterprises of equity interests in PRC resident enterprises. For example, Circular 698 specifies that the PRC State Administration of Taxation isentitled to redefine the nature of an equity transfer where offshore holding vehicles are interposed for tax-avoidance purposes and without reasonablecommercial purpose. On February 3, 2015, the State Administration of Taxation issued the Notice on Several Issues regarding Enterprise Income Tax forIndirect Property Transfer by Non-resident Enterprises, or SAT Circular 7, which further specifies the criteria for judging reasonable commercial purpose, andthe legal requirements for the voluntary reporting procedures and filing materials in the case of indirect property transfer. SAT Circular 7 has listed severalfactors to be taken into consideration by tax authorities in determining whether an indirect transfer has a reasonable commercial purpose. However, despitethese factors, an indirect transfer satisfying all the following criteria shall be deemed to lack reasonable commercial purpose and be taxable under the PRClaws: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from the PRC taxable properties;(ii) at any time during the one year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) iscomprised directly or indirectly of investments in the PRC, or 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functionsperformed and risks assumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC taxable properties are limitedand are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gains derived from the indirect transfer of the PRC taxableproperties is lower than the potential PRC tax on the direct transfer of such assets. Nevertheless, the indirect transfer falling into the scope of the safe harborunder SAT Circular 7 may not be subject to PRC tax and such safe harbor includes qualified group restructuring, public market trading and tax treatyexemptions. Under SAT Circular 7, the entities or individuals obligated to pay the transfer price to the transferor shall be the withholding agent and shallwithhold the PRC tax from the transfer price. If the withholding agent fails to do so, the transferor shall report to and pay the PRC tax to the PRC taxauthorities. In case neither the withholding agent nor the transferor complies with the obligations under SAT Circular 7, other than imposing penalties suchas late payment interest on the transferors, the tax authority may also hold the withholding agent liable and impose a penalty of 50% to 300% of the unpaidtax on the withholding agent, provided that such penalty imposed on the withholding agent may be reduced or waived if the withholding agent hassubmitted the relevant materials in connection with the indirect transfer to the PRC tax authorities in accordance with SAT Circular 7. On October 17, 2017, the SAT released the Public Notice Regarding Issues Concerning the Withholding of Non-resident Enterprise Income Tax atSource, or SAT Public Notice 37, effective from December 1, 2017. SAT Public Notice 37 replaced a series of important circulars, including but not limited toSAT Circular 698, and revised the rules governing the administration of withholding tax on China-source income derived by non-resident enterprises. SATPublic Notice 37 made certain key changes to the current withholding regime such as (i) the withholding obligation for dividend payment to non-residententerprises arises on the day the payment is actually made rather than the day of the board resolution to declare the dividends; and (ii) the self-reportingrequirements on non-resident enterprises in certain circumstances is removed. It is not clear to what extent the holders of our shares or ADS may be subject to these requirements. We have conducted and may conduct acquisitionsand dispositions involving complex corporate structures, and we may not be able to make timely filings with the PRC tax authorities as required. The PRCtax authorities may, at their discretion, impose or adjust the capital gains on us or the holders of our shares or ADS or request us or the holders of our shares orADS to submit additional documentation for their review in connection with any relevant acquisition or disposition, and thus cause us or the holders of ourshares or ADS to incur additional costs. Risks Relating to Doing Business in China Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China,which could reduce the demand for our services and materially and adversely affect our competitive position. Since substantially all of our business operations are conducted in China, our business, financial condition, operating results and prospects aresignificantly affected by economic, political, social and legal developments in China, and by continued growth in China as a whole. The Chinese economydiffers from the economies of most developed countries in many respects, including: 32Table of Contents · the degree of government involvement; · the level of development; · the growth rate; · the control of foreign exchange; · access to financing; and · the allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of stateownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets inChina is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development. TheChinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. While the Chinese economy has grown significantly in the past years, the growth has been uneven, both geographically and among various sectors ofthe economy. The PRC government has implemented various measures to encourage or contain economic growth and guide the allocation of resources. Someof these measures benefit the overall Chinese economy, but may also have a negative effect on our operations. For example, our operating results andfinancial condition may be materially and adversely affected by government control over capital investments or changes in tax regulations that areapplicable to us. In addition, in the past the PRC government has implemented certain measures, including increases in interest rates and the reserverequirement ratio of the People’s Bank of China, or the PBOC, to control the pace of growth. It is unclear whether PRC economic policies will be effective in sustaining stable economic growth in the future. In addition, other economic measures,as well as future actions and policies of the PRC government, could also materially affect our liquidity and access to capital and our ability to operate ourbusiness. Substantially all of our assets are located in China and substantially all of our revenues are derived from our operations in China. Accordingly, ourbusiness, financial condition, operating results and prospects are subject, to a significant extent, to economic, political and legal developments in China. Uncertainties with respect to the PRC legal system could limit the protections available to you and us. The PRC legal system is a civil law system based on written statutes. Unlike in the common law system, prior court decisions may be cited for referencebut have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms offoreign investments in China. We conduct substantially all of our business through our subsidiary and consolidated affiliates and their subsidiariesestablished in China. However, since the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not alwaysuniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to us. For example, we mayhave to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRCadministrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult toevaluate the outcome of Chinese administrative and court proceedings and the level of legal protection we enjoy in China than in more developed legalsystems. These uncertainties may impede our ability to enforce the contracts we have entered into with our employees, business partners, customers andsuppliers. In addition, such uncertainties, including the inability to enforce our contracts, could materially and adversely affect our business and operations.Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries.Accordingly, we cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing lawsor the interpretation or enforcement thereof, or the preemption of local regulations by national laws. For instance, on January 19, 2015, the MOFCOMpublished the Draft FIL on its official website for public comments. The Draft FIL embodies an expected PRC regulatory trend to rationalize its foreigninvestment regulatory regime in alignment with international practice and the legislative efforts to unify the corporate legal requirements for both foreignand domestic investments, and thus the Draft FIL will have a far-reaching and significant impact upon foreign investments by fundamentally reshaping theentire PRC foreign investment regulatory regime. See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Draft ForeignInvestment Law.” There is no definitive timeline for this law to be officially promulgated by the PRC legislature and the current draft may need to undergosignificant amendment before the law is finally passed. Accordingly, substantial uncertainties still exist with respect to the enactment timetable,interpretation and implementation of this new law. As a result, we may not be aware of how it may impact the viability of our current corporate structure,corporate governance and business operations. These uncertainties could limit the legal protections available to us and other foreign investors. In addition,any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention. 33Table of Contents Fluctuations in exchange rates of the Renminbi could materially affect our reported operating results. The exchange rates between the Renminbi and the U.S. dollar, Euro and other foreign currencies is affected by, among other things, changes in China’spolitical and economic conditions. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar.Following the removal of the U.S. dollar peg, the Renminbi appreciated more than 20.0% against the U.S. dollar over the following three years. BetweenJuly 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band.Subsequent to June 2010, the Renminbi has started to appreciate slowly against the U.S. dollar, though there were periods when the U.S. dollar hasappreciated against the Renminbi. On August 11, 2015, the People’s Bank of China allowed the Renminbi to depreciate by approximately 2% against theU.S. dollar. From then until the end of 2016, the Renminbi has depreciated against the U.S. dollar by approximately 10%. Since October 1, 2016, the RMBhas joined the International Monetary Fund (IMF)’s basket of currencies that make up the Special Drawing Right (SDR), along with the U.S. dollar, the Euro,the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB depreciated significantly in the backdrop of a surging U.S. dollar andpersistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbiinternationalization, the PRC government may in the future announce further changes to the exchange rate system and there is no guarantee that the RMBwill not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S.government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. As we may rely on dividends and other fees paid to us by our subsidiary and affiliated consolidated entities in China, any significant revaluation of theRenminbi may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, ourADSs in U.S. dollars. To the extent that we need to convert U.S. dollars we will receive from any offshore financing that we may undertake in the future intoRenminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receivefrom the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinaryshares or ADSs or for other business purposes or commercial reasons, appreciation of the U.S. dollar against the Renminbi would have a negative effect on theU.S. dollar amount available to us. We recorded foreign exchange loss of RMB1.1 million in 2015, foreign exchange gain of RMB9.6 million in 2016, andforeign exchange loss of RMB23.6 million in 2017, primarily due to the RMB fluctuation against the U.S. dollar. Our operating results are sensitive tochanges in exchange rates of the Renminbi. Future fluctuations that are adverse to us could have a material adverse effect on our results of operation,financial condition or liquidity. You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China, based on UnitedStates or other foreign laws, against us, our management or the experts named in this annual report. We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, a majority of our seniorexecutive officers reside within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China uponour senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, our PRCcounsel has advised us that China does not have treaties with the United States or many other countries providing for the reciprocal recognition andenforcement of legal judgments. 34Table of Contents PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the net proceeds fromany offshore financing that we may undertake in the future to make loans or additional capital contributions to our PRC subsidiaries and affiliatedconsolidated entities. In utilizing the net proceeds from our initial public offering, as an offshore holding company of our PRC subsidiaries and affiliated consolidatedentities, we may make loans to our PRC subsidiaries and affiliated consolidated entities, or we may make additional capital contributions to our PRCsubsidiaries. Any loans to our subsidiary or affiliated consolidated entities in China are subject to PRC regulations, registrations and/or approvals. Forexample, loans by us, as an offshore holding company, to our affiliated consolidated entities must be approved by the relevant government authorities andregistered with the State Administration of Foreign Exchange or SAFE, or its local counterpart. If we provide loans to our PRC subsidiaries, the total amountof such loans may not exceed the statutory limit such loans need to be registered with the SAFE which usually takes no more than 20 working days tocomplete. The cost of completing such registration is minimal. We may also determine to finance our PRC subsidiaries by means of capital contributions.These capital contributions shall go through record-filing procedures from MOFCOM or its local counterpart. Because the affiliated consolidated entities aredomestic PRC enterprises, we are not likely to finance their activities by means of capital contributions due to regulatory issues relating to foreigninvestment in domestic PRC enterprises, as well as the licensing and other regulatory issues. We cannot assure you that we can obtain the requiredgovernment registrations or record-filings on a timely basis, if at all, with respect to future loans or capital contributions by us to our PRC subsidiaries or anyof the affiliated consolidated entities. If we fail to receive such registrations or record-filings, our ability to use the net proceeds from our initial publicoffering and to fund our operations in China would be negatively affected which would adversely and materially affect our liquidity and our ability toexpand our business. In addition, on August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues Concerning the Improvement of the Administrationof the Payment and Settlement of Foreign Currency Capital of Foreign Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into Renminbi by restricting how the converted Renminbi may be used. SAFE Circular 142 providesthat the Renminbi capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used within the business scopeapproved by the applicable governmental authority and may not be used for equity investments within the PRC, unless it is provided for otherwise. Inaddition, SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from foreign currency registered capital of a foreign-investedcompany. The use of such Renminbi capital may not be altered without SAFE approval, and such Renminbi capital may not in any case be used to repayRenminbi loans if the proceeds of such loans have not been used. As to the latest development, on March 30, 2015, SAFE issued the Circular on theManagement Concerning the Reform of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 19,which became effective on June 1, 2015 and replaced SAFE Circular 142. Pursuant to SAFE Circular 19, up to 100% of foreign currency capital of foreign-invested enterprise may be converted into RMB capital according to the actual operation of the enterprise within the business scope at its will and the RMBcapital converted from foreign currency registered capital of a foreign-invested enterprise may be used for equity investments within the PRC. However,under SAFE Circular 19, RMB capital converted from foreign currency registered capital of a foreign-invested company still may not in any case be used toadvance the RMB entrusted loan or repay RMB loans if the proceeds of such loans have not been used. SAFE promulgated the Notice of the StateAdministration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital convertedfrom foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capitalto issue loans to nonassociated enterprises. As such, if we engage in any offshore financing in the future and convert the net proceeds we may receive fromsuch financing into Renminbi and repatriate these funds into China pursuant to SAFE Circular 19, our use of Renminbi funds will need to be for purposeswithin the approved business scope of our PRC subsidiaries, which may limit our ability to deploy our funds in the most desirable manner. 35Table of Contents If the PRC government finds that our PRC beneficial owners are subject to the SAFE registration requirement under SAFE Circular 37 and the relevantimplementing rules and our PRC beneficial owners fail to comply with such registration requirements, such PRC beneficial owners may be subject topersonal liability, our ability to acquire PRC companies or to inject capital into our PRC subsidiaries may be limited, our PRC subsidiaries ‘ ability todistribute profits to us may be limited, or our business may be otherwise materially and adversely affected. On July 4, 2014, SAFE issued the Circular on Several Issues Concerning Foreign Exchange Administration of Domestic Residents Engaging inOverseas Investment, Financing and Round-Trip Investment via Special Purpose Vehicles, or SAFE Circular 37, which became effective on the same date.SAFE Circular 37 and its detailed guidelines require PRC residents to register with the local branch of SAFE before contributing their legally owned onshoreor offshore assets or equity interest into any special purpose vehicle, or SPV, directly established, or indirectly controlled, by them for the purpose ofinvestment or financing; SAFE Circular 37 further requires that when there is (i) any change to the basic information of the SPV, such as any change relatingto its individual PRC resident shareholders, name or operation period or (ii) any material change, such as increase or decrease in the share capital held by itsindividual PRC resident shareholders, a share transfer or exchange of the shares in the SPV, or a merger or split of the SPV, the PRC resident must registersuch changes with the local branch of SAFE on a timely basis. See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulation of Foreign Exchange Registration of Offshore Investment by PRC Residents.” Based on the opinion of our PRC counsel, Zhong Lun Law Firm, we understand that the aforesaid registration requirement under SAFE Circular 37 andthe relevant implementing rules do not apply to our PRC subsidiaries or our PRC resident beneficial owners due to the following reasons: (i) our companywas incorporated and controlled by Phoenix TV, a Hong Kong listed company, rather than any PRC residents defined under SAFE Circular 37; (ii) none ofthe former or current shareholders of our PRC affiliated consolidated entities established or acquired interest in our company by injecting the assets of, orequity interest in, our affiliated consolidated entities; and (iii) before the public listing of our ADSs, all of our PRC resident beneficial owners obtainedinterest in our company through exercise of options granted to them under our employee share option plan. However, we cannot assure you that the PRCgovernment would hold the same opinion as us, and the relevant government authorities have broad discretion in interpreting these rules and regulations. IfSAFE or any of its local branches requires our PRC resident beneficial owners to register their interest in our company pursuant to SAFE Circular 37 and therelated implementing rules, we will request our PRC resident beneficial owners to make the necessary registration, filings and amendments as required.However, we cannot provide any assurances that these PRC resident beneficial owners will apply for and complete any applicable registrations, filing andamendments. The failure or inability of such PRC resident beneficial owners to do so may subject our PRC subsidiaries to fines or legal sanctions, restrictionson our cross-border investment activities or our PRC subsidiaries’ ability to distribute dividends to, or obtain foreign-exchange-dominated loans from, ourcompany, or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you couldbe materially and adversely affected. Failure to comply with PRC regulations regarding the registration requirements for stock incentive plans may subject the plan participants or us to finesand other legal or administrative sanctions. Under the applicable PRC regulations, “domestic individuals” (including both PRC residents and non-PRC residents who reside in the PRC for acontinuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations) who participate inemployee stock plans or stock option plans of an overseas publicly-listed company are required to register with SAFE and complete certain other procedures.If a domestic individual participates in any stock incentive plan of an overseas listed company, a qualified PRC domestic agent, which can be the PRCsubsidiaries of such overseas listed company, shall, among other things, file, on behalf of such individual, an application with SAFE to conduct the SAFEregistration with respect to such stock incentive plan, and obtain approval for an annual allowance with respect to the foreign exchange conversion inconnection with the stock purchase or stock option exercise. Such PRC individuals’ foreign exchange income received from the sale of stocks and dividendsdistributed by the overseas listed company and any other income shall be fully remitted into a collective foreign currency account in the PRC opened andmanaged by the PRC domestic agent before distribution to such individuals. See “Item 4. Information on the Company—B. Business Overview—RegulatoryMatters—SAFE Regulation of Stock Incentive Plan.” We and our employees who are “domestic individuals” participating in stock incentive plans aresubject to these regulations. Our share incentive plans had been registered with SAFE when we became a public company listed on the New York StockExchange. We cannot assure you, however, that we will be able to complete relevant registration for new employees who participate in our share incentiveplans in the future, in a timely manner or at all. If we or such employees fail to comply with these regulations, we or such employees may be subject to finesand other legal or administrative sanctions. 36Table of Contents The approval of the China Securities Regulatory Commission, or the CSRC, may have been required in connection with our initial public offering. Ourfailure to obtain this approval, if required, could have a material adverse effect on our business, operating results, reputation and trading price of ourADSs. According to the 2006 M&A Rules, an offshore special purpose vehicle, or SPV, refers to an overseas company controlled directly or indirectly bydomestic companies or individuals for purposes of overseas listing of equity interests in domestic companies (defined as enterprises in the PRC other thanforeign invested enterprises). If an SPV purchases, for the purpose of overseas listing and by means of paying consideration in shares of such SPV, domesticinterests held by PRC domestic companies or individuals controlling such SPV, then the overseas listing by the SPV must obtain the approval of the CSRC.However, the applicability of the 2006 M&A Rules with respect to CSRC approval is unclear. The CSRC currently has not issued any definitiverule concerning whether offerings like the offering contemplated by our company are subject to the 2006 M&A Rules and related clarifications. Our PRC counsel, Zhong Lun Law Firm, has advised us that the 2006 M&A Rules do not require that we obtain prior CSRC approval for the listing andtrading of our ADSs on the New York Stock Exchange, given that: · the CSRC approval requirement applies to SPVs that acquired equity interests in PRC companies through share exchanges and seek overseaslisting; · Fenghuang On-line and Qieyiyou were incorporated indirectly by Phoenix TV, a Hong Kong-listed company, rather than an SPV as definedunder the 2006 M&A Rules; and · Fenghuang On-line and Qieyiyou were incorporated as a wholly foreign-owned enterprise by means of direct investment rather than bymerger or acquisition by our company of the equity interest or assets of any “domestic company” as defined under the 2006 M&A Rules, andno provision in the 2006 M&A Rules classifies the contractual arrangements between Fenghuang On-line and Qieyiyou and each of theaffiliated consolidated entities as a type of acquisition transaction falling under the 2006 M&A Rules. Our PRC counsel has further advised us that there are uncertainties regarding the interpretation and application of relevant PRC laws, regulations andrules. If the CSRC subsequently determines that its prior approval is required, we may face regulatory actions or other sanctions from the CSRC or other PRCregulatory agencies. These regulatory agencies may impose fines and penalties on our operations, limit our operating privileges, delay or restrict sending theproceeds from our initial public offering into China, or take other actions that could have a material adverse effect on our business, financial condition,operating results, reputation and prospects, as well as the trading price of our ADSs. We cannot predict when the CSRC may promulgate additional rules or other guidance, if at all. Implementing rules or guidance, to the extent issued,may fail to resolve current ambiguities under this new PRC regulation. Uncertainties and/or negative publicity regarding this new PRC regulation could havea material adverse effect on the trading price of our ADSs. The approval of MOFCOM may be required in connection with the establishment of our contractual arrangements with the affiliated consolidated entities.Our failure to obtain this approval, if required, could have a material adverse effect on our business, operating results, reputation and trading price of ourADSs. The 2006 M&A Rules also provide that approval by MOFCOM is required prior to a foreign company acquiring a PRC domestic company where theforeign company and the domestic company have the same de facto controlling person(s) that are PRC domestic individual(s) or enterprise(s). Theapplicability of the 2006 M&A Rules with respect to MOFCOM’s approval is unclear. 37Table of Contents Our PRC legal counsel has advised us that an approval from MOFCOM is not required under 2006 M&A Rules for our contractual arrangements amongFenghuang On-line, Qieyiyou and each of the affiliated consolidated entities, based on their understanding of the current PRC laws, rules and regulations,given that Fenghuang On-line was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition byour company of the equity interest or assets of any “domestic company” as defined under the 2006 M&A Rules, and no provision in the 2006 M&ARules classifies the contractual arrangements between Fenghuang On-line, Qieyiyou and each of the respective affiliated consolidated entities as a type ofacquisition transaction falling under the 2006 M&A Rules. However, if MOFCOM subsequently determines that its prior approval was required for our contractual arrangements with the affiliated consolidatedentities, we may face regulatory actions or other sanctions from MOFCOM or other PRC regulatory agencies. These regulatory agencies may impose fines andpenalties on us and the affiliated consolidated entities, which require us to restructure our ownership structure or operations, limit our operations, delay orrestrict sending the net proceeds from our initial public offering into China, or take other actions. These regulatory actions could have a material adverseeffect on our business, financial condition, operating results, reputation and prospects, as well as the trading price of our ADSs. Governmental control of currency conversion may affect the value of your investment. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currencyout of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our income is primarily derived from dividendpayments from our PRC subsidiaries. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiaries to remit sufficientforeign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations. Under existing PRC foreignexchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions,can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements. However, approval from theSAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as therepayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies forcurrent account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands,we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs. Dividends we receive from our PRC subsidiaries located in the PRC may be subject to PRC withholding tax. The CIT Law provides that a maximum income tax rate of 20% may be applicable to dividends payable to non-PRC investors that are “non-residententerprises,” to the extent such dividends are derived from sources within the PRC, and the State Council of the PRC has reduced such rate to 10% throughthe implementation regulations. We are a Cayman Islands holding company and substantially all of our income may be derived from dividends we receivefrom our subsidiary located in the PRC. Thus, dividends paid to us by our subsidiary in China may be subject to the 10% income tax if we are considered as a“non-resident enterprise” under the CIT Law. If we are required under the CIT Law to pay income tax for any dividends we receive from our subsidiary inChina, it would materially and adversely affect the amount of dividends, if any, we may pay to our shareholders and ADS holders. 38Table of Contents We may be deemed a PRC resident enterprise under the CIT Law and be subject to the PRC taxation on our worldwide income. The CIT Law also provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered“resident enterprises” and are generally subject to the uniform 25% enterprise income tax rate as to their worldwide income. Under the implementationregulations for the CIT Law issued by the PRC State Council, “de facto management body” is defined as a body that has material and overall managementand control over the manufacturing and business operations, personnel and human resources, finances and treasury, and acquisition and disposal of propertiesand other assets of an enterprise. Although substantially all of our PRC operational entities’ management is currently based in the PRC, it is unclear whetherPRC tax authorities would treat us as a PRC resident enterprise. Despite the present uncertainties as a result of limited guidance from PRC tax authorities onthe issue, we do not believe that our legal entities organized outside of the PRC should be treated as residents under the CIT Law. If we are treated as aresident enterprise for PRC tax purposes, we will be subject to PRC tax on our worldwide income at the 25% uniform tax rate, which could have an impact onour effective tax rate and an adverse effect on our net income and operating results. Dividends payable by us to our foreign investors and gain on the sale of our ADSs or ordinary shares may become subject to taxes under PRC tax laws. Under the CIT Law and implementation regulations issued by the State Council, PRC withholding tax at the rate of 10% is applicable to dividendspayable to investors that are “non-resident enterprises”, which do not have an establishment or place of business in the PRC, or which have suchestablishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent suchdividends have their sources within the PRC. Similarly, any gain realized on the transfer of ADSs or shares by such investors is also subject to 10% PRCincome tax if such gain is regarded as income derived from sources within the PRC. The implementation regulations of the CIT Law set forth that, (i) if theenterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC,then such dividends or capital gains are treated as China-sourced income. It is not clear how “domicile” may be interpreted under the CIT Law, and it may beinterpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered a PRC tax resident enterprise for tax purposes, thedividends we pay to our non-PRC enterprise investors with respect to our ordinary shares or ADSs, or the gain our non-PRC enterprise investors may realizefrom the transfer of our ordinary shares or ADSs, may be treated as income derived from sources within the PRC and be subject to PRC withholding tax. Inaddition, it is unclear whether our non-PRC individual investors would be subject to any PRC tax in the event we are deemed a “PRC resident enterprise”. Ifany PRC tax were to apply to such dividends or gains of non-PRC individual investors, it would generally apply at a tax rate of 20%. Furthermore, it isunclear in these circumstances whether holders of our ordinary shares or ADSs would be able to claim the benefit of income tax treaties entered into betweenChina and other countries or regions. If we are required under the PRC law to withhold PRC income tax on dividends payable to our non-PRC investors, or ifyou are required to pay PRC income tax on the transfer of our ordinary shares or ADSs, the value of your investment in our ordinary shares or ADSs may bematerially and adversely affected. We may be required to register our operating offices not located at our residence addresses as branch companies under PRC law. Under PRC law, a company setting up premises outside its resident address for business operations must register such operating offices with the relevantlocal industry and commerce bureau at the place where such premises are located as branch companies and shall obtain business licenses for such branches.Our affiliated consolidated entities have operations at locations other than their respective resident addresses. If the PRC regulatory authorities determine thatwe are in violation of relevant laws and regulations, we may be subject to relevant penalties, including fines, confiscation of income, and suspension ofoperation. If we are subject to these penalties, our business, operating results, financial condition and prospects could be materially and adversely affected. 39Table of Contents The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, assuch, you are deprived of the benefits of such inspection. Auditors of companies that are registered with the US Securities and Exchange Commission and traded publicly in the United States, including ourindependent registered public accounting firm, must be registered with the United States Public Company Accounting Oversight Board, or the PCAOB, andare required by the rules of the PCAOB to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States andprofessional standards. Because our auditor is located in the Peoples’ Republic of China, a jurisdiction where the PCAOB is currently unable to conductinspections without the approval of the Chinese authorities, our auditor is not currently inspected by the PCAOB. In May 2013, PCAOB announced that ithad entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes acooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by PCAOB, the CSRCor the PRC Ministry of Finance in the United States and the PRC, respectively. PCAOB continues to be in discussions with the CSRC and the PRC Ministryof Finance to permit joint inspections in the PRC of audit firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating audits and quality control procedures of any auditorsoperating in China, including our auditor. As a result, investors may be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s auditprocedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence inour reported financial information and procedures and the quality of our financial statements. We may be adversely affected by the outcome of the administrative proceedings brought by the SEC against the Big Four PRC-based accounting firms. In December 2012, the SEC brought administrative proceedings against the Big Four accounting firms in China, including our independent registeredpublic accounting firm, alleging that these accounting firms had violated U.S. securities laws and the SEC’s rules and regulations thereunder by failing toprovide to the SEC the firms’ audit papers and other documents related to certain PRC-based companies that are publicly traded in the United States. On January 22, 2014, the Administrative Law Judge presiding over the matter reached an initial decision that the firms had each violated the SEC’srules of practice by failing to produce the audit work papers and related documents directly to the SEC. The initial decision further determined that each ofthe firms should be censured and barred from practicing before the SEC for a period of six months. On February 12, 2014, the Big Four PRC-based accountingfirms appealed to the SEC against this decision. In February 2015, each of these four PRC-based accounting firms agreed to a censure and to pay a fine to theSEC to settle the dispute and avoid suspension of their ability to practice before the SEC. The settlement requires the firms to follow detailed procedures toseek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If the firms do not follow these procedures, the SEC could imposepenalties such as suspensions, or it could restart the administrative proceedings. In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with majorPRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements beingdetermined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about theproceedings against these audit firms may cause investor uncertainty regarding China-based, U.S.-listed companies and the market price of our ADSs may beadversely affected. If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and we were unable to timelyfind another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not tobe in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to our delisting from the NYSE or deregistrationfrom the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States. 40Table of Contents Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of the draft Foreign Investment Law and how itmay impact the viability of our current corporate structure, corporate governance and business operations. The MOFCOM, published the Draft FIL on its official website in January 2015. Upon its enactment, it is intended to replace the trio of existing lawsregulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint VentureEnterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The Draft FIL embodiesan expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislativeefforts to unify the corporate legal requirements for both foreign and domestic investments. The MOFCOM is currently soliciting comments on this draft andsubstantial uncertainties exist with respect to its enactment timetable, interpretation and implementation. The Draft FIL, if enacted as proposed, maymaterially impact the viability of our current corporate structure, corporate governance and business operations in many aspects. Among other things, the Draft FIL expands the definition of foreign investment and introduces the principle of “actual control” in determining whetheran investment is considered a foreign investment or domestic investment. The Draft FIL specifically provides that an entity established in China but“controlled” by foreign investors will be treated as a foreign investor, whereas an entity set up in a foreign jurisdiction but “controlled” by PRC entitiesand/or citizens would nonetheless be treated as a PRC domestic investor, provided that the entity should obtain such determination upon market entryclearance by the competent foreign investment authority. In this connection, “control” is broadly defined in the draft law to cover the following summarizedcategories: (i) holding 50% or more of shares, equity interests, property shares, voting rights or other similar rights of the subject entity; (ii) holding less than50% of shares, equity interests, property shares, voting rights or other similar rights, but having the power to secure at least 50% of the seats on the board orother equivalent decision making bodies, or having the voting power to materially influence the board, the shareholders’ meeting or other equivalentdecision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations,financial matters or other key aspects of business operations. If a foreign investment is made in an industry within the catalogue of special managementmeasures, or the negative list, to be issued by the State Council, it would be subject to the foreign investment restrictions or prohibitions set forth therein andcall for market entry clearance by the competent foreign investment authority. The “variable interest entity” structure, or the VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessarylicenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure— If the PRC government finds that the agreements that establish the structure for operating our businesses inChina do not comply with PRC governmental restrictions on foreign investment in Internet businesses, or if these regulations or the interpretation of existingregulations change in the future, we would be subject to severe penalties or be forced to relinquish our interests in those operations.” Under the Draft FIL, if avariable interest entity is ultimate controlled by a foreign investor via contractual arrangement, it would be deemed as a foreign investment and thus subjectto market entry clearance where such variable interest entity is engaged in the industry on the negative list. If an existing company with a VIE structurecontinues to engage in an industry on the negative list, the MOFCOM has proposed three possible solutions: (i) the company should declare to theMOFCOM that it is controlled by PRC entities and/or citizens, and the VIE structure would be deemed legitimate; (ii) the company should be determined bythe MOFCOM that it is controlled by PRC entities and/or citizens, and the VIE structure would be deemed legitimate; or (iii) the company should pass themarket access clearance by the MOFCOM. Conversely, if the actual controlling person is of a foreign nationality, then the variable interest entities will betreated as foreign invested enterprises and any operation in an industry on the negative list without market entry clearance may be considered to be illegal. 41Table of Contents We may not be considered to be ultimately controlled by PRC entities/citizens, as (i) our company was incorporated in Cayman Islands and is currentlycontrolled by Phoenix TV, a company listed in the main board of The Stock Exchange of Hong Kong Limited; and (ii) Mr. Liu Changle, a permanent residentof Hong Kong, is deemed to have control of Phoenix TV as defined in the Codes on Takeovers and Mergers and Share Buy-backs published by the Securitiesand Futures Commission of Hong Kong. The Draft FIL has not taken a position on what actions will be taken with respect to the existing companies with aVIE structure, whether or not these companies are controlled by PRC entities/citizens, while it is soliciting comments from the public. Moreover, it isuncertain whether the telecommunications and Internet information services, online cultural activities, online games and other Internet-based industries, inwhich our variable interest entities operate, will be subject to the foreign investment restrictions or prohibitions set forth in the negative list to be issued. Ifthe enacted version of the Foreign Investment Law and the final negative list mandate further actions, such as MOFCOM market entry clearance or certainrestructuring of our corporate structure and operations, to be completed by companies with existing VIE structure like us, we will face substantialuncertainties as to whether these actions can be timely completed, or at all. As a result, our business and financial condition may be materially and adverselyaffected. The Draft FIL, if enacted as proposed, may also materially impact our corporate governance practice and increase our compliance costs. For instance,the Draft FIL imposes stringent ad hoc and periodic information reporting requirements on foreign investors and the applicable foreign-invested enterprises.Reports are required whenever we make a new investment and modify or change our investment. Annual reports are mandatory, and large foreign investorsmeeting certain criteria are required to make reports quarterly. Any company found to be non-compliant with these information reporting obligations may besubject to fines and/or administrative or criminal liability, and the persons directly responsible may be subject to criminal liability. Press reports concerning possible increased scrutiny by Chinese authorities of the VIE structure used by us and various other Chinese companies publicly-traded in the United States appear to have created concern among investors and caused the price of our common stock to drop, and such reports may havesuch an effect in the future. We operate a VIE structure in which substantially all of our operations in China are conducted by our affiliated consolidated entities, in which we donot own any equity interest, through our contractual arrangements. In the recent past, various prominent Western news outlets reported that the MOFCOMand the China Securities Regulatory Commission, among other Chinese regulatory authorities, may be considering increased scrutiny or enhanced regulationof Chinese companies that use VIE structures as a means of complying with Chinese laws prohibiting or restricting foreign ownership of certain businesses inChina, including businesses we are engaged in such as Internet information, content and services, online and mobile advertising, and mobile Internet andother value-added telecommunication services. Some of such news reports have also sought to draw a connection between recent widely reported accountingissues at certain Chinese companies and the use of VIE structures. Such news reports appear to have had the effect of causing significant drops in the marketprices of the shares of several Chinese companies, including us, that are publicly-traded in the United States. We believe even if any such Chinese regulatoryauthorities were to increase scrutiny of VIE structures or adopt regulations specifically governing their use, the possibility is remote that any such scrutinywould have a material adverse impact on us or cause us to change our existing operational structure in any materially adverse way. However, it is possiblethat there will be such increased scrutiny or enhanced regulation in the future. In addition, while we are not aware of any causal connection between therecently reported accounting scandals and the use of VIE structures, it is possible that investors in our ADSs will believe that such a connection exists. Any ofsuch circumstances could lead to further loss of investor confidence in Chinese companies such as ours and cause fluctuations in the market prices of ourcommon stock and, if such prices were to drop sharply, could subject us to shareholder litigation, which could cause the price for our shares to drop further. 42Table of Contents Risks Relating to Our ADSs The market price for our ADSs may be volatile which could result in a loss to you. The market price for our ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors, including the following: · announcements of competitive developments; · regulatory developments in China affecting us, our clients or our competitors; · announcements regarding litigation or administrative proceedings involving us; · actual or anticipated fluctuations in our quarterly operating results; · changes in financial estimates by securities research analysts; · addition or departure of our executive officers; · release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares or ADSs; and · sales or perceived sales of additional ordinary shares or ADSs. In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operatingperformance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ADSs. Substantial future sales or perceived sales of our ADSs in the public market could cause the price of our ADSs to decline. Sales of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could cause the market price of our ADSs todecline. As of March 31, 2018, we had 578,729,336 ordinary shares outstanding, including 317,325,360 Class B ordinary shares and 261,403,976 Class Aordinary shares part of which are represented by 32,202,054 ADSs. All ADSs sold in our initial public offering are freely transferable without restriction oradditional registration under the Securities Act of 1933, as amended, or the Securities Act. The remaining ordinary shares outstanding are available for saleupon the expiration of any relevant lock-up periods, subject to volume and other restrictions that may be applicable under Rule 144 and Rule 701 under theSecurities Act. In addition, ordinary shares that certain option holders will receive when they exercise their share options will not be available for sale untilthe expiration of any relevant lock-up periods, subject to volume and other restrictions that may be applicable under Rule 144 and Rule 701 under theSecurities Act. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availabilityof these securities for future sale will have on the market price of our ADSs. Our dual-class ordinary share structure with different voting rights could discourage others from pursuing any change of control transactions that holdersof our Class A ordinary shares and ADSs may view as beneficial. We have Class A ordinary shares and Class B ordinary shares, which are all at par value of US$0.01 each. Holders of Class A ordinary shares are entitledto one vote per share, while holders of Class B ordinary shares are entitled to 1.3 votes per share. Phoenix TV (BVI), which is wholly owned by Phoenix TV,holds Class B ordinary shares, each of which is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are notconvertible into Class B ordinary shares under any circumstances. Due to the disparate voting rights attached to these two classes, Phoenix TV (BVI) hassignificant voting rights over matters requiring shareholder approval, including the election and removal of directors and certain corporate transactions, suchas mergers, consolidations and other business combinations. This concentrated control could discourage others from pursuing any potential merger, takeoveror other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial. 43Table of Contents Anti-takeover provisions in our articles of association may discourage a third party from offering to acquire our company, which could limit youropportunity to sell your ADSs at a premium. Our currently effective, second amended and restated articles of association include provisions that could limit the ability of others to acquire controlof us, modify our structure or cause us to engage in change of control transactions. These provisions could have the effect of depriving our shareholders of anopportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of us in a tender offeror similar transaction. For example, our board of directors have the authority, without further action by our shareholders, to issue preference shares in one or more series and tofix the powers and rights of these shares, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any orall of which may be greater than the rights associated with our ordinary shares. Preference shares could thus be issued quickly with terms calculated to delayor prevent a change in control or make removal of management more difficult. In addition, if our board of directors issues preference shares, the market priceof our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares may be adversely affected. As a foreign private issuer, we are permitted to, and we may, rely on exemptions from certain NYSE corporate governance standards applicable to U.S.issuers. This may afford less protection to holders of our ordinary shares and ADSs. The NYSE Listed Company Manual in general require listed companies to have, among other things, a majority of its board be independent, an auditcommittee consisting of a minimum of three members and a nominating and corporate governance committee consisting solely of independent directors. As aforeign private issuer, we are permitted to follow, and we follow, certain home country corporate governance practices instead of the above requirements ofthe NYSE Listed Company Manual. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board toconsist of independent directors or the implementation of an audit committee or nominating and corporate governance committee. We rely upon the relevanthome country exemption and exemptions afforded to controlled companies in lieu of certain corporate governance practices, such as having less than amajority of the board be independent and establishing an audit committee consisting of two independent directors. As a result, the level of independentoversight over management of our company may afford less protection to holders of our ordinary shares and ADSs. As a foreign private issuer, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are morelenient and less frequent than those of a U.S. issuer. As a foreign private issuer, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic issuers, including (i) thesections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act,(ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profitfrom trades made in a short period of time, and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Qcontaining unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. Inaddition, the executive compensation disclosure requirements to which we are subject under Form 20-F are less rigorous than those required of U.S. issuersunder Form 10-K. Furthermore, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year,while U.S. domestic issuers that are not large accelerated filers or accelerated filers are required to file their annual report on Form 10-K within 90 days afterthe end of each fiscal year. Foreign private issuers are also exempt from the Regulation FD, aimed at preventing issuers from making selective disclosures ofmaterial information. Although we intend to make quarterly reports available to our shareholders in a timely manner and are required under the Exchange Actto provide current reports on Form 6-K, you may not have the same protections afforded to stockholders of companies that are not foreign private issuers. We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law thanunder U.S. law, you may have less protection of your shareholder rights than you would under U.S. law. Our corporate affairs are governed by our second amended and restated memorandum and articles of association, the Cayman Islands Companies Law(as amended) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders andthe fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. Thecommon law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English commonlaw, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of ourdirectors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the UnitedStates. In particular, the Cayman Islands has a less developed body of securities laws than the United States. In addition, some U.S. states, such as Delaware,have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. Furthermore, Cayman Islands companies may nothave standing to initiate a shareholder derivative action in a federal court of the United States. As a result, public shareholders may have more difficulties inprotecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would asshareholders of a Delaware company. 44Table of Contents Judgments obtained against us by our shareholders may not be enforceable. We are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current operationsare conducted in the PRC. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantialportion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the UnitedStates upon these persons. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions ofthe U.S. federal securities laws against us and our officers and directors. Moreover, there is uncertainty as to whether the courts of the Cayman Islands or thePRC would recognize or enforce judgments of United States courts against us or such persons predicated upon the civil liability provisions of the securitieslaws of the United States or any state. In addition, there is uncertainty as to whether such Cayman Islands or PRC courts would be competent to hear originalactions brought in the Cayman Islands or the PRC against us or such persons predicated upon the securities laws of the United States or any state. Holders of ADSs must act through the depositary to exercise their rights as shareholders of our company. Holders of our ADSs do not have the same rights of our shareholders and may only exercise the voting rights with respect to the underlying ordinaryshares in accordance with the provisions of the deposit agreement for the ADSs. Under our second amended and restated memorandum and articles ofassociation, the minimum notice period required to convene a general meeting is 10 days. When a general meeting is convened, you may not receivesufficient notice of a shareholders’ meeting to permit you to withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter.In addition, the depositary and its agents may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We willmake all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive thevoting materials in time to ensure that you can instruct the depositary to vote your ADSs. Furthermore, the depositary and its agents will not be responsiblefor any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be ableto exercise your right to vote and you may lack recourse if your ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you willnot be able to call a shareholders’ meeting. The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not vote at shareholders’meetings, except in limited circumstances, which could adversely affect your interests. Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs atshareholders’ meetings if you do not vote, unless: · we have failed to timely provide the depositary with our notice of meeting and related voting materials; · we have instructed the depositary that we do not wish a discretionary proxy to be given; · we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or · a matter to be voted on at the meeting would have a material adverse impact on shareholders. 45Table of Contents The effect of this discretionary proxy is that you cannot prevent our ordinary shares underlying your ADSs from being voted, absent the situationsdescribed above, and it may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are notsubject to this discretionary proxy. You may be subject to limitations on transfers of your ADSs. Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when itdeems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSsgenerally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of anyrequirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason. Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings and you may not receive cash dividendsor other distributions if it is impractical to make them available to you. We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available toyou in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from theregistration requirements is available. Also, under the deposit agreement, the depositary will not make rights available to you unless either both the rightsand any related securities are registered under the Securities Act, or the distribution of them to ADS holders is exempted from registration under the SecuritiesAct. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registrationstatement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you maybe unable to participate in our rights offerings and may experience dilution in your holdings. In addition, the depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or otherdeposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSsrepresent. However, the depositary may, at its discretion, decide that it is impractical to make a distribution available to any holders of ADSs. For example,the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be lessthan the cost of mailing them. In these cases, the depositary may decide not to distribute such property and you will not receive any such distribution. ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Phoenix TV registered the domain name phoenixtv.com for its corporate website in 1998. Tianying Jiuzhou began operating this website after itsestablishment in April 2000. As part of the reorganization before its initial public offering, in September 1999, Phoenix TV incorporated Phoenix SatelliteTelevision Information Limited in the British Virgin Islands to be the holding company of its new media business. In November 2005, Mr. Shuang Liu, a vice president of Phoenix TV, was appointed to lead Phoenix TV’s new media business. Upon his appointment,Mr. Liu began implementing his vision to transform the business from a mere corporate website of Phoenix TV into a new media company capitalizing on thefuture of new media convergence. Yifeng Lianhe was established in June 2006 to provide new media mobile services in China. In July 2007, TianyingJiuzhou registered the domain name ifeng.com and redirected the traffic of phoenixtv.com and phoenixtv.com.cn to ifeng.com. On November 22, 2007, Phoenix New Media Limited, an exempted limited liability company, was incorporated in the Cayman Islands as a subsidiaryof Phoenix TV to be the holding company for its new media business. In May 2008, Phoenix Satellite Television (B.V.I.) Holding Limited transferred the soleoutstanding share of Phoenix Satellite Television Information Limited to us in exchange for 319,999,999 ordinary shares of our company. 46Table of Contents Fenghuang On-line was established in December 2005. On December 31, 2009, Fenghuang On-line entered into a series of contractual arrangementswith each of Tianying Jiuzhou and Yifeng Lianhe and their respective shareholders to govern our relationships with Tianying Jiuzhou and Yifeng Lianhe, atwhich time we became operational in our current corporate structure. These contractual arrangements allow us to effectively control Tianying Jiuzhou andYifeng Lianhe and to derive substantially all of the economic benefits from them. See “—C. Organizational Structure — Contractual Arrangements with OurAffiliated Consolidated Entities.” On May 12, 2011, our ADSs began trading on the New York Stock Exchange under the ticker symbol “FENG.” We closed our initial public offering onMay 17, 2011 and the underwriters subsequently exercised their over-allotment option on June 8, 2011. We issued and sold a total of 13,415,125 ADSs inthese transactions, representing 107,321,000 Class A ordinary shares in the form of ADSs, raising US$137.2 million in proceeds to us before expenses butafter underwriting discounts and commissions. Our principal executive offices are located at Sinolight Plaza, Floor 16, No. 4 Qiyang Road, Wangjing, Chaoyang District, Beijing 100102, People’sRepublic of China. Our telephone number at this address is +(86) 10 6067 6000. Our registered office in the Cayman Islands is located at the offices of CodanTrust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our agent for service ofprocess in the United States is Law Debenture Corporate Services Inc., located at 801 2nd Avenue, Suite 403 New York, New York 10017. B. Business Overview We are a leading new media company providing premium content on an integrated Internet platform, including PC and mobile, in China. Havingoriginated from a leading global Chinese language TV network based in Hong Kong, Phoenix TV, we enable consumers to access professional news andother quality information and UGC, on the Internet and through their PCs and mobile devices. We also transmit our UGC and in-house produced content toTV viewers primarily through Phoenix TV. Our PC channel includes major verticals such as news, fashion, military, finance, web-based games, and digitalreading. Our mobile channel includes our mobile news application, mobile video application, HTML5-based mobile Internet websites (“mobile websites”),mobile digital reading application (“Fanyue Novel”), and prior to December 1, 2017, fashion application (“Shizhuang App”). We also act as a serviceprovider for telecom operators, providing content and mobile value-added services. The appeal of our brand is enhanced by its affiliation with the “Phoenix”(“鳳凰”) brand of Phoenix TV. According to iResearch, our number of PC daily unique visitors was 33.9 million, and number of monthly unique visitors was 277.4 million inDecember 2017. We have ranked third among all Internet portals in China in terms of daily unique visitors in December 2017, according to iResearch.According to our internal data, our aggregated mobile daily unique visitors from mobile websites i.ifeng.com and mobile applications reached 33 million inDecember 2017. We earn revenues from advertising and paid services, which accounted for 85.9% and 14.1% of our total revenues, respectively, in 2017. Our net advertising revenues accounted for 76.2%, 85.3% and 85.9% of our total revenues in 2015, 2016 and 2017, respectively. We provideadvertising services through PC channel and mobile channel, which accounted for 42.2% and 57.8% of our net advertising revenues respectively in 2017.We recognize revenues from our advertising services on a net basis, after deducting the agency service fees we pay to advertising agencies. We see mobile devices as the primary gateway for news and other media content consumption going forward. In recent years, we have taken steps toevolve our business and shift our revenue mix towards our mobile channels, which we believe have greater potential for sustainable growth over the longterm, and which have demonstrated robust growth in 2017. Our mobile advertising revenues increased by 46.5% to RMB781.8 million (US$120.2 million) in2017 from RMB533.8 million in 2016. As part of our mobile strategy, we invested in convertible redeemable preferred shares of Particle and accounted forthe investments as available-for-sale investments. Particle operates Yidian, a personalized news and life-style information application in China that allowsusers to define and explore desired content on their mobile devices. By partnering with Yidian and by continuing to strengthen our core competencies ofcontent production capability, dedication to serious journalism and cutting-edge technology, we believe that we will be better positioned to capitalize onemerging opportunities as increasing numbers of consumers in China use Internet-enabled mobile devices to consume news and other media content. 47Table of Contents We offer a wide variety of paid services primarily through our mobile channel and operations with the telecom operators. We classify our paid servicesinto (i) digital entertainment, which includes mobile value-added services delivered through telecom operators’ platforms, or MVAS, and digital reading, and(ii) games and others, which includes web-based games, mobile games, content sales, and other online and mobile paid services through our own platforms.Prior to 2016, our paid service revenues mainly comprised of the revenues generated from MVAS and games and others. Digital reading was previouslyclassified under “games and others”. In order to align with our overall strategies, in 2016, digital reading was re-classified from “Games and others”, anddigital reading together with MVAS was determined as “Digital entertainment”. We derived 81.2% and 18.8% of our paid services revenues, respectively,from our digital entertainment and games and others in 2017. Due to an increase in revenues generated from digital reading business, our paid servicesrevenues increased from RMB212.7 million in 2016 to RMB221.6 million (US$34.1 million) in 2017. Our Relationship with Phoenix TV We are a subsidiary of Phoenix TV, a leading Hong Kong-based satellite TV network broadcasting Chinese language content globally and into China.Phoenix TV indirectly owned 54.8% of our ordinary shares and 61.2% of the voting power of our ordinary shares as of March 31, 2018. Fenghuang On-line and Phoenix TV entered into a cooperation agreement, or the Phoenix TV Cooperation Agreement, on November 24, 2009, whichexpired on May 27, 2016. Under this agreement, Fenghuang On-line and Phoenix TV agreed to certain cooperative arrangements in the areas of content,branding promotion and technology. Pursuant to the Phoenix TV Cooperation Agreement, in November 2009 Tianying Jiuzhou and Yifeng Lianhe enteredinto a program content license agreement, or Content License Agreement, with Phoenix Satellite Television Company Limited and a trademark licenseagreement, or Old Trademark License Agreement, with Phoenix Satellite Television Trademark Limited. Considering the significant growth and changes inour business since execution of these agreements in 2009, we and Phoenix TV Group entered into a new set of agreements in May 2016 and December 2017,or the New Agreements, to amend and replace the previous agreements and provide the terms of our continued cooperation. The New Agreements includeProgram Resource License Agreements and Program Text/Graphics Resource License Agreements, or the Program License Agreements, between PhoenixSatellite Television Company Limited and each of Tianying Jiuzhou, Yifeng Lianhe, and Fengyu Network, and trademark license agreements by and amongPhoenix Satellite Television Trademark Limited and each of Tianying Jiuzhou and Yifeng Lianhe, or the New Trademark License Agreements. Unlike theprevious agreements, the New Agreements do not grant us the right to sublicense Phoenix TV Group’s copyrighted content to third parties. While we are inthe process of negotiating with Phoenix TV Group to potentially re-acquire such certain right of sublicense, we cannot assure you that we will be able to re-acquire such certain right at reasonable costs or at all. Different from the Old Trademark License Agreement, the New Trademark License Agreements nolonger allow us to use the double-phoenix logo of Phoenix TV Group on a stand-alone basis and increased the annual license fee payable to Phoenix TVGroup from a total of US$10,000 to the greater of 2% of the annual revenues of Tianying Jiuzhou or Yifeng Lianhe (as the case may be) or US$100,000 foreach company. For illustrative purpose only, Tianying Jiuzhou and Yifeng Lianhe had annual revenues of RMB570.4 million in 2016 and RMB413.8million in 2017 in accordance with U.S.GAAP, which meant that the annual license fee payable to Phoenix TV Group would have been RMB11.4 millionand RMB8.3 million in 2016 and 2017, respectively, if the New Trademark License Agreements had been implemented since January 2016. Each of the NewTrademark License Agreements has an initial term of three years and may be extended prior to expiration of its term with the written confirmation of PhoenixTV Group, and may be terminated earlier by Phoenix TV Group in the event of a material breach by us of any covenant or a material failure by us to performany of our obligation and if the breach or failure, as applicable, is not rectified within a reasonable time or ten days of receipt of written notice from PhoenixTV Group. In addition, in the event that any of the shareholding structure of Tianying Jiuzhou or Yifeng Lianhe is changed which causes Phoenix TV Groupto lose control of them, or any of Tianying Jiuzhou or Yifeng Lianhe is disqualified from conducting Internet service business due to applicable laws,Phoenix TV Group may terminate the New Trademark License Agreements immediately. Tianying Jiuzhou and Yifeng Lianhe are also granted a one-yearlicense to continue to use the current marks of our two mobile applications which contain the Chinese words of “Phoenix News” and “Phoenix Video” whichwill be automatically renewed upon its expiration unless Phoenix TV Group raises any objection. We cannot assure you that we will be able to continue touse Phoenix TV Group’s logos, which would have a material and adverse effect on our business, operating results and financial condition. 48Table of Contents We have a mutually beneficial relationship with Phoenix TV. We and Phoenix TV share a common vision of the convergence of traditional and newmedia channels, and work together to realize this vision. While we furnish Phoenix TV with access to our new media delivery channels, Phoenix TV enablesus to display our proprietary content on its TV programs. Pursuant to the Program License Agreements, Phoenix TV Group agreed to grant Tianying Jiuzhou,Yifeng Lianhe and Fengyu Network the license with priority over any third party to broadcast Phoenix TV Group’s copyrighted video content from threetelevision channels of Phoenix TV Group on ifeng.com (our main Internet channel), i.ifeng.com (a mobile Internet channel of ours), and ifeng News, ifengVideo and ifeng VIP (three mobile applications of ours) in China (excluding Hong Kong, Macau and Taiwan) concurrently with such content broadcasted onthe three television channels of Phoenix TV Group. Phoenix TV Group also agreed to grant Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network a non-exclusive license to use Phoenix TV Group’s copyrighted text and graphics on the same Internet and mobile channels of ours in China for which Phoenix TVGroup’s copyrighted video content license, above, was granted. These licenses help to distinguish our content offerings from those of other Internet and newmedia companies in China. We believe that our and Phoenix TV’s active promotion of one another’s brands on our respective Internet-enabled and TVplatforms helps to grow our combined audience synergistically. On February 17, 2014, our Chief Executive Officer, Mr. Shuang Liu, was also promoted to the position of chief operating officer of Phoenix TV. Thekey initiative for his new position at Phoenix TV is to accelerate the convergence of TV, PC and mobile platforms of the two companies. In his new role,Mr. Liu is tasked with strategizing, overseeing and allocating resources to implement this convergence strategy. Through this appointment, both companiescan more seamlessly expand user reach on each of its media platforms, provide advertisers a one-stop shop solution, more effectively monetize the Phoenixbrand across all verticals, and achieve greater cost synergies. For more information about the terms of each of the New Agreements, see “—C. Organizational Structure—Our Relationship with Phoenix TV.” Formore information about the risks associated with our relationship with Phoenix TV, see “Item 3. Key Information—D. Risk Factors—Risks Relating to OurBusiness and Industry—We may not be able to continue to receive the same level of support from Phoenix TV Group in the future. We could lose our licenseand priority over any third party to broadcast Phoenix TV Group’s content, which would have an adverse effect on our paid services business, and would alsonegatively affect our video advertising business. Together, these impacts could have an adverse effect on our business and operating results” and “Item 3.Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We may have conflicts of interest with Phoenix TV and, because of PhoenixTV’s controlling beneficial ownership interest in our company, may not be able to resolve such conflicts on terms favorable for us.” Our Content We strive to deliver the most up-to-date, in-depth, exclusive and thought-provoking content to our users. Content selection, editing and production arecore focuses of our business. We obtain our content from four sources: third-party professional media companies, Phoenix TV, our in-house production, we-media accounts and UGC. The content we acquire covers a wide spectrum of user-targeted subjects, including news, current affairs, finance, technology,automobiles, fashion and entertainment, among others. We believe that we have provided the earliest video and text media coverage among Chinese mediacompanies of certain major world events. We are uniquely positioned among our peers in China to be able to distribute our content on TV. We feed asubstantial amount of in-house produced content and UGC to a number of Phoenix TV’s regular prime-time programs each day. We also provide our in-houseproduced content to domestic TV networks, such as Shenzhen Satellite TV. Third-Party Professional Content. We have entered into content licensing agreements with approximately 445 professional content providers inaggregate. We obtain our print content from major Chinese print media and news wires and selected international sources. Our Chinese content sourcesinclude companies such as China News Service, Xinhua News Agency and the Huanqiu.com, as well as China’s top ten image providers. Our internationalsources include Reuters, The Associated Press and Agence France Presse, among others. The video content we source from third parties is primarily comprisedof news and documentaries, which cater to our users’ preferences. We obtain our third-party video content from major Chinese television broadcasters, such asCCTV, Shenzhen Satellite TV, and Hubei Satellite TV. The content that we source from professional third parties comprises the majority of the content on ourPC websites, mobile applications and mobile websites. 49Table of Contents Phoenix TV Content. Phoenix Satellite Television Company Limited, a wholly owned subsidiary of Phoenix TV, has granted Tianying Jiuzhou, YifengLianhe and Fengyu Network the license with priority over any third party effective until May 26, 2019 to broadcast Phoenix TV Group’s copyrighted videocontent from three television channels of Phoenix TV Group on ifeng.com (our main Internet channel), i.ifeng.com (a mobile Internet channel of ours), andifeng News, ifeng Video and ifeng VIP (three mobile applications of ours) in China (excluding Hong Kong, Macau and Taiwan) concurrently with suchcontent broadcasted on the three television channels of Phoenix TV Group, pursuant to the Program License Agreements. Since Phoenix TV’s satellitelanding rights in China, outside of Guangdong Province, are limited to international residences and hotels, our integrated platforms provide a convenientalternative means for people in China to view Phoenix TV’s programs. We have offered live streaming broadcasts of the Phoenix Chinese Channel, thePhoenix InfoNews Channel and the Phoenix Hong Kong Channel on ifeng.com, and delivered updated clips from a broad range of Phoenix TV’s programs onboth our PC and mobile channels until June 22, 2017, when we received a public notice issued by SAPPRFT, which required us to suspend our ifeng videoand audio services due to our lack of the Internet audio-visual program transmission license and our certain commentary programs that violated governmentregulations. We are also able to leverage Phoenix Satellite’s global media resources, particularly for our news and finance channels. In-house Produced Content. We produce investigative reports, exclusive video programs and event-based coverage in-house. We frequently conductinterviews with government officials, thought leaders, celebrities and other compelling public figures and we have provided coverage on hundreds ofconferences and forums. We transmit a considerable amount of our in-house produced content to Phoenix TV on a frequent basis and to certain Chinese TVnetworks from time to time. We-media Content. We-media content covers various verticals in the form of text, photos, videos, etc., adding an important complementary componentto the content we deliver. We have integrated our we-media platform with Yidian’s, so that we can share the we-media content with each other. In sum, weobtain content from over 550,000 we-media accounts by December 2017, including content from top public intellectual, commentators, scholars, keyopinion leaders, or KOLs, professors, etc. UGC. UGC adds an important interactive component to the content we deliver. We generate text UGC through our comment-posting and user surveyservices. We feed UGC from our comment-posting and surveys to Phoenix TV on a number of its regular TV programs. Content Editing and Production Content editing and production are critical components of our content production process. We had a team of 389 editors as of December 31, 2017organized generally by interest-based vertical. We believe that we possess a strong ability to select and distill compelling news stories and frame issues forour users in a distinctive way. Beyond distributing a large amount of news and information in a timely fashion, we provide independent social commentaryand analyses. We edit our videos, primarily consisting of news, documentaries and interviews, into short clips. We organize our content by interest-basedvertical and segment it further by featured topic. We actively combine text, image, video and live broadcasting content and integrate interactive UGC, aimedat producing an engaging user experience. Content Monitoring We implement monitoring procedures for all of our published content to remove inappropriate or illegal content, including but not limited to we-mediaand UGC from our discussion forum, comments postings and user survey services. As of December 31, 2017, our content screening team consists of 13 full-time editors and more than 100 outsourced staff members who are responsible for monitoring and preventing the public release of inappropriate illegalcontent. Text and images are screened by our content screening team, which reviews the content on a 24-hour, 3-shift basis and employs monitoringprocedures, including (i) technology screening, where a text filtering system screens content based on pre-set key words and identifies suspected information;and (ii) manual review, where the content that passes the technology screening is reviewed by the content screening team and the flagged content identifiedby our technology is reviewed and confirmed before it can be released. For technology screening, we use an in-house developed identification system inorder to comply with PRC regulatory requirements regarding Internet content. 50Table of Contents Our Channels We provide our content and services through three major channels, including our PC channel, our mobile channel, and our operations with the telecomoperators. We also transmit our content to TV viewers, primarily through Phoenix TV. Together, these channels form a converged platform providingintegrated text, image, video and live broadcasting content, and employing a variety of interactive formats to create a rich, personalized and hands-onexperience for our users. We derive advertising revenues through our PC channel and mobile channel. We generate paid services revenues through PC,mobile channel and operations with the telecom operators. Our PC Channel Our PC channel consists of our website at ifeng.com, which comprises our interest-based verticals and interactive services. According to iResearch, ournumber of PC daily unique visitors was 33.9 million, and number of monthly unique visitors was 277.4 million in December 2017. We have ranked thirdamong all Internet portals in China in terms of daily unique visitors in December 2017. Interest-based Verticals. We currently provide over 40 interest-based verticals, each of which features integrated text, image, video and livebroadcasting content and embedded interactive services, such as user surveys and comment postings. Since ifeng.com is one of multiple access points to ourconverged platforms, our users can also access a significant portion of our interest-based verticals’ content through our mobile channel and operations withthe telecom operators, and can view in-house produced content and UGC created on these verticals on Phoenix TV’s regular programs. Our most popularverticals include: · News. Through our news vertical, ifeng News, users have easy access to breaking news coverage from multiple sources and points of view. Ournews vertical also features a large amount of in-depth special reports and embedded interactive services. For our special reports, we not onlyhave dedicated teams deliver in-depth analysis and reports, but also integrated user surveys and comment postings into the featured websites. · Finance. Our finance vertical, ifeng Finance, provides up-to-date information about financial news, securities and personal finance. We haveformed relationships with individual industry leaders who contribute to our in-depth reports and discussions we feature on our financevertical. We also obtain independent finance content from Phoenix TV. Our finance vertical also offers stock quotes from the majorexchanges, as well as breaking news from individual listed companies. · Fashion. Our fashion vertical provides coverage on fashion, beauty, weight loss, luxury goods, travel, furniture, art and other popular topics,all centered on the theme of refined lifestyle. It offers information on international fashion trends and new fashion concepts. Our fashionvertical covers a variety of luxury topics, including wines, cigars, high-end brand apparel and accessories, as well as services aimed at thehigh net worth population. It also provides real-time coverage of major world fashion events, bringing users the latest information on stylesand trends. · Entertainment. Our entertainment vertical spans greater China and strives to cover entertainment news and developments in China, HongKong, Taiwan and globally among the Chinese community. This vertical provides broad coverage of the latest entertainment news, includingdining, movies, television programs, plays, operas, as well as popular and classical music. It features our in-house produced video program ofcandid celebrity interviews. · Automobiles. Our automobiles vertical, ifeng Auto, offers the latest automobile-related news and information to provide car buyers andautomobile enthusiasts with the most current information on automotive pricing, reviews and featured guides. 51Table of Contents · Live Broadcasting. Our live broadcasting vertical, FENG Live (“风直播”), offers live broadcasting news and information to provide real-timeprofessional reports of hit events, conferences and etc. · We-media. Our we-media vertical, Dafenghao, (“大风号”) offers various we-media content. We have integrated our we-media platform withYidian’s Yidianhao (“一点号”), and by the end of 2017, we can obtain content produced by over 550,000 we-media outlets, publicintellectual, commentators, scholars, KOLS, professors, etc.in total. · Military affairs. Our military affairs vertical provides updated information and commentary on military affairs and defense matters and targetsa broad audience, from military professionals to hobbyists. It also provides UGC content to Phoenix TV’s “Tiger Talk” (“一虎一席谈”) TVprogram. · Sports. Our sports vertical offers multimedia news and information on a wide range of sporting events, and broadcasts both live and recordeddomestic and international sports matches. · History. Our history vertical provides content about Chinese and international modern history. We investigate relatively unexploredhistorical turning points and events and provide in-depth analyses of historical figures and events. We also cooperate with Phoenix TV’s highquality history programs to provide premium content to our users. · Video. Our v.ifeng.com vertical offers the following four categories of video products and services, (i) free online video on demand, or VOD.Our free online VOD typically consist of short clips of up to five minutes of news programs, interviews, documentaries and other programs.Our VOD content is easily searchable on our websites and is organized into various verticals of v.ifeng.com for easy browsing, includingentertainment, fashion, sports, technology, movies and dramas, and VIP channel. In addition, we organize and present video content,supplemented by text, images, user surveys and comment postings on our v.ifeng.com vertical to create a value-added user experience that webelieve is richer than that of watching traditional TV. (ii) live Phoenix TV broadcasts. We offer live streams of Phoenix TV’s flagshipchannels, such as the Phoenix Chinese Channel, the Phoenix InfoNews Channel, and the Phoenix Hong Kong Channel. These broadcastsprovide our users with exclusive online access to up-to-the-minute, quality news and other programs from Phoenix TV until June 22 2017.See “Item 3. — D. Risk Factors—Risks Relating to Our Business and Industry — If we fail to continue to anticipate user preferences andprovide high quality content that attracts and retains users, or if we have to limit our services or cease providing certain content in order tocomply with changing regulatory requirements, we may not be able to generate sufficient user traffic to remain competitive”. These livebroadcasts on our v.ifeng.com vertical provide a convenient alternative means for viewing these popular Phoenix TV programs through anInternet-enabled device. (iii) online video subscription service. Our online video subscription service enables users to watch advertisement-free premium content, such as feature-length documentaries and exclusive online Phoenix TV programming. (iv) online video pay-per-viewservice. However, in response to a public notice issued by the SAPPRFT, we ceased distributing any video and audio content from PhoenixTV since June 2017. See “Item 3. — D. Risk Factors—Risks Relating to Our Business and Industry — If we fail to continue to anticipate userpreferences and provide high quality content that attracts and retains users, or if we have to limit our services or cease providing certaincontent in order to comply with changing regulatory requirements, we may not be able to generate sufficient user traffic to remaincompetitive.” Our online video pay-per-view service enables users to watch advertisement-free premium videos by purchasing access toparticular videos on vip.v.ifeng.com. Like our online video subscription, our online video pay-per-view also include generally longer videosof up to 45 minutes in length. 52Table of Contents · Web-based Game. We operate third-party developed web-based games on our game platforms, play.ifeng.com. Web-based games are gamesthat can be played directly from the user’s Internet browser without downloading additional software. Currently our game platforms only offerweb-based games licensed from third parties. Our game portfolio includes role-playing, strategy and casual games. Revenues generated fromweb-based games are recorded in games and others under paid services revenues. Web-based game industry has been declining, and thereforeour web-based game revenue has also been declining, which contributed only approximately 1.6% of our total revenue in 2017. · PC Digital Reading. Our PC digital reading service provides fee-based Internet literatures from writers and digital format books licensed fromthird-party publishers to customers on our PC platforms. Revenues generated from digital reading are recorded in digital entertainment underpaid services revenues. Interactive Services. Our interactive services aim at turning our PC websites, mobile applications and mobile websites into an active venue for socialnetworking and community interaction. These services allow our users to interact with the content we provide, opening up avenues for lively exchange ofinformation. Our comment posting services are available on both our PC and mobile channels. Also through our converged platforms, we feed a substantialamount of user comments to prime-time programs of Phoenix TV on a daily basis. By furnishing an engaging user experience across PC, mobile and TVchannels, we believe that community-based interactive services increase user loyalty and stickiness. We currently offer the following interactive services · User surveys. Our user surveys allow users to express their opinions on topics featured on our PC and mobile channels, view up-to-dateopinion polls of users generally and compare their views with those of our user community at large. We offer opinion surveys on majorfeatured topics on most of ifeng.com and v.ifeng.com. Our survey results also frequently appear on Phoenix TV’s programs. · Comment posting. Our comment posting feature allows registered users to post their reactions to and thoughts on our articles and videos andbrowse the input of other members of the ifeng.com community. Our comment postings also frequently appear on Phoenix TV’s programs. Our Mobile Channel Our mobile channel includes (i) ifeng news application, (ii) ifeng video application, (iii) mobile Internet website i.ifeng.com (“mobilewebsites”), (iv) digital reading application and (v) before December 1, 2017, fashion application (“Shizhuang App”). According to our internal data, ouraggregated number of mobile daily unique visitors from mobile applications and mobile websites reached 33 million in December 2017. · ifeng News (formerly named “Phoenix News “). We offer a wide range of mobile applications for different mobile devices. Ifeng newsapplication is our flagship mobile product, which provides news feeds and other contents in the form of text, image, live broadcasting andvideo. · ifeng Video (formerly named “ Phoenix Mobile Station “). ifeng video application provides video news, live broadcasting, and Phoenix TVprograms content, etc. · Mobile websites. Our i.ifeng.com website is designed and tailored to the preferences of our mobile users on mobile browser and web-basedpages. As part of our converged platform, i.ifeng.com allows our users to access quality convergence content while they are on-the-go. Similarto ifeng.com, our i.ifeng.com features an array of interest-based and interactive verticals, as well as a mobile video site for watching freemobile VOD. There are two of fee-based products, including mobile digital reading and mobile games. 53Table of Contents · Digital reading application, Fanyue Novel (“翻阅⼩说”). Our digital reading application provides fee-based Internet literatures from writersand digital format books licensed from third-party publishers to customers on our mobile platform. Revenues generated from digital readingare recorded in digital entertainment under paid services revenues. · Fashion Application, Shizhuang (“识装”). Fashion application provides UGC and user communication and interaction in fashion industryand community. For strategic reasons, we ceased operating or updating the Shizhuang App starting from December 1, 2017 In addition to our own mobile channel, we have opened public accounts on popular social media in China including WeChat and Weibo to distributecontent in certain verticals such as finance, technology, fashion and entertainment. Among these public accounts, ifeng Finance was ranked top 3 in Hurun’s2017 most influential financial we-media public accounts ranking. Our Operations with the Telecom Operators. As part of our converged platforms, we provide a convenient means for our users to access our quality content through the telecom operators’ platforms,or MVAS, while they are on-the-go. MVAS consist mainly of the following product lines: Mobile Newspaper Service. We edit content from our content library to deliver mobile newspapers to mobile users of China Mobile, China Telecomand China Unicom via MMS. Our mobile newspapers provide periodicals in digital form reformatted for convenient viewing on mobile devices. ChinaMobile’s VIP subscribers can receive our mobile newspaper service as part of their subscription and other mobile users can subscribe to this serviceindependently through any one of the three mobile operators. Mobile Video Service. We offer video content through the mobile video platforms of all three of the telecom operators. Users pay a monthlysubscription fee for access to our mobile channel on the telecom operators’ platforms or pay on a per-clip pay-per-view basis, and we share the fees chargedfor such services with the telecom operators. Mobile Games Service delivered through the Telecom Operators’ Platforms. We currently offer mobile games through China Mobile’s, ChinaUnicom’s and China Telecom’s gaming platforms, which allow users to download our mobile games programs. WVAS. We also provide wireless value-added services, or WVAS, through telecom operation’s payment platforms to our users. We offer the followingWVAS: (i) SMS-based Services, (ii) Music Services, (iii) IVR-based Services, (iv) MMS-based Services, (v) Animation Services. Our Sources of Revenues Advertising Services We provide advertising services primarily through our ifeng.com, our mobile Internet websites i.ifeng.com and our mobile applications in our mobilechannel. Our advertising team consists of direct sales, agency sales, advertising technology and products support, customer support, advertising design andproduction, resource management, advertising strategy and sales promotion and other functions. As is typical in China’s online advertising industry, we primarily enter into advertising service contracts through third-party advertising agencies. Wemainly have three types of pricing models, consisting of the Fixed Price model, the Cost Per Impression (“CPM”) model, and the Cost Per Click (“CPC”)model. In 2017, our advertising services are primarily on our mobile, instead of PC channel, and we expect our advertising services on mobile will continueto increase going forward. In addition, together with Phoenix TV, we provide bundled new media and TV advertising solutions to certain of Phoenix TV’sadvertisers. 54Table of Contents We strive to provide our advertisers with high-quality customer service. Our experienced sales professionals help advertisers to analyze their targetaudiences and create innovative campaign strategies and designs. We provide a variety of advertising solutions, including online advertisements, onlinevideo advertisements, user activities, live promotions and cross media public relations campaigns. We have an advertising tracking system, which recordsand maintains the traffic statistics and other data that can be used to measure the effectiveness of advertisements. After the release of a customer’s advertisingcampaign, we furnish them with a report on the campaign’s effectiveness either prepared in-house or by an independent research firm. We have a diverse advertising client base, including both Chinese and international brand advertisers. Our top ten advertisers accounted for 34.8% ofour total gross advertising revenues in 2017. Our advertisers generally are in the automobile, e-commerce, food & beverages, Internet services, financialservices, communication services, entertainment and game services, IT products, cosmetic products, luxury brands, airline, health care, education andindustries. Paid Services The following table sets forth our paid services offerings on telecom operators’ platforms and our own platforms and the percentage contribution of ourvarious paid services to our paid services revenues and our total revenues in 2017. Paid Services Offerings % of PaidService Revenues % ofTotal RevenuesDigital EntertainmentMobile value-added services delivered through telecom operators’ platforms, or MVAS, and digital reading81.211.5Games and othersWeb-based games, mobile games, content sales, and other online and mobile paid services through our ownplatforms18.82.6 Our Advertising Execution Team We have a dedicated team to manage the advertising execution which includes a series of review procedures on our advertising material before wedisplay such material on our platforms interfaces. This team checks advertisements for form and reviews them to ensure that they do not contain any racial,violent, pornographic or other inappropriate content. This team also verifies that advertisers have provided relevant government approvals if theiradvertisements are subject to special government requirements. Marketing and Promotion We employ a variety of traditional and online marketing programs and promotional activities to build our brand as part of our overall marketingstrategy. We focus on building brand awareness and growing our user base through proactive public relations and innovative and interactive marketingactivities and events. We believe that our distinguished content and high-quality services lead to strong word-of-mouth promotion, which drives consumer awareness of ourbrand in China. In addition, our engagement in philanthropic activities, such as our Annual Forever Happiness Charity Gala Dinner (“美丽童行”), helpsassociate our brand with social responsibility. 55Table of Contents Seasonality Seasonal fluctuations and industry cyclicality have affected, and are likely to continue to affect our business. We generally generate less revenue fromadvertising sales and paid services revenues during national holidays in China, in particular during the Chinese New Year holidays in the first quarter of eachyear. We typically generate higher net advertising revenues in the fourth quarter due to greater advertising spending by our advertisers near the end of eachcalendar year when they spend the remaining portions of their annual budgets. In addition, advertising spending in China has historically been cyclical,reflecting overall economic conditions as well as the budgeting and buying patterns of our advertisers. Our rapid growth has lessened the impact of theseasonal fluctuations and cyclicality. However, we expect that the seasonal fluctuations and cyclicality to cause our quarterly and annual operating results tofluctuate. See “Item 3. Key Information—D. Risk Factors — Risks Relating to Our Business and Industry—Our quarterly revenues and operating results mayfluctuate, which makes our operating results difficult to predict and may cause our quarterly operating results to fall short of expectations.” Research and Development In 2017, we continued to improve our advertising solution products as well as focus on improving our convergence model across PC, mobile and TV inorder to provide our users easier access to our premium content through any device. In particular, we continued to introduce and improve our mobileapplications and strengthened commercial products in certain of our verticals. For example, we internally developed an analytic platforms named Feng Yan(“凤眼”) to track and analyze certain real-time user behavior data. Through Feng Yan we can better understand user’s profile and reading preference, andprovide reference data for future content production and performance advertising solution. We also have an in-house Data Management Platform to betteranalyze and manage advertising data and help improve the targeting accuracy of advertisements. Another platform we launched in 2016 is Fengyu (“凤羽”).Fengyu is a customizable and self-service marketing solution that operates under a bidding system. Customers are able to target users based on gender, age,geographic location, interests, device type, etc. Customers can place performance-based ads directly by themselves using our self-service advertising system.We launched Feng Yi (“凤翼”), another customizable marketing solution, catering to premium advertising demands. In 2015, 2016 and 2017, our totaltechnology and product development expenses, including related share-based compensation were RMB170.7 million, RMB161.9 million and RMB192.3million (US$29.6 million), respectively. Infrastructure and Technology Our technology platforms have been designed for reliability, speed, scalability and flexibility and are administered by our in-house technologydepartment. We have access to a network of approximately 4,000 self-owned and leased servers across China mainland, Hong Kong and North America withpower supply and power generator backup. We have developed our server operations based on Linux and other open source software, which has allowed us tolower software related investment and enhance our network reliability. Content Management Technology. We have internally developed a leading new media content management system, which fully integrates our PC andmobile channels. We have also developed a new consolidated system, CMPP (Content Management Programmable Platforms), for content management anddelivery, which focuses on mobile websites and mobile applications. Integration with Phoenix TV. The integration of our and Phoenix TV’s content management systems allows us to directly access Phoenix TV’sprograms digitally, in addition to our access via satellite signal, and to expedite the transmission of our content to Phoenix TV. 56Table of Contents Data Analysis Technology. Based on commercial big data, we developed a data analytical system which has successfully helped build a comprehensiveanalytical chain of big data and helping us achieve our goals of making precise and efficient commercial strategy decisions. This system deliverscomprehensive and consultative data ranging from distribution channel, content to manpower. We can access advertising exposure data as well as clicks andits corresponding costs on all business platforms, such as our PC websites, mobile applications and mobile websites. In addition, this system possessesflexible mechanics for organizing and analyzing data, with relatively lower cost. Cloud Computing. Our technology department began researching the use of a cloud computing system in 2011 to modify our network and systeminfrastructure and lower our content delivery and system maintenance costs. We have built a distributed file system, which provides file access services to ourcontent management system, and is anticipated to become a streaming media service and core storage system for each of our CDN nodes. We havecommenced our distributed computing platforms project, which provide large-scale computer capacity support for our raw access log and transcodingcomputing-intensive applications. We have also deployed an open source virtualization cluster to integrate multiple small applications, which significantlyreduced our IT costs. Intelligent Recommender System (IRS). Our technical department developed a real-time, personalized recommender system, which produce a list ofcontents through collaborative and content-based filtering, to predict contents that the user may have an interest in, and to recommend additional items withsimilar properties. Powered by cutting-edge algorithm technology, we are able to provide useful and relative news and information to our users, and also well-equipped to provide enhanced advertising solutions that target users based on their exhibited preferences. Competition We operate in the market of PC and mobile Internet content and services in China. The industry is highly competitive and rapidly changing due to thefast growing market and technological developments. Our ability to compete successfully depends on many factors, including the quality and relevance ofour content, the demographic composition of our users, brand recognition and reputation, user experience, the robustness of our technology platforms, ourability to provide innovative advertising services to our customers and our relationships with our advertisers. While we believe that our integrated platforms business model and targeted user base is unique, on the whole, from other companies in China, wecompete with other content and service providers in each of our individual channels for user traffic, advertising revenues and fee-based services. In Internetcontent and service provision, we compete primarily with NetEase, Inc., Sina Corporation, Sohu.com Inc. and Tencent Technology Limited. Besides,especially among mobile news and information application and personalized feed application, we primarily compete against Jinri Toutiao, Alibaba Group(UC Toutiao) and Baidu Inc. In terms of video content and service provision, we compete with a number of online video companies, including Jinri Toutiao,Kuaishou short video, Youku Tudou Inc., iqiyi.com, Sohu video and QQ video. We also compete with traditional advertising media, such as television, radio, print media, as well as billboards and other forms of outdoor media. Weexpect large companies’ proportionate spending on new media advertising of their advertising budgets relative to traditional media advertising to continueincrease in the future. Intellectual Property We rely on a combination of trademark, copyright and trade secret protection laws in China and other jurisdictions, as well as confidentialityprocedures and contractual provisions to protect our intellectual property and our brand. We also enter into confidentiality, non-compete and inventionassignment agreements with our employees and consultants and nondisclosure agreements with selected third parties. We had 160 PRC software registrationsand owned 36 domain names, including ifeng.com, as of March 31, 2018. 57Table of Contents We have also designed proprietary logos for use in the respective businesses of Tianying Jiuzhou and Yifeng Lianhe. As of March 31, 2018, TianyingJiuzhou owned 189 PRC registered trademarks, six of which were transferred from Phoenix Satellite Trademark Limited, and Yifeng Lianhe owned 20 PRCregistered trademarks. In addition, Tianying Jiuzhou had submitted 293 registration applications relating to 57 logo designs to the PRC Trademark Office.Tianying Jiuzhou and Yifeng Lianhe continue to use certain of Phoenix TV’s logos that are licensed from Phoenix Satellite Television Trademark Limited.Therefore, we are currently not in compliance with a notice of the MIIT which requires ICP License-holders to own the trademarks used in their value-addedtelecommunications businesses. For information about the risks related to our use of licensed trademarks and our plans to remedy such risks, see “Item 3. KeyInformation—D. Risk Factors—Risks Relating to Our Business and Industry—Our affiliated consolidated entities and their respective shareholders do notown all the trademarks used in their value-added telecommunications services, which may subject them to revocation of their licenses or other penalties orsanctions.” Employees We had approximately 1,521, 1,528 and 1,402 employees as of December 31, 2015, 2016 and 2017, respectively. The table below sets forth the numberof employees categorized by function as of December 31, 2017: Function Number of EmployeesManagement and administration198Content development389Mobile products and services173Technology and product development320Sales and marketing322Total1,402 As of December 31, 2017, we had 1,261, 70 and 60 employees located in Beijing, Shanghai and Guangzhou, respectively, and 11 employees located inother locations in China. Currently we do not have any employees located outside of China. Since our inception, we have not experienced any strikes or other disruptions of employment. We believe our relationships with our employees aregood. The remuneration package of our employees includes salary, bonus, share-based compensation and other cash benefits. In accordance with applicableregulations in China, we participate in a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a personal injury insuranceplan, maternity insurance and a housing reserve fund for the benefit of all of our employees. Legal and Administrative Proceedings From time to time, we are involved in claims and legal proceedings that arise in the ordinary course of business. We are currently a party to certain legalproceedings and claims which in the opinion of our management, adequate provisions have been recorded to cover the probable loss of those that can bereasonably estimated, while other claims are considered would not have material adverse effect, individually or in the aggregate, on our financial position,results of operations or cash flows. From January 1, 2017 to March 31, 2018, we have been subject to 95 cases in the PRC, 67 of which have been concluded.The aggregate amount of damages awards and settlements paid by us was RMB5.5million. Government authorities may also impose administrative penaltieson us if they find that we have infringed third parties’ intellectual property rights. 58Table of Contents In October 2015, the National Copyright Bureau imposed a fine of RMB250,000 on one of our consolidated affiliated entities for disseminating on ourPC websites, mobile applications and mobile websites one work of literature that we licensed from third parties that were alleged to have no legal rights tolicense such work. In November 2016, China Youth Book Inc. and Dewey Press LLC filed a claim against Tianying Jiuzhou and our company for intellectualproperty infringement of such work, the related claim for damage was approximately RMB235.8 million, however, the actual income we generated from suchwork was less than RMB1,500. This claim was withdrawn by the plaintiffs in January 2018. In April 2018, we received notices from the local court that theplaintiffs have filed a lawsuit against us again for the same claim, with the related claim for damages reduced to approximately RMB99.8 million. As of thedate of this annual report, this case is still pending. In 2017, we received some complaints and claims from third parties alleging intellectual propertyinfringements by us; however, some of the complainants have not provided necessary proofs of title and infringement. We are still negotiating with suchcomplainants and some of these claims are still pending as of the date of this annual report. Litigation is subject to inherent uncertainties and our view of these matters may change in the future. There exists the possibility of a material adverseimpact on our financial position, results of operations or cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods. Facilities Our executive office is located at Sinolight Plaza, Floor 16, No. 4 Qiyang Road, Wangjing, Chaoyang District, Beijing 100102, People’s Republic ofChina. We maintain a number of offices in Beijing, Shanghai and Guangzhou under leases with terms ranging from one to five years. The following table describes each of our major offices as of December 31, 2017: LocationSpace (in square meters) Usage of Property Expiration DatesBeijing15,002OfficeJuly 15, 2022Guangzhou1,161OfficeAugust 31, 2018Shanghai1,006OfficeMay 31, 2019 We believe that our leased facilities are adequate to meet our needs for the foreseeable future, and that we will be able to obtain adequate facilities,principally through leasing of additional properties, to accommodate our future expansions. Regulatory Matters The following is a summary of the most significant PRC laws and regulations that affect our business activities in China or our shareholders’ rights toreceive dividends and other distributions from us. Draft Foreign Investment Law On January 19, 2015, the MOFCOM published the Draft FIL, on its official websites for public comments, which mainly covers: (i) definition of foreigninvestors and foreign investments, (ii) market entry clearance, (iii) national security review, (iv) information reporting, (v) investment promotion andprotection as well as handling of complaints, (vi) legal liabilities and (vii) other general and miscellaneous provisions. The MOFCOM also published anexplanatory note to the Draft FIL on its official websites. The Draft FIL, once enacted, will eventually replace the trio of the Sino-foreign Equity JointVenture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law as well as theirimplementation rules and ancillary regulations, and will consolidate and simplify the various regulatory requirements on foreign investments. The Draft FIL embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in alignment with internationalpractice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments, and thus the Draft FIL will have a far-reaching and significant impact upon foreign investments by fundamentally reshaping the entire PRC foreign investment regulatory regime. The Draft FILincludes, among others, the following key points: · The Draft FIL expands the definition of foreign investment and introduces the principle of “actual control” in determining whether aninvestment is considered a foreign investment or domestic investment. An entity established in China but “controlled” by foreign entitiesand/or citizens will be treated as a foreign investor, whereas an entity set up in a foreign jurisdiction but “controlled” by PRC entities and/orcitizens would nonetheless be treated as a PRC domestic investor, provided that the entity obtains such determination upon market entryclearance by the competent foreign investment authority. 59Table of Contents · The existing comprehensive approval system of foreign investments will be replaced by an entry clearance system in relation to foreigninvestments in the industries within the negative list and an information reporting system. The negative list will only comprise of twocategories: the prohibited industries and the restricted industries; foreign investments in industries not listed in the negative list will not berequired to apply for entry clearance or make record filing and will only be required to submit information reports. In the future, the negativelist to be issued by State Council may replace the current Guidance Catalogue of Industries for Foreign Investments. The informationreporting system includes the investment implementation reporting, investment amendment reporting, annual reporting and quarterlyreporting. The scope of the information reporting is very extensive under the Draft FIL. In addition, any non-compliance with the informationreporting obligations, concealing true information, or providing misleading or false information will be subject to monetary fines or criminalcharges, depending on the seriousness of circumstances, and the persons directly responsible may also be criminally liable. · All differences in the corporate governance requirements that currently apply to foreign invested and domestic enterprises will be removed,leaving only the requirements under the PRC Company Law, with which all foreign invested and domestic enterprises must comply. · The national security review will be incorporated as a separate chapter and may replace the existing regulations and rules issued by the StateCouncil or the MOFCOM. Compared with the existing regulations and rules, the scope of national security review is wider under the DraftFIL. · The VIE structure will fall into the jurisdiction of the Draft FIL, and certain potential solutions was proposed to apply to the existing VIEstructures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China— Substantial uncertainties exist withrespect to the enactment timetable, interpretation and implementation of the draft Foreign Investment Law and how it may impact theviability of our current corporate structure, corporate governance and business operations.” Although only a first draft has been released for public comments, it is already apparent that the Draft FIL will fundamentally change the current foreigninvestment regulatory landscape. There is no definitive timeline for this law to be officially promulgated by the PRC legislature and the current draft mayneed to undergo significant amendment before the law is finally passed. Accordingly, substantial uncertainties still exist with respect to the enactmenttimetable, interpretation and implementation of this new law. Regulation of Telecommunications and Internet Information Services The telecommunications industry, including the Internet sector, is highly regulated in the PRC. Regulations issued or implemented by the StateCouncil, the Ministry of Industry and Information Technology, or MIIT (formerly the Ministry of Information Industry, or MII), and other relevantgovernment authorities cover many aspects of operation of telecommunications and Internet information services, including entry into thetelecommunications industry, the scope of permissible business activities, licenses and permits for various business activities and foreign investment. The principal regulations governing the telecommunications and Internet information services we provide in the PRC include: Telecommunications Regulations (2016, revised), or the Telecom Regulations. The Telecom Regulations categorize all telecommunications businessesin the PRC as either basic or value-added. Value-added telecommunications services are defined as telecommunications and information services providedthrough public network infrastructures. The currently effective “Catalog of Telecommunications Business,” an attachment to the Telecom Regulations,categorizes various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications services,according to which, Internet information services, or ICP services, are classified as value-added telecommunications businesses. Under the TelecomRegulations, commercial operators of value-added telecommunications services must first obtain an operating license for value-added telecommunicationsservices, or the ICP License, from MIIT or its provincial level counterparts. 60Table of Contents Administrative Measures on Internet Information Services (2011, revised), or the Internet Measures. According to the Internet Measures, a commercialICP service operator must obtain an ICP License from MIIT or its provincial level counterparts before engaging in any commercial ICP service in PRC. Whenthe ICP service involves areas of news, publication, education, medicine, health, pharmaceuticals, medical equipment and other industry and, if required byrelevant laws and regulations, prior approval from the respective regulatory authorities must be obtained prior to applying for the ICP License. Moreover, anICP service operator must display its ICP License number in a conspicuous location on its websites. Administrative Measures for Telecommunications Business Operating License (2017, revised), or the Telecom License Measures. Pursuant to theTelecom License Measures, an ICP service operator conducting business within a single province must apply for the ICP License from MIIT’s applicableprovincial level counterpart, while that providing ICP services across provinces must apply for Trans-regional ICP License directly from MIIT. The appendixto the ICP License should detail the permitted activities to be conducted by the ICP service operator. An approved ICP service operator must conduct itsbusiness in accordance with the specifications recorded on its ICP License. The ICP License is subject to annual report, an ICP service operator shall reportcertain information to the issuing authorities through the Administrative Platforms in the first quarter every year, such information includes the businessperformance of the telecommunications business in the previous year; the actual progress in network building-up, business development, turnover of staffand institutional restructuring; the service quality; the actual implementation of the network and information security guarantee systems and measures; theactual implementation of the relevant provisions of MIIT and other information required to be reported to the issuing authorities. An ICP service operatorshall be responsible for the authenticity of the information in the annual report. Regulations for Administration of Foreign-Invested Telecommunications Enterprises (2016, revised), or the FITE Regulations. Under the FITERegulations, a foreign entity is prohibited from owning more than 50% of the total equity interest in any value-added telecommunications service businessin the PRC and the major foreign investor in any value-added telecommunications service business in the PRC shall have a good track record in suchindustry. Notice on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services (2006), or the MIIT 2006 Notice.Under the MIIT 2006 Notice, a domestic PRC company that holds an ICP License is prohibited from leasing, transferring or selling the ICP License to foreigninvestors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-addedtelecommunications business illegally in the PRC. Further, the domain names and registered trademarks used by an operating company providing value-added telecommunications service must be legally owned by such company and/or its shareholders. In addition, such company’s operation premises andequipment should comply with its approved ICP License, and such company should establish and improve its internal Internet and information securitypolicies and standards and emergency management procedures. After the promulgation of the MIIT 2006 Notice in July 2006, the MIIT issued a subsequentnotice in October 2006, or the MIIT October Notice, urging value-added telecommunication service operators to conduct self-examination regarding anynoncompliance with the MIIT 2006 Notice prior to November 1, 2006. We have also designed proprietary logos for use in the respective businesses of Tianying Jiuzhou and Yifeng Lianhe. As of March 31, 2018, TianyingJiuzhou owned 189 PRC registered trademarks, six of which were transferred to it from Phoenix Satellite Trademark Limited, and Yifeng Lianhe owned 20PRC registered trademarks. In addition, Tianying Jiuzhou had submitted 293 registration applications relating to 57 logo designs to the PRC TrademarkOffice. Tianying Jiuzhou and Yifeng Lianhe continue to use certain of Phoenix TV’s logos that are licensed from Phoenix Satellite Television TrademarkLimited. Therefore, we are currently not in compliance with the MIIT 2006 Notice. All “ifeng” related trademarks used by our company have been transferred to Tianying Jiuzhou and Yifeng Lianhe. In addition, we will continue toexamine the possibility of the transferring to our affiliated consolidated entities all or part of the ownership of additional licensed logos currently used bythem in a manner that would meet the requirements of PRC trademark regulations in due course in the future. For information about the risks related to ouruse of licensed trademarks, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Our affiliated consolidatedentities and their respective shareholders do not own all the trademarks used in their value-added telecommunications services, which may subject them torevocation of their licenses or other penalties or sanctions.” Measures for the Administration of Commercial Websites Filings for Record (2004). Under these measures, commercial websites operated by ICPservice operators registered in Beijing must: (i) file with the Beijing Administration of Industry and Commerce and obtain electronic registration marks, and(ii) place the registration marks on their websites’ homepages. In order to comply with these PRC laws and regulations, we operate our commercial websites through Tianying Jiuzhou, one of our PRC affiliatedconsolidated entities. Tianying Jiuzhou holds an ICP License and owns the material domain names for our value-added telecommunications business. Inaddition, Tianying Jiuzhou completed the necessary filing with the relevant Administration of Industry and Commerce to obtain the electronic registrationmark for our websites and has placed the registration mark on the websites homepage. Tianying Jiuzhou has completed all necessary registrations andapprovals for its use of such material domain names. 61Table of Contents Under various laws and regulations governing ICP services, ICP services operators are required to monitor their websites. They may not produce,duplicate, post or disseminate any content that falls within the prohibited categories and must remove any such content from their websites, including anycontent that: · opposes the fundamental principles determined in the PRC’s Constitution; · compromises state security, divulges state secrets, subverts state power or damages national unity; · harms the dignity or interests of the State; · incites ethnic hatred or racial discrimination or damages inter-ethnic unity; · sabotages the PRC’s religious policy or propagates heretical teachings or feudal superstitions; · disseminates rumors, disturbs social order or disrupts social stability; · propagates obscenity, pornography, gambling, violence, murder or fear or incites the commission of crimes; · insults or slanders a third party or infringes upon the lawful rights and interests of a third party; or · includes other content prohibited by laws or administrative regulations. The PRC government may shut down the websites of ICP License holders that violate any of the above restrictions and requirements, revoke their ICPLicenses or impose other penalties pursuant to applicable law. In order to comply with these PRC laws and regulations, we have adopted internal procedures to monitor content displayed on our PC websites, mobileapplications and mobile websites. However, because the definition and interpretation of prohibited content is in many cases vague and subjective, it is notalways possible to determine or predict what content might be prohibited under existing restrictions or restrictions that might be imposed in the future and wemay be subject to penalties for such content. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—The Chinesegovernment may prevent us from advertising or distributing content, including UGC, that it believes is inappropriate and we may be subject to penalties forsuch content or we may have to interrupt or stop the operation of our PC websites, mobile applications and mobile websites.” Regulation of Online Transmission of Audio-Visual Programs On July 6, 2004, SARFT promulgated the Measures for the Administration of Publication of Audio-Visual Programs through the Internet or OtherInformation Networks, or the 2004 Internet A/V Measures, which was revised on August 28, 2015. The 2004 Internet A/V Measures apply to activitiesrelating to the opening, broadcasting, integration, transmission or download of audio-visual programs via the Internet or other information networks. Anapplicant who engages in the business of transmitting audio-visual programs must obtain a license from SAPPRFT in accordance with its category ofbusiness, including receiving terminals, transmission networks and other items. Foreign-invested enterprises are not allowed to engage in the above business.Pursuant to the Certain Decisions on the Entry of the Non-State-owned Capital into the Cultural Industry, and the Several Opinions on Canvassing ForeignInvestment into the Cultural Sector promulgated in 2005 non-State-owned capital and foreign investors are not allowed to conduct the business oftransmitting audio-visual programs via an information network. On December 20, 2007, SARFT and MII jointly promulgated the Administrative Provisions on Internet Audio-visual Program Service, or the Audio-visual Program Provisions, which came into effect on January 31, 2008 and was revised on August 28, 2015. The Audio-Visual Program Provisions apply tothe provision of audio-visual program services to the public via the Internet (including mobile network) in China. Providers of Internet audio-visual programservices are required to obtain a License for Online Transmission of Audio-Visual Programs issued by SAPPRFT or complete certain registration procedureswith SAPPRFT. Providers of Internet audio-visual program services are generally required to be either State-owned or State-controlled by the PRCgovernment, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for Internet audio-visual programservice determined by SAPPRFT. In a press conference jointly held by SARFT and MII to answer questions with respect to the Audio-Visual ProgramProvisions in February 2008, SARFT and MII clarified that providers of Internet audio-visual program services who engaged in such services prior to thepromulgation of the Audio-Visual Program Provisions are eligible to register their business and continue their operation of Internet audio-visual programservices so long as such providers have not been in violation of laws and regulations. 62Table of Contents On May 21, 2008, SARFT issued a Notice on Relevant Issues Concerning Application and Approval of Licenses for Online Transmission of Audio-Visual Programs, which sets forth detailed provisions concerning the application and approval process for the License for Online Transmission of Audio-Visual Programs. The notice also states that providers of Internet audio-visual program services who engaged in such services prior to the promulgation of theAudio-Visual Program Provisions are eligible to apply for the license as long as their violation of the laws and regulations is minor and can be rectified in atimely manner and they have no records of violation during the three months prior to the promulgation of the Audio-Visual Program Provisions. On December 28, 2007, SARFT issued the Notice on Strengthening the Administration of TV Dramas and Films Transmitted via the Internet, or theNotice on Dramas and Films. According to this notice, if audio-visual programs published to the public through an information network fall under the filmand drama category, the requirements of the Permit for Issuance of TV Dramas, Permit for Public Projection of Films, Permit for Issuance of Cartoons oracademic literature movies and Permit for Public Projection of Academic Literature Movies and TV Plays will apply accordingly. In addition, providers ofsuch services should obtain prior consents from copyright owners of all such audio-visual programs. Further, on March 31, 2009, SARFT issued the Notice on Strengthening the Administration of the Content of Internet Audiovisual Programs, or theNotice on Content of A/V Programs, which reiterates the requirement of obtaining the relevant permit for publishing audio-visual programs to the publicthrough an information network, and prohibits certain types of Internet audio-visual programs from containing violence, pornography, gambling, terrorism,superstitious or other hazardous contents. On April 25, 2016, SAPPRFT issued the Administrative Provisions on Audio-Visual Program Services through Private Network and TargetedCommunication, which replaced 2004 Internet A/V Measures. Pursuant to these provisions, “audio-visual program services through private network andtargeted communication” refer to radio and TV program and other audio-visual program services to a targeted audience with TV, and all types of handheldelectronic equipment, etc., as terminal recipients, and through setting up virtual private network through local area networks and Internet or with Internet andother information networks as targeted transmission channels, including the provision of contents, integrated broadcast control, transmission anddistribution, and other activities conducted by such forms as Internet protocol television (IPTV), private network mobile TV, and Internet TV. Any providerwho engages in aforesaid service must obtain a license from SAPPRFT. Wholly foreign-owned enterprises, Sino-foreign joint ventures and Sino-foreigncooperative enterprises are not allowed to engage in the above business. On March 10, 2017, SAPPRFT issued the Internet Audio-visual Program Services Categories (Provisional), or the Provisional Categories, whichclassifies Internet audio-visual programs into four categories. In order to comply with these laws and regulations, Tianying Jiuzhou submitted an application to SAPPRFT for the License for the OnlineTransmission of Audio-Visual Programs. However, we have not been granted such license as to the date of this annual report and cannot assure you that wemay be able to obtain one. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Our lack of an Internet audio-visual program transmission license has exposed, and may continue to expose, us to administrative sanctions, including the banning of our paid mobilevideo services and video advertising services, which would materially and adversely affect our business and results of operation.” Regulation of Foreign Television Programs and Satellite Channels Broadcast of foreign television programs is strictly regulated by SAPPRFT. On August 11, 1997, the State Council promulgated the AdministrativeRegulations on Television and Radio, which was revised on March 1, 2017, under which any foreign television drama or other foreign television program tobe broadcast by television or radio stations is subject to the prior inspection and approval by SAPPRFT or its authorized entities. On June 18, 2004, SARFTpromulgated the Administrative Measures on the Landing of Foreign Satellite Television Channels, pursuant to which foreign satellite televisions channelscan only be broadcast in three-star (or above) hotels for foreigners or departments exclusively for the residence of foreigners or other specific areas, and priorbroadcasting approval for such limited landing must be obtained from SAPPRFT. In addition, on September 23, 2004, SARFT promulgated the Administrative Regulations on the Introduction and Broadcasting of Foreign TelevisionPrograms, pursuant to which only organizations designated by SAPPRFT are qualified to apply to SAPPRFT or its authorized entities for introduction orbroadcasting of foreign television dramas or foreign television programs. Approval of such application is subject to the general plan of SAPPRFT and thecontent of such foreign television dramas or programs may not in any way threaten the national security or violate any laws or regulations. 63Table of Contents The 2004 Internet A/V Measures explicitly prohibit Internet service providers from broadcasting any foreign television or radio program over aninformation network and state that any violation may result in warnings, monetary penalties or, in severe cases, criminal liabilities. On November 19, 2009,SARFT issued a notice to extend the prohibition to broadcasting foreign television programs via mobile phones. However, pursuant to several notices issuedby SARFT, such as the Notice on Dramas and Films and the Notice on Content of A/V Programs referenced above under “—Regulation of OnlineTransmission of Audio-visual Programs,” foreign audio-visual programs may be published to the public through the Internet, provided that such foreignaudio-visual programs comply with the regulations on administration of radios, films and television, and that the relevant permits required by PRC laws andregulations, such as the Permit for Issuance of TV Dramas, Permit for Public Projection of Films, Permit for Issuance of Cartoons or academic literature moviesand Permit for Public Projection of Academic Literature Movies and TV Plays, have been obtained for such foreign audio-visual programs. The promulgationof the Notice on Dramas and Films and the Notice on Content of A/V Programs implies that the absolute restriction against broadcasting foreign television orradio programs on the Internet as set forth in the 2004 Internet A/V Measures has been lifted. On April 25, 2016, SAPPRFT issued the 2016 A/V Provisions, which replaced the 2004 Internet A/V Measures. The 2016 A/V Provisions does notexplicitly regulate whether broadcasting foreign television program is permitted. A substantial portion of the audio-visual programs and content on our PC websites, mobile applications and mobile websites are closely linked to or areonline versions of the TV content of Phoenix TV and we currently do not have any approval from SAPPRFT for introducing and broadcasting foreigntelevision programs into China and cannot assure you that we may be able to obtain such approval if required to do so. See “Item 3. Key Information—D.Risk Factors—Risks Relating to Our Business and Industry—Failure to obtain SAPPRFT’s approval for introducing and broadcasting foreign televisionprograms could have a material adverse effect on our ability to conduct our business.” Regulation of the Production of Radio and Television Programs On July 19, 2004, SARFT promulgated the Regulations on the Administration of Production of Radio and Television Programs, or the Radio and TVPrograms Regulations, which came into effect as of August 20, 2004 and was revised on August 28, 2015. Under the Radio and TV Programs Regulations,any entities that engage in the production of radio and television programs are required to apply for a license from SAPPRFT or its provincial branches.Entities with the Permit for Production and Operation of Radio and TV Programs must conduct their business operations in strict compliance with theapproved scope of production and operation. Furthermore, entities other than radio and TV stations are strictly prohibited from producing radio and TVprograms covering contemporary political news or similar subjects and columns. Tianying Jiuzhou has been granted a Permit for Production and Operation of Radio and TV Programs, with a permitted scope including the productionof animations, featured shows and entertainment programs. Regulation of Online Cultural Activities, Online Games and Internet Music The MOC promulgated the new Provisional Measures on Administration of Internet Culture on February 17, 2011, or the Internet Culture Measures,which became effective as of April 1, 2011 and the Notice on Issues Relating to Implementing the Newly Amended Provisional Measures on Administrationof Internet Culture on March 18, 2011, replacing the relevant regulations promulgated in 2003. The Internet Culture Measures apply to entities that engagein activities related to “online cultural products.” “Online cultural products” are classified as cultural products produced, disseminated and circulated via theInternet that include: (i) online cultural products specifically produced for the Internet, such as online music entertainment, network games, networkperformance programs, online performing arts, online artworks and online animation features and cartoons; and (ii) online cultural products that areconverted from music entertainment, games, performance programs, performing arts, artworks and animation features and cartoons and disseminated via theInternet. Pursuant to the Internet Culture Measures, an entity that intends to commercially engage in any of the following types of activities are required toobtain an Online Culture Operating Permit from the applicable provincial level culture administrative authority: · the production, duplication, import, distribution or broadcasting of online cultural products; · the publication of online cultural products on the Internet or transmission of online cultural products via an information network, such as theInternet and mobile networks, to a computer, fixed-line or mobile phones, television sets or gaming consoles for the purpose of browsing,reviewing, using or downloading such products by online users; or · exhibitions or contests related to online cultural products. 64Table of Contents The Administration Rules of Publication of Electronic Publication Rules, or the Electronic Publication Rules, regulate the production, publishing andimportation of electronic publication in the PRC and outline a licensing system for business operations involving electronic publishing. Under theElectronic Publication Rules and other regulations issued by GAPP, online games are classified as a type of electronic production and publishing of onlinegames is required to be done by licensed electronic publishing entities with standard publication codes. If a PRC company is contractually authorized topublish foreign electronic publications, it must obtain the approval of, and register the copyright license contract with, SAPPRFT. Pursuant to the Tentative Administrative Measures on Internet Publication, or the Internet Publication Measures, jointly promulgated by MII andGAPP and effective on August 1, 2002, Internet publishers must secure approval, or the Internet Publication license, from GAPP to conduct Internetpublication activities, including operating of online games. In February 2016, the SAPPRFT and the MIIT jointly issued the Administrative Measures onNetwork Publication, which took effect in March 2016 and replaced the Internet Publication Measures. Pursuant to the Administrative Measures on NetworkPublication, Internet publishers must be approved by and obtain a Network Publication Service License from SAPPRFT in order to provide networkpublication services. In addition, the Administrative Measures on Network Publication does not stipulate explicitly whether the holder of InternetPublication License should reapply and obtain the Network Publication Service License within the valid term. On September 28, 2009, GAPP and the National Office of Combating Pornography and Illegal Publications jointly published a circular prohibitingforeign investors from investing and engaging in the operation of online games services by any forms of wholly foreign-owned enterprise, Sino-foreign joint-venture or cooperation. Under this notice, foreign investors cannot control and participate in the operation of online games services provided by domesticcompanies in any indirect forms, such as incorporating other joint-ventures, signing relevant agreements, or providing technical supports. This circularfurther states that all the online games must be screened by SAPPRFT through advanced approvals before they are operated online, and any updated onlinegame versions or any change to the online games are subject to further approvals before they can be operated online. On June 4, 2009, the MOC and MOFCOM jointly issued the Notice on Strengthening the Administration of Online Game Virtual Currency, or theVirtual Currency Notice, to regulate the trading of online game virtual currencies. The Virtual Currency Notice defines the meaning of virtual currency andplaces a set of restrictions on the trading and issuance of virtual currency. The Virtual Currency Notice also reiterates that virtual currency can only beprovided to users in exchange for an RMB payment and can only be used to pay for virtual goods and services of the issuers. In addition, the VirtualCurrency Notice states that online game operators are not allowed to give out virtual items or virtual currency through lottery-base activities, such as luckydraws, betting or random computer sampling, etc., in exchange for user’s cash or virtual money. We provide extra free virtual currencies to game users as theybuy virtual currencies from us. For more information regarding regulatory risks related to our online games business, see “Item 3. Key Information—D. RiskFactors—Risks Relating to Our Business and Industry— If we fail to obtain or maintain all applicable permits and approvals, or fail to comply with PRCregulations, relating to online games, our ability to conduct our online game business and certain other businesses could be affected and we could be subjectto penalties and other administrative sanctions.” On June 3, 2010, the MOC issued the Provisional Regulations for the Administration of Online Games, which applies to business activities relating toonline game development and operation and virtual currencies issuance and trading. Pursuant to this regulation, business entities are required to obtain anOnline Culture Operating Permit prior to commencing their online game operation. Game operators must file separate applications for virtual currenciesissuance and trading. Regarding virtual currencies trading, game operators can only issue virtual currencies in exchange of service they provide themselvesrather than trading for service or products of the third parties. Game operators cannot appropriate advance payments from players. Game operators are notallowed to provide trading service of virtual currencies to minors. Records of all transactions in the accounts shall be kept for minimum 180 days. On December 2, 2016, the MOC issued the Administrative Measures for Business Activities of Online Performances, which became effective onJanuary 1, 2017. According to these measures, the business of transmitting in real time the content of online games presented or narrated via informationnetworks such as Internet, mobile communication networks and mobile Internet or uploading such contents for communication in the audio-visual form shallbe administered as online performances. An operator of online performances shall apply for Online Culture Operating Permit with the competent provincialadministrative cultural department, and the business scope indicated on the Online Culture Operating Permit shall clearly include online performances. Inaddition, an operator of online performances shall present the number of its Online Culture Operating Permit in a prominent position on the homepage of itswebsites. 65Table of Contents On December 1, 2016, MOC issued the Circular of the Ministry of Culture on Regulating the Operations of Online Games and Strengthening Interimand Ex Post Regulation, the MOC Online Games Regulation, which will become effect on May 1, 2017. Pursuant to the MOC Online Games Regulation,MOC further clarified the scope of operations of online games. Technical testing of online games conducted by an enterprise engaging in online gamesoperations by means such as making the online games available for user registration, opening the fee-charging system of the online games, providing client-end software with direct server registration and login functions, etc. shall be deemed as the operations of online games. In addition, with respect to enterprisesengaging in providing user systems, fee-charging systems, program downloading, publicity and promotion and other services for the online game products ofanother operating enterprise and participating in sharing the revenue from the operations of online games shall be deemed as engaging in joint operations,and shall bear corresponding liabilities. In addition, this circular standardizes the service for distributing the virtual props listed as below: · Virtual props distributed by enterprises engaging in online games operations shall be managed pursuant to the provisions on virtualcurrencies of online games. · Enterprises engaging in online games operations that intend to change the version of an online game, increase the types of virtual props,adjust the functions and use period of virtual props or hold temporary activities shall, via the official homepage of the online game or inconspicuous locations within the online game, promptly make public the name, functions, price, exchange rate and expiration date of eachvirtual prop involved, the corresponding ways for gifting, transferring or trading the virtual props and other relevant information. · Enterprises engaging in online games operations that provide virtual props and value-added services of an online game by random selectionshall not require users to participate by way of directly investing legal tender or the virtual currency of the online game. · Enterprises engaging in online games operations shall publish the random selection results of participating users on the official websites of anonline game or in conspicuous locations within the online game, and keep relevant records for at least 90 days for future inquiries by relevantdepartments. · When providing virtual props and value-added services of an online game by way of random selection, an enterprise engaging in onlinegames operations shall, at the same time, provide users with other means to obtain virtual props and value-added services of the sameperformance, such as by exchanging other virtual props, using the virtual currency of the online game to directly purchase virtual props, etc. · Enterprises engaging in online games operations shall not provide users with services to exchange the virtual currency of an online game tolegal tender or physical items, except where the said enterprise terminates the provision of online gaming products and services, and refundsthe virtual currency not yet used by users in the form of legal tender or by other means acceptable to the users. · Enterprises engaging in online games operations may not provide users with services to exchange virtual props into legal tender. In addition, enterprises engaging in online games operations shall require online game users to register their real names by using valid identitydocuments and shall limit the amount that an online game user may top up each time in a single game, and send information that requires confirmation byusers when they top up or engage in consumption, and shall indicate the contact details for protecting user rights and interests in conspicuous locationswithin an online game. On November 20, 2006, the MOC issued Several Suggestions on the Development and Administration of the Internet Music, or the Suggestions, whichbecame effective on November 20, 2006. The Suggestions, among other things, reiterate the requirement for Internet service providers to obtain an OnlineCulture Operating Permit to operate any business involving Internet music products. In addition, foreign investors are prohibited from operating Internetculture businesses. However, the laws and regulations on Internet music products are still evolving, and there have not been any provisions stipulatingwhether or how music videos will be regulated by the Suggestions. On August 18, 2009, the MOC issued the Notice on Strengthening and Improving the Content Review of Online Music. According to this notice, only“Internet culture operating entities” approved by the MOC may engage in the production, release, dissemination (including providing direct links to musicproducts) and importation of online music products. Online music content shall be reviewed by or filed with the MOC. Internet culture operating entitiesshould establish a strict system for self-monitoring online music content and set up a special department in charge of such monitoring. 66Table of Contents Tianying Jiuzhou provides Internet music products on our PC websites, mobile applications and mobile websites. As of the date of this annual report,Tianying Jiuzhou has been granted an Online Culture Operating Permit with a permitted scope including the operation of online music, art and entertainmentproducts, online game products (including virtual currencies for online games), art products, play performance, animation products and organization ofexhibition or race of the online cultural products. However, the Online Culture Operating Permit does not cover the operation of online performances.Tianying Jiuzhou has also obtained an Internet Publication License from SAPPRFT with respect to books and periodicals published on the Internet,including the mobile Internet, and online and mobile games. For more information regarding regulatory risks of our online games business, see “Item 3. KeyInformation—D. Risk Factors—Risks Relating to Our Business and Industry—If we fail to obtain or maintain all applicable permits and approvals, or fail tocomply with PRC regulations, relating to online games, our ability to conduct our online game business and certain other businesses could be affected andwe could be subject to penalties and other administrative sanctions.” In addition, to comply with the laws and regulations on the content requirements of Internet music products, our content examination team reviews thecontent of online music products provided on our PC websites, mobile applications and mobile websites. Regulation of Internet News Dissemination Pursuant to the Provisional Regulations for the Administration of Internet Websites Engaging in News Publication Services, promulgated by the StateCouncil Information Office, or the SCIO, and MII, which became effective as of November 6, 2000 websites established by non-news organizations maypublish news released by certain official news agencies but may not publish news generated by themselves or news sourced elsewhere. In order to disseminatenews, such websites must satisfy the relevant requirements set forth in the applicable regulations and have acquired approval from SCIO after securingpermission from the news office of the provincial-level government. In addition, websites intending to publish news released by the aforementioned newsagencies must enter into agreements with the respective organizations, and file copies of such agreements with the news office of the provincial-levelgovernment. On November 4, 2016, the State Internet Information Office issued the Provisions on the Administration of Online Live-streaming Services, whichbecame effective on December 1, 2016. According to these provisions, online live-streaming service providers shall obtain an Internet news license, and carryout Internet news information services within the permissible scope of the license; those who provide online performances, Internet video and audio programsand other online live-streaming services shall also obtain relevant licenses as required by laws and regulations. Online live-streaming service providers shallexamine and verify the real identity information of online live-streaming service publishers and establish platforms for reviewing live-streaming content,exercise oversight over Internet news information live-streams and its interactive content following the principle of examination first and issuance later. Inaddition, online live-streaming service providers shall strengthen real-time management of live interactions and equip corresponding administrative staff. On May 2, 2017, the CAC issued the Provisions on Administration over the Internet News Information Services, which became effective on June 1,2017 and replaced the Provisions for the Administration of Internet News Information Services, promulgated by the SCIO, and MII, which became effectiveas of September 25, 2005. In addition, CAC issued the Implementing Rules for the Administration of the Licensing for Internet News Information Services onMay 22, 2017, which became effective as of June 1, 2017. According to these regulations, Internet news information services are divided into threecategories: collecting, editing and releasing Internet news information service; reposting Internet news information and providing platforms to disseminatesuch news information. Anyone who intends to provide the public with news information services on the Internet via Internet websites, applications, forums,blogs, micro-blogs, official accounts, instant messaging tools, network-based broadcast, etc. shall obtain an Internet news license, and is forbidden to carryout any activities concerning Internet news information services without the permit or beyond the permitted scope. Where such an applicant is an entity otherthan a news entity, or a party whose entity-in-charge is a news publicity department, the application shall first be subject to preliminary examination by theapplicable cyberspace administrator at the provincial level, and thereafter be examined and approved by the CAC. No organization may establish the Internetnews information service entity in the form of a Sino-foreign equity joint venture, Sino-foreign cooperative joint venture or wholly foreign-investedenterprise. When an Internet news information service entity cooperates with a Sino-foreign equity joint venture, Sino-foreign cooperative joint venture orwholly foreign-invested enterprise, such cooperation shall be submitted to the CAC for security assessment. In addition, an Internet news information serviceprovider shall request its users to submit their real identification information in accordance with the provisions of the Cyber Security Law, provided that itprovides such users with a platform to disseminate news information on the Internet. Where any user refuses to provide its real identification information, theInternet news information service provider is not allowed to provide it with relevant services. In order to comply with these laws and regulations, we submitted an application to CAC for the Internet news license. However, we have not beengranted such license as of the date of this annual report and cannot assure you that we may be able to obtain one. See “Item 3. Key Information—D. RiskFactors—Risks Relating to Our Business and Industry—Our lack of an Internet news license may expose us to administrative sanctions, including an order tocease our Internet information services that provide political news or to cease the Internet access services provided by third parties to us.” 67Table of Contents Regulation of Publication Operation On March 25, 2011, GAPP and MOFCOM jointly issued the Administrative Measures for the Publication Market, or the Publication Market Measures(2011 Version), pursuant to which any entity or individual engaging in the wholesale or retail of books, newspaper, magazines, electronic publications andaudio and video products must obtain an approval from the relevant press and publication administrative authority and receive a Publication OperationPermit. An enterprise that has obtained a Publication Operation Permit is not required to obtain any special permission if it utilizes the Internet and otherinformation networks to sell such publications, but must file with the relevant press and publication administrative authority within 15 days following itscommencement of operations on the Internet. Foreign investors may engage in the distribution of audio and video products in China only in the form ofcontractual joint ventures between foreign and Chinese investors. Due to these measures, we engage in retail of books, newspaper, magazines, electronicpublications and audio and video products through Tianying Jiuzhou and wholesale and retail of books, newspaper, magazines and electronic publicationsthrough Yifeng Lianhe. Each of Tianying Jiuzhou and Yifeng Lianhe has obtained a Publication Operation Permit. On May 31, 2016, SAPPRFT and MOFCOM jointly promulgated the Administrative Measures for the Publication Market (2016 Version), orPublication Market Measures (2016 Version), which replaced the Publication Market Measures (2011 Version). According to the Publication MarketMeasures (2016 Version), entities and individuals engaged in the wholesale or retail of publications shall carry out the relevant activities on the strength ofan operation permit for publications. Where an entity or individual is engaged in the distribution of publications via the Internet or other informationnetworks, it or he/she shall obtain the operation permit for publications; where an entity or individual that has obtained the operation permit for publicationsis engaged in the distribution of publications via the Internet or other information networks within the approved business scope, it or he/she shall go throughthe record-filing formalities with the publication administrative department that granted approval within 15 days after launching the online distributionbusiness. Pursuant to the Publication Market (2016 Version), foreign-invested enterprises are allowed to engage in the distribution of publications. Regulation of Internet Publication SAPPRFT is the government agency regulating publishing activities in the PRC. On June 27, 2002, MII and GAPP jointly promulgated the TentativeAdministration Measures on Internet Publication, or the Internet Publication Measures, which took effect on August 1, 2002. The Internet PublicationMeasures require Internet publishers to secure approval, or the Internet Publication License, from SAPPRFT to conduct Internet publication activities. InFebruary 2016, the SAPPRFT and the MIIT jointly issued the Administrative Measures on Network Publication, which took effect in March 2016 andreplaced the Internet Publication Measure. The Administrative Measures on Network Publication further strengthen and expand supervision over andmanagement of network publication services, and require Internet publishers to be approved by and obtain a Network Publication Service License fromSAPPRFT. Pursuant to the Administrative Measures on Network Publication, “network publication services” refers to activities including providing networkpublications to the public through information network, and “network publications” refers to digitalized works with publishing features such as editing,producing and processing. The Administrative Measures on Network Publication also detailed qualifications and application procedures for obtaining aNetwork Publication Service License. User generated content, the programs we select, produce and/or edit for users’ browsing, reading or downloading or our online games may be deemed akind of “Internet publication” and the relevant authority could require us to obtain a Network Publication Service License. Tianying Jiuzhou has obtained anInternet Publication License from SAPPRFT. However, Yifeng Lianhe has not obtained this license. See “Item 3. Key Information—D. Risk Factors—RisksRelating to Our Business and Industry—If we fail to obtain or maintain all applicable permits and approvals, or fail to comply with PRC regulations, relatingto online games, our ability to conduct our online game business and certain other businesses could be affected and we could be subject to penalties andother administrative sanctions.” Regulation of Short Message Services MII issued the Notice on Certain Issues Regarding Standardizing Short Message Services on April 15, 2004, specifying that only those informationservice providers holding the relevant license can provide short message services in the PRC. Such notice also specifies that information service providersshall examine the contents of short messages and automatically record and keep for five months the time of sending and receiving the short messages, themobile numbers or codes of the sending terminal and receiving terminal of the short messages. MIIT issued the Administrative Provisions on Short Message Services for Communication on May 19, 2015, which became effective on June 30, 2015.According to such provisions, an entity shall obtain relevant telecommunications business license (“the relevant licenses”) to engage in short messageservice. 68Table of Contents In order to comply with these laws and regulations, Tianying Jiuzhou and Yifeng Lianhe have obtained the relevant licenses, for provision ofinformation via mobile networks. In addition, we have certain personnel to examine and screen on contents of short messages and keep the relevant records asrequired by the law. Regulation of Telecommunications Networks Code Number Resources On January 29, 2003, MII issued the Administrative Measures on Telecommunications Networks Code Number Resources, or the Code NumberMeasures, which was revised on September 23, 2014, to regulate code numbers, including those of mobile communications networks. According to suchadministrative measures, entities which apply for code numbers to be used in a trans-provincial range shall apply to MIIT, and entities which apply for codenumbers to be used within provincial-level administrative regions shall apply to MIIT at the provincial level. Such administrative measures also specify thequalification requirements for code number applicants, required application materials and the application procedures. In June 2006, MII issued the Administrative Measures on Application, Distribution, Usage and Withdrawal of SMS Services Access Codes. Accordingto such administrative measures, the administration and usage of services relating to SMS short codes shall comply with the Code Number Measures. Suchadministrative measures also specify that operators who provide services relating to SMS short codes across provinces or in the territory of the whole countryshall file with the relevant provincial-level counterparts of MII. Each of Tianying Jiuzhou and Yifeng Lianhe has been granted the code numbers to be used in a trans-provincial range and has completed the filing inall of the provinces in the PRC. Regulation of Certain Internet Content Internet Medicine Information The Administration Measures on Internet Medicine Information Service issued by The State Food and Drug Administration, or the SFDA, and relatedimplementing rules and notices govern the classification, application, approval, contents, qualifications and requirements for Internet medicine informationservices. An ICP service operator that provides information regarding medicine or medical equipment must obtain an Internet Medicine Information ServiceQualification Certificate from the applicable provincial level counterpart of SFDA. Certain of our verticals contain medicine-related. We currently do not have such consent letter or qualification certificate, but have engaged an agencyto assist us in applying for such certificate and consent letter. We cannot assure you that we may be able to obtain them. See “Item 3. Key Information—D.Risk Factors—Risks Relating to Our Business and Industry—Failure to obtain certain permits for our health and Chinese medicine verticals would subject usto penalties.” Regulation of Internet Privacy The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits the infringement of suchrights. In recent years, PRC government authorities have passed regulations on Internet use to protect personal information from unauthorized disclosure. TheInternet Measures prohibit an ICP service operator from insulting or slandering a third party or infringing upon the lawful rights and interests of a third party.The regulations also authorize the relevant telecommunications authorities to order ICP service operators to rectify unauthorized disclosures. ICP serviceoperators are subject to legal liability if unauthorized disclosure results in damages or losses to users. The PRC government, however, has the power andauthority to order ICP service operators to turn over personal information if an Internet user posts any prohibited content or engages in illegal activities onthe Internet. Pursuant to the Information Protection Decision issued by the Standing Committee of the National People’s Congress of the PRC and the Orderfor the Protection of Telecommunication and Internet User Personal Information issued by MIIT on July 16, 2013, or the Order, any collection and use ofuser personal information shall be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specifiedpurposes, methods and scope. The Information Protection Decision and the Order further states that Inter net service providers and other enterprises andinstitutions must keep users’ personal information that is gathered in the course of their business activities confidential and are further prohibited fromdivulging, tampering or destroying of any such information, or selling or providing such information to other parties. Any violations of the InformationProtection Decision or the Order may subject such companies to penalties such as warnings, fines, confiscation of its unlawful income, revocation of licenses,cancellation of filings, shutdown of their websites or even criminal liabilities. 69Table of Contents Our platforms are open to Internet users for uploading text and images. As a result, content posted by our users may expose us to allegations by thirdparties of invasion of privacy. Though our users agree not to use our services in a way that is illegal, given the volume of content uploaded, it is not possibleto identify and remove all potentially infringing content uploaded by our users and we may therefore be subject to litigations or claims in connection withinvasion of user privacy. Regulation of Advertising Business The State Administration for Industry and Commerce, or SAIC, is the government agency responsible for regulating advertising activities in the PRC. According to PRC Advertisement Law and relevant rules and regulations, companies that engage in advertising activities must obtain from SAIC or itslocal branches a business license which specifically includes advertising within its business scope. PRC advertising laws and regulations set forth certaincontent requirements for advertisements in the PRC including, among other things, prohibitions on false or misleading content, superlative wording, sociallydestabilizing content or content involving obscenities, superstition, violence, discrimination or infringement of the public interest. Advertisers, advertisingagencies, and advertising distributors are required to ensure that the content of the advertisements they prepare or distribute is true and in full compliancewith applicable law. In providing advertising services, advertising operators and advertising distributors must review the supporting documents provided byadvertisers for their advertisements and verify that the content of the advertisements complies with applicable PRC laws and regulations. Prior to distributingadvertisements that are subject to government censorship and approval, advertising distributors are obligated to verify that such censorship has beenperformed and approval has been obtained. The release or delivery of advertisements through the Internet shall not impair the normal use of the users.Advertisements released in pop-up forms on a webpage and other forms shall indicate the close flag in prominent manner and ensure one-key close. Violationof these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements andorders to eliminate the effect of illegal advertisement. In circumstances involving serious violations, SAIC or its local branches may revoke violators’ licensesor permits for their advertising business operations. On July 4, 2016, SAIC issued the Interim Measures for the Administration of Internet Advertising to regulate Internet advertising activities, whichbecame effect on September 1, 2016. According to these measures, no advertisement of any medical treatment, medicines, foods for special medical purpose,medical apparatuses, pesticides, veterinary medicines, dietary supplement or other special commodities or services which are subject to examination by anadvertising examination authority as stipulated by laws and regulations shall be published unless it has passed such examination. In addition, no entity orindividual may publish any advertisement of over-the-counter medicines or tobacco by means of the Internet. An Internet advertisement shall be identifiableand clearly identified as an “advertisement” so that consumers will know that it is an advertisement. Paid search advertisements shall be clearly distinguishedfrom natural search results. In addition, the following violations shall be forbidden in Internet advertising activities: providing or using any applicationprograms or hardware to intercept, filter, cover, fast forward or otherwise restrict any authorized advertisement of other persons; using network pathways,network equipment or applications to disrupt the normal data transmission of advertisements, alter or block authorized advertisements of other persons orload advertisements without authorization; or using false statistical data, transmission effect or Internet medium prices to induce incorrect quotations, seekundue interests or damage the interests of other persons. Internet advertisement publishers shall verify related supporting documents, check the contents ofthe advertisement and be prohibited from publishing any advertisement with nonconforming contents or without all the necessary certification documents.Internet information service providers that are not involved in Internet advertising business activities but simply provide information services shall stop anyattempt to publish an advertisement through their information services when they know, or should reasonably know, that such advertisement is illegal. In November, 2017, the Standing Committee of the National People’s Congress released a newly amended Anti-unfair Competition Law of the PRC, orthe Anti-unfair Competition Law, which became effective on January 1, 2018. Such newly amended Anti-unfair Competition Law further emphasize that abusiness operator that engage in production and business activities by taking advantage of the network shall abide all the provisions under Anti-unfairCompetition Law, and shall not engage in any false or misleading publicity for its products. Violation of these provisions may subject the relevant businessoperators to various penalties, including an order from the competent governmental authorities to cease its illegal acts and impose a fine, or in case of asevere violation, revocation of business licenses. Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of theadvertisements and orders to eliminate the effect of illegal advertisement. In circumstances involving serious violations, SAIC or its local branches mayrevoke violators’ licenses or permits for their advertising business operations. 70Table of Contents In order to comply with these laws and regulations, our advertising contracts require that all advertising agencies or advertisers that contract with usmust examine the advertising content provided to us to ensure that such content are truthful, accurate and in full compliance with PRC laws and regulations.In addition, we have established a task force to review all advertising materials to ensure the content does not violate relevant laws and regulations beforedisplaying such advertisements, and we also request relevant advertiser to provide proof of governmental approval if an advertisement is subject to specialgovernment review. Regulation of Information Security and Censorship Applicable PRC laws and regulations specifically prohibit the use of Internet infrastructure where it may breach public security, distribute contentharmful to the stability of society or disclose state secrets. It is mandatory for Internet companies in the PRC to complete security filing procedures andregularly update information security and censorship systems for their websites with the local public security bureau. In addition, the newly amended Law onPreservation of State Secrets, which became effective on October 1, 2010, provides that whenever an Internet service provider detects any leakage of statesecrets in the distribution of online information, it should stop the distribution of such information and report such violation to the state security and publicsecurity authorities. Upon request of state security, public security or state secrecy authorities, the Internet service provider must delete any contents on itswebsites that may lead to disclosure of state secrets. Failure to do so on a timely and adequate manner may subject the Internet service provider to liabilityand certain penalties enforced by the State Security Bureau, the Ministry of Public Security and/or MIIT or their respective local counterparts. On June 28, 2016, the State Internet Information Office issued the Administrative Provisions on Mobile Internet Applications Information Services,which became effect on August 1, 2016, to further strengthen administration over mobile Internet applications information services. Pursuant to theseprovisions, owners or operators of mobile Internet applications that provide information services shall fulfill their information security managementresponsibilities strictly and perform their obligations listed as below: · certify the identification information of registered users including their mobile telephone number based information under the principle of areal name backstage, and a freely-chosen name on stage; · establish and perfect the mechanism for protecting users’ information, and follow the principle of legality, rightfulness and necessity, indicateexpressly the purpose, method and scope of collection and use and obtain the consents of users while collecting and using users’ personalinformation; · establish and perfect the mechanism for verifying and managing information contents, and in terms of any information content released thatviolates laws or regulations, take such measures as warning, restricting functions, suspending updates and closing accounts as the case maybe, keep relevant records and report the same to relevant competent departments; · safeguard users’ right to know and to make choices when users are installing or using such applications, and refrain from starting suchfunctions as collecting the information of users’ location, accessing users’ contacts, turning on users’ camera and recording sound, or anyother function irrelevant to the services, nor forcefully install any other irrelevant application, for so long as users are not notified of the sameclearly and do not give their consent; · respect and protect intellectual property and refrain from producing or releasing any application that infringes others’ intellectual property;and · record the users’ log information and keep the same for 60 days. On November 7, 2016, the Standing Committee of the National People’s Congress promulgated the Cyber Security Law to preserve cyberspace securityand order. Pursuant to Cyber Security Law, network operators shall strictly keep confidential users’ personal information that they have collected, andestablish and improve systems to protect users’ information. To collect and use personal information, network operators shall follow the principles oflegitimacy, rightfulness and necessity, disclose their rules of data collection and use, clearly express the purposes, means and scope of collecting and usinginformation, and obtain the consent of persons whose data is gathered. Network operators shall not gather personal information unrelated to the services theyprovide. Network operators shall not divulge, distort or damage the personal information they have collected, and shall not provide the personal informationto others without the consent of the persons whose data is collected, except under circumstance where the information has been processed and cannot berecovered and thus it is impossible to match such information with specific persons. In addition, network operators shall perform the following securityobligations according to the requirements of the classified protection system for cyber security to ensure that the network is free from interference, damage orunauthorized access, and prevent network data from being divulged, stolen or falsified: 71Table of Contents · formulate internal security management systems and operating instructions, determine the persons responsible for cyber security, and fulfillthe responsibilities of cyber security protection; · take technological measures to prevent computer viruses, network attacks, network intrusions and other actions endangering cyber security; · take technological measures to monitor and record the network operation status and cyber security incidents, and preserve relevant web logsfor no less than six months according to the provisions; and · take measures such as data classification, as well as back-up and encryption of important data. Violation of these laws and provisions may result in penalties, including fines, confiscation of illegal income. In circumstances involving seriousviolations, the competent telecommunication department, public security departments and other relevant authorities may order the network operators tosuspend relevant business, stop the business for rectification or close down the websites, or revoke violators’ licenses or permits for their business operations. On August 25, 2017, the CAC promulgated the Administrative Provisions on Internet Follow-up Comment Services, which became effective onOctober 1, 2017, pursuant to which Internet follow-up comment services refers to the services of publishing transcripts, symbols, expressions, pictures, audioand video and other information offered by Internet websites, applications, interactive communication platforms and other types of communication platformswith news and public opinion property and social mobilization function by way of post, reply, message, bullet screen and using other means. The Internetfollow-up comment service providers shall strictly assume the primary responsibilities and discharge the following obligations according to the law: · verify the real identity information of registered users following the principle of using real name at foreground and volunteering to do so atbackground and forbid the provision of Internet follow-up comment services for users whose real identity information is not verified; · establish and improve a user information protection system; · establish a system of reviewing at first and then publishing comments if the service providers offer Internet follow-up comment services tonews information; · establish and improve an Internet follow-up comment review and administration, real-time check, emergency response and other informationsecurity administration systems, timely identify and process illicit information and submit a report to the relevant competent authorities; · develop Internet follow-up comment information protection and administration technologies, timely identify security flaws and loopholesand other risks existing in Internet follow-up comment services, take remedial measures and submit a report to the relevant competentauthorities; and · build a reviewing and editing team in line with service scale and improve the professionalism of editors. In addition, on August 25, 2017, the CAC promulgated the Administrative Provisions on Internet Forum and Community Services, which becameeffective on October 1, 2017, pursuant to which the Internet forum and community service providers shall assume the primary responsibility for establishingand improving the information check and verification, public information real-time check, emergency response and personal information protection andother information security administration systems, institute safe and controllable preventative measures, employ professionals in line with their service scale,and provide necessary technical support for the relevant departments in performing duties according to the law. The Internet forum and community serviceproviders shall not use Internet forum and community services to publish or disseminate information banned by laws, regulations and the relevant provisionsof the state. Where the Internet forum and community service providers identify any aforementioned information, they shall cease the transmission of suchinformation forthwith, take deletion and other handling measures, retain the relevant records and timely submit a report to the CAC or its local counterparts. To comply with these laws and regulations, we have completed the mandatory security filing procedures with the local public security authorities, andregularly updated the information security and content-filtering systems with newly issued content restrictions as required by the relevant laws andregulations. However, not all of our users have registered their real names by using valid identity documents, we may be ordered to effect rectification by therelevant competent authorities; where we fail to effect rectification or if the circumstances are serious, a fine of no less than RMB50,000 but no more thanRMB500,000 may be imposed, and the relevant competent authorities may order us to suspend operation, stop doing business for internal rectification, closedown the website, or may revoke relevant business permits or business licenses; and a fine of no less than RMB10,000 but no more than RMB100,000 maybe imposed on the persons directly in charge and other directly responsible persons. 72Table of Contents Regulation of Internet Copyrights In order to address copyright issues relating to the Internet, in December 2012, the PRC Supreme People’s Court adopted the Provisions on CertainIssues Concerning the Applicable Laws in the Trial of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through InformationNetworks, or the Provisions, which provides that the courts will require ICP service providers to remove not only links or content that have been specificallymentioned in the notices of infringement from right holders, but also links or content they “should have known” to contain infringing content. TheProvisions further provide that where an ICP service provider has directly obtained economic benefits from any content made available by an Internet user, ithas a higher duty of care with respect to Internet users’ infringement of third-party copyrights. According to the Copyright Law, an infringer may be subjectto various consequences, which include stopping the infringement, eliminating the damages, apologizing to the copyright owners and compensating the lossof copyright owners. The Copyright Law further provides that the infringer shall compensate the actual loss suffered by the copyright owner. If the actual lossof the copyright owner is difficult to determine, the illegal income received by the infringer as a result of the infringement shall be deemed as the actual lossor if such illegal income is difficult to be determine, the court may decide the amount of the actual loss up to RMB500,000. Under the applicable laws and regulations, where a copyright holder finds that any content communicated through the Internet infringes upon itscopyright and sends a notice to the ICP service operator, the ICP service operator shall immediately take measures to remove the relevant content. Such ICPservice operator is also required to retain all infringement notices for six months and to record the content, display time and IP addresses and the domainnames related to the infringement for 60 days. Where an ICP service operator removes relevant content of an Internet content provider according to the noticeof a copyright holder, the Internet content provider may deliver a counter-notice to both the ICP service operator and the copyright holder, stating that theremoved contents do not infringe upon the copyright of other parties. After the delivery of such counter-notice, the ICP service operator may immediatelyreinstate the removed contents and shall not bear administrative legal liability for such reinstatement. Where an ICP service operator is clearly aware of theinfringement by an Internet content provider of another’s copyright through the Internet, or, although not being aware of such activity, fails to take measuresto remove relevant contents upon receipt of the copyright owner’s notice, and as a result, damages public interests, the ICP service operator could be subjectto an order to stop the tortious act and other administrative penalties such as confiscation of illegal income and fines. Where there is no evidence to indicatethat an ICP service operator is clearly aware of the facts of tort, or the ICP service operator has taken measures to remove relevant contents upon receipt of thecopyright owner’s notice, the ICP service provider shall not bear the relevant administrative legal liabilities. Our content licensors and users have entered into agreements with us in which they make an undertaking not to provide or upload any contents thatmay have infringed on the copyright of any third parties. However, we cannot ensure you that our content licensors or users who upload contents to our PCwebsites, mobile applications and mobile websites will not infringe on the copyright of any third parties and we could delete any infringed contents in a timemanner or at all. We may be consequently subject to copyright infringement claims arising thereof. See “Item 3. Key Information—D. Risk Factors—RisksRelating to Our Business and Industry—We have been and expect we will continue to be exposed to intellectual property infringement and other claims,including claims based on content posted on our PC websites, mobile applications and mobile websites, which could be time-consuming and costly todefend and may result in substantial damage awards and/or court orders that may prevent us from continuing to provide certain of our existing services.” Regulation of Foreign Exchange Control and Administration Under the Foreign Exchange Administration Rules, Renminbi is convertible for current account items, including the distribution of dividends, interestpayments, trade and service-related foreign exchange transactions. As for capital account items, such as direct investments, loans, security investments andthe repatriation of investment returns, however, the conversion of foreign currency is still subject to the approval of, or registration with, SAFE or itscompetent local branches. SAFE approval is not necessary for the conversion of Renminbi for foreign currency payments for current account items except asotherwise explicitly provided by laws and regulations. Under the Administration Rules of the Settlement, Sale and Payment of Foreign Exchange, enterprisesmay only buy, sell or remit foreign currencies at banks that are authorized to conduct foreign exchange business after the enterprise provides validcommercial documents and relevant supporting documents and, in the case of certain capital account transactions, after obtaining approval from SAFE or itscompetent local branches. If we provide loans to any of our PRC subsidiaries, the total amount of such loans may not exceed the difference between its totalinvestment as approved by the foreign investment authorities and its registered capital at the time of the provision of such loans. Such loans need to beregistered with the SAFE, which usually takes no more than 20 working days to complete. The cost of completing such registration is minimal. Capitalinvestments by enterprises outside of the PRC are subject to further limitations, which include approvals by MOFCOM, SAFE and the National Developmentand Reform Commission, or their respective competent local branches. 73Table of Contents On August 29, 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Paymentand Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142. Pursuant to SAFE Circular 142, Renminbi capitalobtained from settlement of the foreign currency capital of a foreign-invested enterprise must be used within the business scope as approved by theapplicable government authority and unless otherwise specifically provided by law, such Renminbi capital cannot be used for domestic equity investments.In addition, SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from foreign currency registered capital of a foreign-invested company. As a result, the use of such Renminbi capital may not be altered without the SAFE’s approval, and such Renminbi capital may not be usedto repay Renminbi loans if the relevant loan proceeds have not been used. As to the latest development, on March 30, 2015, SAFE issued the Circular on theManagement Concerning the Reform of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 19,which became effective on June 1, 2015 and replaced SAFE Circular 142. Pursuant to SAFE Circular 19, up to 100% of foreign currency capital of foreign-invested enterprise may be converted into RMB capital according to the actual operation of the enterprise within the business scope at its will and the RMBcapital converted from foreign currency registered capital of a foreign-invested enterprise may be used for equity investments within the PRC. However,under SAFE Circular 19, RMB capital converted from foreign currency registered capital of a foreign-invested company still may not in any case be used toadvance the RMB entrusted loan or repay RMB loans if the proceeds of such loans have not been used. On November 19, 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on ForeignDirect Investment, or SAFE Circular 59, which became effective on December 17, 2012. SAFE Circular 59 substantially amends and simplifies the currentforeign exchange procedure. The major developments under SAFE Circular 59 are that the opening of various special purpose foreign exchange accounts,such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, no longer requires the approval of SAFE.Furthermore, multiple capital accounts for the same entity may be opened in different provinces, which was not possible before the issuance of SAFE Circular59. The reinvestment of lawful incomes, such as profit and proceeds of equity transfer, capital reduction, liquidation and early repatriation of investment, byforeign investors in the PRC and the purchase and remittance of foreign exchange as a result of capital reduction, liquidation, early repatriation or sharetransfer in a foreign-invested enterprise no longer requires SAFE approval. On May 10, 2013, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over DomesticDirect Investment by Foreign Investors and the Supporting Documents, which specifies that the administration by SAFE or its local branches over directinvestment by foreign investors in the PRC shall be conducted by way of registration. Institutions and individuals shall register with SAFE and/or itsbranches for their direct investment in the PRC. Banks shall process foreign exchange business relating to the direct investment in the PRC based on theregistration information provided by SAFE and its branches. On February 13, 2015, SAFE issued the Circular on Further Simplifying and Improving the Foreign Exchange Administration Policies on DirectInvestments, or SAFE Circular 13, pursuant to which the administrative examination and approval procedures with SAFE or its local branches relating to theforeign exchange registration approval for domestic direct investments as well as overseas direct investments have been cancelled, and qualified banks aredelegated the power to directly conduct such foreign exchange registrations under the supervision of SAFE or its local branches. SAFE Circular 13 tookeffect on June 1, 2015. On April 26, 2016, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Promoting Trade and Investment Facilityand Improving the Examination and Verification of the Authenticity, pursuant to which when handling the remittance of profits exceeding the equivalent ofUS$50,000 abroad for a domestic institution, a bank shall examine, according to the principle of transaction authenticity, the profit distribution resolution ofthe board of directors (or the profit distribution resolution of all partners) that is related to this remittance of profits abroad, the original of its tax record-filingform and the financial statements in proof of the profits involved in this remittance. On June 9, 2016, SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Controlover Foreign Exchange Settlement of Capital Accounts, to promote nationwide the reform of control approaches to foreign exchange settlement of foreigndebts of enterprises and in the meantime to unify and regulate control over discretionary settlement and payment of foreign exchange receipts under capitalaccounts. Pursuant to this circular, domestic enterprises (including foreign-invested enterprises) may go through foreign exchange settlement formalities fortheir foreign debts at their discretion. In addition, domestic institutions may, at their discretion, settle up to 100% of foreign exchange receipts under capitalaccounts for the time being. 74Table of Contents Regulation of Foreign Exchange Registration of Offshore Investment by PRC Residents On July 4, 2014, SAFE issued the Circular on Several Issues Concerning Foreign Exchange Administration of Domestic Residents Engaging inOverseas Investment, Financing and Round-Trip Investment via Special Purpose Vehicles, or SAFE Circular 37, which became effective on the same date.SAFE Circular 37 and its detailed guidelines require PRC residents to register with the local branch of SAFE before contributing their legally owned onshoreor offshore assets or equity interest into any special purpose vehicle, or SPV, directly established, or indirectly controlled, by them for the purpose ofinvestment or financing; and when there is (i) any change to the basic information of the SPV, such as any change relating to its individual PRC residentshareholders, name or operation period or (ii) any material change, such as increase or decrease in the share capital held by its individual PRC residentshareholders, a share transfer or exchange of the shares in the SPV, or a merger or split of the SPV, the PRC resident must register such changes with the localbranch of SAFE on a timely basis. According to the relevant SAFE rules, failure to comply with the registration procedures set forth in SAFE Circular 37 mayresult in restrictions being imposed on the foreign exchange activities of the relevant onshore companies of SPVs, including the payment of dividends andother distributions to its offshore parent or affiliate and the capital inflow from such offshore entity, and may also subject the relevant PRC residents andonshore companies to penalties under PRC foreign exchange administration regulations. Further, failure to comply with various SAFE registrationrequirements described above would result in administrative penalties or even criminal liabilities under PRC laws. On February 13, 2015, SAFE issued SAFECircular 13, which is the Circular on Further Simplifying and Improving the Foreign Exchange Administration Policies on Direct Investments. Under SAFECircular 13, qualified banks are delegated the power to register all PRC residents’ investments in SPVs pursuant to SAFE Circular 37, saving forsupplementary registration application made by PRC residents who failed to comply with SAFE Circular 37, which shall still fall into the jurisdiction of thelocal branch of SAFE. SAFE Circular 13 took effect on June 1, 2015. We understand that the aforesaid registration requirement under SAFE Circular 37, SAFE Circular 13 and the relevant implementing rules do not applyto our PRC subsidiaries or our PRC resident beneficial owners due to the following reasons: (i) our company was incorporated and controlled by Phoenix TV,a Hong Kong listed company, rather than any PRC residents defined under SAFE Circular 37, (ii) none of the former or current shareholders of our PRCaffiliated consolidated entities established or acquired interest in our company by injecting the assets of, or equity interest in, our affiliated consolidatedentities, and (iii) before the public listing of our ADSs all of our PRC resident beneficial owners obtained interest in our company through exercise of optionsgranted to them under our share incentive plan. However, we cannot assure you that SAFE or its local branch would hold the same opinion with us and therelevant government authorities have broad discretion in interpreting these rules and regulations. See “Item 3. Key Information—D. Risk Factors—RiskRelating to Doing Business in China—If the PRC government finds that our PRC beneficial owners are subject to the SAFE registration requirement underSAFE Circular 37 and the relevant implementing rules and our PRC beneficial owners fail to comply with such registration requirements, such PRCbeneficial owners may be subject to personal liability, our ability to acquire PRC companies or to inject capital into our PRC subsidiaries may be limited, ourPRC subsidiaries’ ability to distribute profits to us may be limited, or our business may be otherwise materially and adversely affected.” SAFE Regulation of Stock Incentive Plan On December 25, 2006, the People’s Bank of China promulgated the Administrative Measures for Individual Foreign Exchange. On January 5, 2007,SAFE issued the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rules, which,among other things, specifies the approval requirements for a “domestic individual’s” (including both PRC residents and non-PRC residents who reside inthe PRC for a continuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations)participation in employee stock plans or stock option plans of an overseas publicly listed company. On February 15, 2012, SAFE issued the Notices on Issuesconcerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, orthe Stock Incentive Plan Rules, which terminated the Processing Guidance on Foreign Exchange Administration of Domestic Individuals Participating inthe Employee Stock Ownership Plans or Stock Option Plans of Overseas-Listed Companies issued by SAFE on March 28, 2007. According to the StockIncentive Plan Rules, if a domestic individual participates in any stock incentive plan of an overseas listed company, a qualified PRC domestic agent, whichcan be the PRC subsidiaries of such overseas listed company, shall, among other things, file, on behalf of such individual, an application with SAFE toconduct the SAFE registration with respect to such stock incentive plan, and obtain approval for an annual allowance with respect to the purchase of foreignexchange in connection with the stock purchase or stock option exercise. Such PRC individuals’ foreign exchange income received from the sale of stocksand dividends distributed by the overseas listed company and any other income shall be fully remitted into a collective foreign currency account in the PRCopened and managed by the PRC domestic agent before distribution to such individuals. 75Table of Contents Our employees who are “domestic individuals” and have been granted share options, or PRC optionees are subject to the Stock Incentive Plan Rules.Our stock incentive plan has been registered with SAFE when we listed in New York Stock Exchange, however, we cannot assure you that we will be able tocomplete relevant registration for other employees who participate such stock incentive plan in the future, in a timely manner or at all. If we or our PRCoptionees fail to comply with the Individual Foreign Exchange Rules and the Stock Incentive Plan Rules, we and/or our PRC optionees may be subject tofines and other legal sanctions. We may also face regulatory uncertainties that could restrict our ability to adopt additional option plans for our directors andemployees under PRC law. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Failure to comply with PRCregulations regarding the registration requirements for stock incentive plans may subject the plan participants or us to fines and other legal or administrativesanctions.” Regulation of Dividend Distributions Wholly foreign-owned enterprises in the PRC may pay dividends only out of their accumulated profits, if any, as determined in accordance with PRCaccounting standards and regulations. In addition, a wholly foreign-owned enterprise in the PRC is required to set aside at least 10% of its after-tax profitbased on PRC accounting standards each year to its general reserves until its cumulative total reserve funds reaches 50% of its registered capital. The board ofdirectors of a wholly foreign-owned enterprise has the discretion to allocate a portion of its after-tax profits to its employee welfare and bonus funds. Thesereserve funds, however, may not be distributed as cash dividends. Under the CIT Law and its implementation rules, dividends payable by a foreign-investedenterprise in the PRC to its foreign investor who is a non-resident enterprise will be subject to a 10% withholding tax, unless any such foreign investor’sjurisdiction of incorporation has a tax treaty with the PRC that provides for a lower withholding tax rate. Regulation of Overseas Listings On August 8, 2006, six PRC regulatory agencies, namely, MOFCOM, the State Assets Supervision and Administration Commission, the StateAdministration for Taxation, SAIC, CSRC and SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by ForeignInvestors, or the M&A Rules, which became effective on September 8, 2006 and were amended in June 22, 2009. The M&A Rules purport, among otherthings, to require that offshore special purpose vehicles, or SPVs, that are controlled by PRC companies or individuals and that have been formed for overseaslisting purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of the CSRC prior topublicly listing their securities on an overseas stock exchange. On September 21, 2006, the CSRC published a notice on its official websites specifyingdocuments and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. While the application of the M&ARules remains unclear, our PRC counsel has advised us that based on its understanding of the current PRC laws, rules and regulations and the M&A Rules,prior approval from the CSRC is not required under the M&A Rules for the listing and trading of our ADSs on the NYSE because we have not acquired anyequity interest or assets of a PRC domestic company owned by PRC companies or individuals, as defined under the M&A Rules, that are our beneficialowners after the effective date of the M&A Rules. However, our PRC counsel has further advised us uncertainties still exist as to how the M&A Rules will be interpreted and implemented and itsopinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to theM&A Rules. If the CSRC or another PRC regulatory agency subsequently determines that prior CSRC approval was required, we may face regulatory actionsor other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations, limit ouroperating privileges, delay or restrict the repatriation of the proceeds from our initial public offering into the PRC or payment or distribution of dividends byour PRC subsidiaries, or take other actions that could materially adversely affect our business, financial condition, operating results, reputation andprospects, as well as the trading price of our ADSs. If the CSRC later requires that we obtain its approval for our initial public offering, we may be unable toobtain a waiver of CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicityregarding CSRC approval requirements could have a material adverse effect on the trading price of our ADSs. C. Organizational Structure Our Corporate Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our subsidiaries, affiliated consolidated entitiesand their subsidiaries which are significant subsidiaries as defined in rule 1-02(w) of Regulation S-X: 76Table of Contents Aligned with our business strategies, we have made the following investments in subsidiaries, affiliates and other business alliance partners in variousInternet-related businesses. In March 2014, the IDG-Accel Funds acquired US$3.0 million convertible preferred shares of Phoenix FM, previously a subsidiary of us, to acceleratedevelopment of the ifeng application business. Despite holding 100% ordinary shares of Phoenix FM, we accounted for our investment in Phoenix FM as anequity method investment since we did not control Phoenix FM due to substantive participating rights that have been provided to the IDG-Accel Funds. Asof December 31, 2017, the carrying value of our equity investment in Phoenix FM was nil. In April 2014, we established Fenghuang Jingcai, a company engaged in online lottery ticket distribution with capitalization of RMB2.0 million.Subsequently, we invested additional RMB2.5 million in Fenghuang Jingcai. In 2014 and 2016, Fenghuang Jingcai obtained capital injection from otherindependent third parties. We held approximately 31.54% of the equity interests in Fenghuang Jingcai as of December 31, 2017 and accounted it as anequity method investment. As of December 31, 2017, the carrying value of our equity investment in Fenghuang Jingcai was nil. We are unlikely to recoverany value of Fenghuang Jingcai in the future. In October 2014, we acquired Series B convertible redeemable preferred shares of Particle, representing 9.34% of the equity interest in Particle on an as-if converted basis, with a total cash consideration of US$6.0 million. Particle operates Yidian, a personalized news and life-style information application inChina that allows users to define and explore desired content on their mobile devices. In December 2014, we acquired ordinary shares of Particle,representing 9.08% of the equity interest in Particle on an as-if converted basis, with a cash consideration of US$5.0 million and a number of our ordinaryshares with fair value of US$2.8 million. In April 2015, we acquired Series C convertible redeemable preferred shares of Particle with a cash consideration ofUS$30.0 million, and we also acquired additional ordinary shares and Class A ordinary shares of Particle from certain existing shareholders for an aggregatepurchase price of US$27.6 million. Following the transactions, also in April 2015, Particle repurchased all the ordinary shares and Class A ordinary sharesheld by us, including ordinary shares purchased by us in 2014, and issued to us one Series C convertible redeemable preferred share for each ordinary share orClass A ordinary share. In January and April 2016, we granted two unsecured short-term loans to Particle with an aggregate principal amount of US$20.0million, and we converted the principal amounts of these loans and all accrued interests with a total amount of US$20.7 million into Series D1 convertibleredeemable preferred shares of Particle in December 2016. 77Table of Contents As of the date hereof, we held Series B, Series C and Series D1 convertible redeemable preferred shares, which had been accounted for as available-for-sale investments, representing an aggregate of approximately 41.8% equity interest of Particle on an as-if converted basis. The fair value of our available-for-sale investments in Particle was RMB1,196.3 million (US$183.9 million) as of December 31, 2017. In December 2014, we lost control over Tianbo, a previously consolidated subsidiary, as the result of disposal of certain equity interests in Tianbo, andwe currently still hold 50% of the equity interest of Tianbo. As we have significant influence over financial and operating decision-making afterdeconsolidation, we account for the retained 50% equity interests by using the equity method of accounting. Tianbo is principally engaged in operation ofthe real property channel and sales of real property advertisements for ifeng.com. As of December 31, 2016 and 2017, the carrying value of equity investmentin Tianbo was RMB8.2 million and RMB15.1 million (US$2.3 million), respectively. In January 2015, in order to leverage our brand, content platform and large user base to expand into more entertainment related businesses, weestablished a new subsidiary, Meowpaw. Meowpaw is engaged in creating intellectual properties, related games, books, movies and animations, etc. As of thedate of this annual report, we held 75% of Meowpaw’s equity interest, and its noncontrolling shareholder, who is an individual, held the remaining 25%.Meowpaw’s share capital was not sufficient to support its operations. In addition to the capital injection, we provided a long-term financing of RMB79.0million to support its operations. In January 2015, we acquired 5% equity interest of Lilita from a family member of the chairman of Phoenix TV, for an aggregate purchase price ofRMB0.5 million. Lilita is principally engaged in P2P lending and reward-based crowd-funding businesses. In July 2016, Lilita completed its Series A roundof financing and the percentage of our equity interest in Lilita decreased to 4.69%. We account for our equity interests in Lilita by using the cost method ofaccounting. Based on our other-than-temporary impairment assessment on equity investments and collectability assessment on the long overdue accountsreceivables, we have fully written off our entire investment in Lilita with an amount of RMB0.5 million (US$0.08 million) and made bad debt provision toreceivable from Lilita with a total amount of RMB1.0 million (US$0.2 million) in 2017. In February 2015, we invested approximately RMB4.5 million in Hangzhou Qike, a company engaged in providing risk management and creditcontrol assessment based on big data analysis to enterprises and eventually directly to individual customers. We hold 45% equity interest of Hangzhou Qikeand account for it by using the equity method of accounting. Based on our other-than-temporary impairment assessment on equity investments, we havemade impairment provisions in investment in Hangzhou Qike in 2017 and fully written off our entire investment in Hangzhou Qike with an amount ofRMB0.04 million (US$0.01 million), therefore, as of December 31, 2017, the carrying value of equity investment in Hangzhou Qike was nil. In April 2015, we acquired 0.3% equity interest of Lifeix Inc., an Internet company that operates L99.com and Lifeix.com, for an aggregate purchaseprice of US$1.0 million. We account for our equity investment in Lifeix by using the cost method of accounting. In December 2015, in view of businessperformance and near-term business outlook that were below our previous expectation, based on the other-than-temporary impairment assessment, werecorded an impairment loss of US$1.0 million (RMB6.4 million) to fully write down the equity investment. In August 2017, we acquired 8% equity interest of Kuailai with a consideration of RMB0.2 million (US$0.04 million). Kuailai operates Xunhutai, alife-style information application in China. Contractual Arrangements with Our Affiliated Consolidated Entities Foreign investment in the Internet and mobile services industries is currently prohibited or restricted in China. As a Cayman Islands company, we donot qualify to conduct these businesses under PRC regulations. See “—B. Business Overview—Regulatory Matters.” As a result, our business in China isoperated through contractual arrangements with our affiliated consolidated entities. We do not have any equity interests in Tianying Jiuzhou or its subsidiaries, Yifeng Lianhe, or Chenhuan or its subsidiaries. However, as a result ofthese contractual arrangements, we are the primary beneficiary of each of Tiangying Jiuzhou, Yifeng Lianhe and Chenhuan and account for them as ouraffiliated consolidated entities under U.S. GAAP. Outstanding equity interests in Tianying Jiuzhou, Yifeng Lianhe and Chenhuan are held by Haiyan Qiaoand Ximin Gao, Yinxia Liu and Yansheng He, and Haipeng Wu and Yansheng He respectively. Mssrs. Qiao, Gao, Wu and He are all current employees of ourcompany and have each been employed by us for approximately ten years. Ms. Liu is an employee of Zhongcheng Letian Property Development CompanyLtd., a company founded by the chairman of Phoenix TV, Mr. Changle Liu. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our CorporateStructure—The shareholders of our affiliated consolidated entities may have potential conflicts of interest with us.” 78Table of Contents We have consolidated the financial results of each of Tianying Jiuzhou and its subsidiaries, Yifeng Lianhe, and Chenhuan and its subsidiaries in ourconsolidated financial statements in accordance with U.S. GAAP. In 2017, Tianying Jiuzhou and its subsidiaries accounted for 47.0% of our total revenues,Yifeng Lianhe accounted for 0.9% of our total revenues, and Chenhuan and its subsidiaries accounted for 2.0% of our total revenues. Overview of the Contractual Arrangements The contractual arrangements among Fenghuang On-line, Qieyiyou, the affiliated consolidated entities and the shareholders of the affiliatedconsolidated entities enable us to: · receive substantially all of the economic benefits from Tianying Jiuzhou and its subsidiaries, Yifeng Lianhe and Chenhuan and itssubsidiaries in consideration for the technical and consulting services provided and intellectual property rights licensed by Fenghuang On-line; · exercise effective control over Tianying Jiuzhou and its subsidiaries, Yifeng Lianhe, and Chenhuan and its subsidiaries; and · have an exclusive option to purchase all of the equity interests in Tianying Jiuzhou, Yifeng Lianhe and Chenhuan when and to the extentpermitted under PRC laws. Agreements that Transfer Economic Benefits to Us Exclusive Technical Consulting and Service Agreements. Under the exclusive technical consulting and service agreements between Fenghuang On-lineand each of Tianying Jiuzhou and Yifeng Lianhe, or the Fenghuang On-line Technical Service Agreements, Fenghuang On-line has the exclusive right toprovide designated technical and consulting services to the affiliated consolidated entities, including developing and upgrading various software,developing system technology, maintaining operational hardware and providing various training and consulting services, among other services. Third partiesmay only be engaged to provide the designated services to the affiliated consolidated entities under limited circumstances that are within the control ofFenghuang On-line. The Fenghuang On-line Technical Service Agreements also transfer all of the economic benefit of intellectual property created by the relevant affiliatedconsolidated entities to Fenghuang On-line. To the extent that the relevant affiliated consolidated entities jointly develop business-related technologies withFenghuang On-line or are entrusted by Fenghuang On-line to develop business-related technologies, the ownership and patent application rights for suchtechnologies are vested in Fenghuang On-line. To extent that the relevant affiliated consolidated entities develop business-related technologiesindependently, the relevant affiliated consolidated entities are required to promptly notify Fenghuang On-line of such technologies, and Fenghuang On-linehas the right to purchase each such technology for RMB1 or the minimum purchase price permitted by then applicable law, or otherwise has priority rightswith respect to any transfer or license of such technologies. In addition, Fenghuang On-line controls the patent applications of any business-relatedtechnologies created by the relevant affiliated consolidated entities. The term of each Fenghuang On-line Technical Service Agreements is indefinite unless terminated by Fenghuang On-line by providing prior writtennotice to the relevant affiliated consolidated entity. The Fenghuang On-line Technical Service Agreements provide that the relevant affiliated consolidatedentities cannot terminate such agreements under any circumstances or on any ground unless otherwise provided for by law. The Fenghuang On-line Technical Service Agreements provide that any disputes shall be resolved by the parties through negotiation, and if the partiescannot reach an agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission inBeijing. The arbitral awards shall be final and binding upon both parties. On January 13, 2014, Qieyiyou, Chenhuan and each of the shareholders of Chenhuan entered into an exclusive technical consulting and serviceagreement, or Qieyiyou Technical Service Agreements (collectively with Fenghuang On-line Technical Service Agreements as the Technical ServiceAgreements). The Qieyiyou Technical Service Agreements contains terms substantially similar to the Fenghuang On-line Technical Service Agreementsdescribed above. 79Table of Contents Pursuant to the Technical Service Agreements, the affiliated consolidated entities have each agreed to pay to Fenghuang On-line or Qieyiyou anamount equal to a certain percentage of their respective annual revenues, plus a special service fee for certain services rendered by Fenghuang On-line orQieyiyou at the request of the relevant affiliated consolidated entity. However, the Technical Service Agreements also provide that notwithstanding suchagreement as to payment, the actual amount of the service fee may be adjusted upon mutual agreement of the parties. Historically, the affiliated consolidatedentities have deducted relevant costs and expenses from the amount that is subject to the service fee payment. In 2015, 2016 and 2017, the affiliatedconsolidated entities transferred technical service fees of RMB236.4 million, RMB119.0 million and RMB39.0 million (US$6.0 million), respectively, toFenghuang On-line and Qieyiyou and their subsidiaries Agreements that Provide Us with Effective Control and Grant Fenghuang On-line and Qieyiyou an Exclusive Option to Purchase all of the Equity Interestsin the Respective Affiliated Consolidated Entities When and to the Extent Permitted Under PRC Laws Voting Right Entrustment Agreements. Each of the Tianying Jiuzhou and Yifeng Lianhe, their respective shareholders and Fenghuang On-line haveentered into a voting right entrustment agreement. Pursuant to the voting right entrustment agreements the shareholders of each relevant affiliatedconsolidated entity have granted a person designated by Fenghuang On-line, or the trustee, the right to exercise their rights as shareholders, including allvoting rights, as well as rights to attend and propose the convening of shareholder meetings. Under the voting right entrustment agreements, the respectivetrustees have the right to access all information regarding the relevant affiliated consolidated entity’s operation, business, clients, finances and employees, aswell as their financial, business and corporate documentation. The term of each voting right entrustment agreement is indefinite unless both parties agree to terminate the agreement in writing, or unless FenghuangOn-line decides in its discretion to terminate the relevant agreement after the relevant affiliated consolidated entity or one of its shareholders breaches theagreement and such breach is not remedied within ten days of receipt of written notice. The voting right entrustment agreements provide that the relevantaffiliated consolidated entities cannot terminate such agreements under any circumstances or on any ground unless otherwise provided for by law. The voting right entrustment agreements provide that any disputes shall be resolved by the parties through negotiation, and if the parties cannot reachan agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. Thearbitral awards shall be final and binding upon both parties. On January 13, 2014, Qieyiyou, Chenhuan and each of the shareholders of Chenhuan entered into a voting right entrustment agreement. The votingright entrustment agreement contains terms substantially similar to the voting right entrustment agreement relating to Fenghuang On-line described above. Exclusive Equity Option Agreements. Each of the Tianying Jiuzhou and Yifeng Lianhe, their respective shareholders and Fenghuang On-Line haveentered into an exclusive equity option agreement, or equity option agreement, pursuant to which Fenghuang On-line has an irrevocable, unconditional andexclusive option to purchase, or to designate other persons to purchase from the shareholders, to the extent permitted by applicable PRC laws, rules andregulations, all of the equity interest in the affiliated consolidated entities. Fenghuang On-line may acquire all of the equity interest in the relevant affiliatedentity through one purchase or a series of purchases, the timing, manner and frequency of which are in Fenghuang On-line’s discretion. The purchase price forthe entire equity interest is to be calculated based on the paid-up amount of the relevant equity interest or the minimum price permitted by applicable PRClaws, rules and regulations. In addition, the amount borrowed by the respective shareholders from Fenghuang On-line for making the capital contributions tothe relevant affiliated consolidated entities under the loan agreements, as described in “—Loan Agreements,” shall offset the purchase price paid for anytransfer of equity interest from the respective shareholders to Fenghuang On-line. Under the equity option agreements, the shareholders have agreed that, without Fenghuang On-line’s written consent, they will not take certain actions,including transferring any of their equity interests in the relevant affiliated consolidated entities, disposing or causing the relevant affiliated consolidatedentities’ management to dispose of any of the entities’ tangible or intangible assets, terminating any material agreement to which the relevant affiliatedconsolidated entities are party, appointing or removing any of the relevant affiliated consolidated entities’ directors, supervisors or management members,causing or endorsing the declaration or actual distribution of any profit, bonus, dividends or interests of the relevant affiliated consolidated entities, orcausing or endorsing any lending or borrowing or provision of any guarantee or creation of any other security interest other than in the normal course ofbusiness, among other actions. 80Table of Contents The term of each equity option agreement will expire when all of the equity interests in the relevant affiliated consolidated entities have been dulytransferred to Fenghuang On-line or its designated representative. In addition, the equity option agreements provide that neither of the relevant affiliatedconsolidated entities nor their shareholders may terminate such agreements under any circumstances or on any ground. The equity option agreements provide that any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach anagreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitralawards shall be final and binding upon both parties. On January 13, 2014, Qieyiyou, Chenhuan and each of the shareholders of Chenhuan entered into an exclusive equity option agreement. The exclusiveequity option agreement contains terms substantially similar to the exclusive equity option agreement relating to Fenghuang On-line described above. Loan Agreements. Pursuant to the loan agreements among Fenghuang On-line and the respective shareholders of Tianying Jiuzhou and Yifeng Lianhe,Fenghuang On-line granted interest-free loans to the shareholders of the relevant affiliated consolidated entities in an amount equal to their respective capitalcontribution in the relevant affiliated consolidated entities. The loans can be repaid only with proceeds from the sale of all of the respective shareholder’sequity interests in the applicable affiliated consolidated entity to Fenghuang On-line or its designated representatives pursuant to the applicable equityoption agreement. The term of each loan is ten years from the execution of the applicable loan agreement, and may be extended upon mutual agreement of the parties.Any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall besubmitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon bothparties. On January 13, 2015, Qieyiyou and the shareholders of Chenhuan entered into a loan agreement. The loan agreement contains terms substantiallysimilar to the loan agreement relating to Fenghuang On-line described above. Business Management Agreement. Pursuant to the business management agreement entered into by and among Chenhuan, its respective shareholdersand Qieyiyou, Qieyiyou agrees to be the guarantor of Chenhuan in contracts, agreements or transactions entered into between Chenhuan and any third partyin connection with Chenhuan’s business and operations, to provide full guarantees for the performance of such contracts, agreements or transactions byChenhuan. As counter-guarantee, Chenhuan agrees to pledge the accounts receivable in its operations and all of its assets to Qieyiyou. In addition, Qieyiyouhas the exclusive right to nominate directors, general manager and other senior management of Chenhuan. Equity Pledge Agreements. Each of Tianying Jiuzhou and Yifeng Lianhe, their respective shareholders and Fenghuang On-line, have entered into anequity pledge agreement. Under the equity pledge agreements, the shareholders have pledged their respective equity interests in the relevant affiliatedconsolidated entities to Fenghuang On-line to secure the performance of the obligations of the relevant affiliated consolidated entities and the shareholdersunder the applicable technical service agreements, voting right entrustment agreements, equity option agreements and loan agreements, including, amongothers, the payment of the service fees, the entrustment of the shareholders’ voting rights in the affiliated consolidated entities, the conditional transfer of theshareholders’ equity interests in the affiliated consolidated entities and the repayment of the shareholder loans with proceeds from the transfer of theshareholders’ equity interests, respectively. In addition, the shareholders of Chenhuan and Qieyiyou have also entered into an equity pledge agreement, orQieyiyou Equity Pledge Agreement, which is substantially similar to the equity pledge agreements of Tianying Jiuzhou and Yifeng Lianhe except that theamount of such guarantee under the Qieyiyou Equity Pledge Agreement is limited to an amount equal to the shareholders’ respective capital contribution inthe Chenhuan, and the scope of such guarantee is extended to cover the obligations of Chenhuan under the business management agreement, the QieyiyouEquity Pledge Agreement contains terms substantially similar to the equity pledge agreement relating to Fenghuang On-line. All registrations necessary tosecure the enforceability of each of the equity pledge agreements have been completed. The term of each equity pledge agreement will expire when the secured obligations have been fully performed or released. Any disputes shall beresolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall be submitted to the ChinaInternational Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon both parties. 81Table of Contents We have been advised by our PRC legal counsel, Zhong Lun Law Firm, that the structure for operating our business in China (including our corporatestructure and our contractual arrangements with our affiliated consolidated entities) complies with all applicable PRC laws, rules and regulations, and doesnot violate, breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations. However, there are uncertainties regarding theinterpretation and application of the relevant PRC laws, rules and regulations. Accordingly, there can be no assurance that the PRC regulatory authorities willnot take a view that is contrary to the opinion of our PRC legal counsel. Our PRC legal counsel has further advised that if a PRC government authoritydetermines that our corporate structure, the contractual arrangements or the reorganization to establish our current corporate structure violates any applicablePRC laws, rules or regulations, the contractual arrangements will become invalid or unenforceable, and we could be subject to severe penalties and requiredto obtain additional governmental approvals from the PRC regulatory authorities. See “Item 3. Key Information—D. Risk Factors—Risks Relating to OurCorporate Structure—If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply withPRC governmental restrictions on foreign investment in Internet businesses, or if these regulations or the interpretation of existing regulations change in thefuture, we would be subject to severe penalties or be forced to relinquish our interests in those operations” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could limit the protections available to you and us.” Our Relationship with Phoenix TV We are currently a subsidiary of Phoenix TV, the leading Hong Kong-based satellite TV network broadcasting Chinese language content globally andinto China. Phoenix TV owned 54.8% of our outstanding ordinary shares and 61.2% of the voting power of our ordinary shares as of March 31, 2018.Phoenix TV first reported its new media business as one of its business segments in its annual report submitted to the Hong Kong Stock Exchange for the yearended December 31, 2007. Fenghuang On-line and Phoenix TV entered into a cooperation agreement, or the Phoenix TV Cooperation Agreement, on November 24, 2009, whichexpired on May 27, 2016. Under this agreement, Fenghuang On-line and Phoenix TV agreed to certain cooperative arrangements in the areas of content,branding promotion and technology. Pursuant to the Phoenix TV Cooperation Agreement, in November 2009 Tianying Jiuzhou and Yifeng Lianhe enteredinto a program content license agreement, or Content License Agreement, with Phoenix Satellite Television Company Limited and a trademark licenseagreement, or Old Trademark License Agreement, with Phoenix Satellite Television Trademark Limited. Considering the significant growth and changes inour business since execution of these agreements in 2009, we and Phoenix TV Group entered into a new set of agreements in May 2016 and December 2017,or the New Agreements, to amend and replace the previous agreements and provide the terms of our continued cooperation. The New Agreements includeProgram Resource License Agreements and Program Text/Graphics Resource License Agreements, or the Program License Agreements, between PhoenixSatellite Television Company Limited and each of Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network, and trademark license agreements by and amongPhoenix Satellite Television Trademark Limited and each of Tianying Jiuzhou and Yifeng Lianhe, or the New Trademark License Agreements. Unlike theprevious agreements, the New Agreements do not grant us the right to sublicense Phoenix TV Group’s copyrighted content to third parties. While we are inthe process of negotiating with Phoenix TV Group to potentially re-acquire such right of sublicense, we cannot assure you that we will be able to re-acquiresuch right at reasonable costs or at all. Pursuant to the Program License Agreements, Phoenix TV Group agreed to grant Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network the licensewith priority over any third party to broadcast Phoenix TV Group’s copyrighted video content from three television channels of Phoenix TV Group onifeng.com (our main Internet channel), i.ifeng.com (a mobile Internet channel of ours), and ifeng News, ifeng Video and ifeng VIP (three mobile applicationsof ours) in China (excluding Hong Kong, Macau and Taiwan) concurrently with such content broadcasted on the three television channels of Phoenix TVGroup. Phoenix TV Group also agreed to grant Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network a non-exclusive license to use Phoenix TV Group’scopyrighted text and graphics on the same Internet and mobile channels of ours in China for which Phoenix TV Group’s copyrighted video content license,above, was granted. These licenses help to distinguish our content offerings from those of other Internet and new media companies in China. The fees payableto Phoenix TV Group by us for all content licenses described above will be RMB10.0 million for the first year of the agreements, which will incrementallyincrease by 15% for each subsequent year of the agreements. Each of the Program License Agreements has an initial term of three years and will expire on May 26, 2019 and may be renewed on an annual basisthereafter upon agreement of both parties. Each of the parties to the Program License Agreements has the right to terminate the Program License Agreementsbefore their expiration date by 6-month prior written notice to the other party. In addition, each of the Program License Agreements can be terminated earlier(i) by the non-breaching party in the event of a breach and if the breach is not cured within ten business days after receipt of notice of breach from the non-breaching party, (ii) in the event of bankruptcy or the cessation of business operations of either party, or a change in the shareholder or equity structure ofTianying Jiuzhou, Yifeng Lianhe or Fengyu Network, other than in connection with the contractual arrangements, (iii) by Phoenix Satellite TelevisionCompany Limited in the event that our shareholders or ownership structure change so that the shares held by Phoenix TV Group account for 50% or less ofour actual total issued shares, or in the event that we lose control of Tianying Jiuzhou, Yifeng Lianhe or Fengyu Network; or if Tianying Jiuzhou, YifengLianhe or Fengyu Network, as applicable, ceases business operation; (iv) if either party’s performance of its obligations is held unlawful under PRC law; or(v) if an event occurs that adversely affects the performance by either party of its obligations and upon written notice by the unaffected party. 82Table of Contents In addition, Tianying Jiuzhou and Yifeng Lianhe are able to use certain of Phoenix TV Group’s logos pursuant to the Old Trademark LicenseAgreement and the New Trademark License Agreements. We believe that our use of these logos helps to affiliate us with the brand of Phoenix TV Group,which helps to enhance our own brand. Different from the Old Trademark License Agreement, however, the New Trademark License Agreements no longerallow us to use the double-phoenix logo of Phoenix TV Group on a stand-alone basis and increased the annual license fee payable to Phoenix TV Group froma total of US$10,000 to the greater of 2% of the annual revenues of Tianying Jiuzhou or Yifeng Lianhe (as the case may be) or US$100,000 for eachcompany. For illustrative purpose only, Tianying Jiuzhou and Yifeng Lianhe had annual revenues of RMB570.4 million in 2016 and RMB413.8 million in2017 in accordance with U.S.GAAP, which meant that the annual license fee payable to Phoenix TV Group would have been RMB11.4 million and RMB8.3million in 2016 and 2017, respectively, if the New Trademark License Agreements had been implemented since January 2016. Each of the New TrademarkLicense Agreements has an initial term of three years and may be extended prior to expiration of its term with the written confirmation of Phoenix TV Group,and may be terminated earlier by Phoenix TV Group in the event of a material breach by us of any covenant or a material failure by us to perform any of ourobligation and if the breach or failure, as applicable, is not rectified within a reasonable time or ten days of receipt of written notice from Phoenix TV Group.For example, we may in practice use such logos beyond the scope authorized by Phoenix TV Group, which may constitute a breach of such agreements andcause Phoenix TV Group to terminate such New Trademark License Agreements. We cannot assure you that we will be able to continue to use Phoenix TVGroup’s logos in order to help maintain our brand affiliation with Phoenix TV Group. If our brand image deteriorates as a result of a weaker brand affiliationwith Phoenix TV Group, our business and the price of your ADSs could be negatively affected. We have a mutually beneficial relationship with Phoenix TV. We and Phoenix TV share a common vision of the convergence of traditional and newmedia channels, and work together to realize this vision. Phoenix TV enables us to display our proprietary content on its TV programs. We believe that ourand Phoenix TV’s active promotion of one another’s brands on our respective Internet-enabled and TV platforms helps to grow our combined audiencesynergistically. On February 17, 2014, our Chief Executive Officer Mr. Shuang Liu was also promoted to the position of Chief Operating Officer of Phoenix TV. Thekey initiative for his new position at Phoenix TV is to accelerate the convergence of TV, Internet and mobile platforms of the two companies. In his new role,Mr. Liu is tasked with strategizing, overseeing and allocating resources to implement this convergence strategy. Through this appointment, both companiescan more seamlessly expand user reach on each of its media platforms, provide advertisers a one-stop shop solution, more effectively monetize the Phoenixbrand across all verticals, and achieve greater cost synergies. Although we believe that our interests and those of Phoenix TV are mostly aligned because Phoenix TV will continue to consolidate our financialresults as long as Phoenix TV maintains a majority voting interest in our company, there may be conflicts of interest between our company and Phoenix TVfrom time to time. We may not be able to resolve any potential conflicts, and even if we do so, the resolution may be less favorable to us than if we weredealing with a non-controlling shareholder. For more information about our potential conflicts of interest with Phoenix TV, see “Item 3. Key Information—D.Risk Factors—Risks Relating to Our Corporate Structure—We may have conflicts of interest with Phoenix TV and, because of Phoenix TV’s controllingbeneficial ownership interest in our company, may not be able to resolve such conflicts on terms favorable for us.” Subsidiaries of Phoenix New Media Limited An exhibit containing a list of our significant subsidiaries has been filed with this annual report. D. Property, Plants and Equipment Please refer to “B. Business Overview—Facilities” for a discussion of our property, plants and equipment. ITEM 4A. UNRESOLVED STAFF COMMENTS None. ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Unless otherwise states, the discussion and analysis of our financial condition and results of operation in this section apply to our financial informationas prepared according to U.S. GAAP. You should read the following discussion and analysis of our financial condition and operating results in conjunctionwith our consolidated financial statements and the related notes included elsewhere in this annual report. The following discussion contains forward-lookingstatements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected events may differ materiallyfrom those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. RiskFactors.” 83Table of Contents Overview We are a leading new media company providing premium content on an integrated Internet platform, including PC and mobile, in China. Havingoriginated from a leading global Chinese language TV network based in Hong Kong, Phoenix TV, we enable consumers to access professional news andother quality information and UGC, on the Internet and through their PCs and mobile devices. We also transmit our UGC and in-house produced content toTV viewers primarily through Phoenix TV. Our PC channel includes major verticals such as news, fashion, military, finance, web-based games, and digitalreading. Our mobile channel includes our mobile news application, mobile video application, HTML5-based mobile Internet websites, mobile digital readingapplication (“Fanyue Novel”), and before December 1, 2017, fashion application (“Shizhuang App”). We also act as a service provider for telecom operators,providing content and mobile value-added services. The appeal of our brand is enhanced by its affiliation with the “Phoenix” (“鳳凰”) brand of Phoenix TV. According to iResearch, our number of PC daily unique visitors was 33.9 million, and number of monthly unique visitors was 277.4 million inDecember 2017. We have ranked third among all Internet portals in China in terms of daily unique visitors in December 2017, according to iResearch.According to our internal data, our aggregated mobile daily unique visitors from mobile websites i.ifeng.com and mobile applications reached 33 million inDecember 2017. We earn revenues from advertising and paid services, which accounted for 85.9% and 14.1% of our total revenues, respectively, in 2017. Our net advertising revenues accounted for 76.2%, 85.3% and 85.9% of our total revenues in 2015, 2016 and 2017, respectively. We provideadvertising services through PC channel and mobile channel, which accounted for 42.2% and 57.8% of our net advertising revenues respectively in 2017.We recognize revenues from our advertising services on a net basis, after deducting the agency service fees we pay to advertising agencies. We see mobile devices as the primary gateway for news and other media content consumption going forward. In recent years, we have taken steps toevolve our business and shift our revenue mix towards our mobile channels, which we believe have greater potential for sustainable growth over the longterm, and which have demonstrated robust growth in 2017. Our mobile advertising revenues increased by 46.5% to RMB781.8 million (US$120.2 million) in2017 from RMB533.8 million in 2016. As part of our mobile strategy, we invested in convertible redeemable preferred shares of Particle and accounted forthe investments as available-for-sale investments. Particle operates Yidian, a personalized news and life-style information application in China that allowsusers to define and explore desired content on their mobile devices. By partnering with Yidian and by continuing to strengthen our core competencies ofcontent production capability, dedication to serious journalism and cutting-edge technology, we believe that we will be better positioned to capitalize onemerging opportunities as increasing numbers of consumers in China use Internet-enabled mobile devices to consume news and other media content. We offer a wide variety of paid services primarily through our mobile channel and operations with the telecom operators. We classify our paid servicesinto (i) digital entertainment, which includes mobile value-added services delivered through telecom operators’ platforms, or MVAS, and digital reading, and(ii) games and others, which includes web-based games, mobile games, content sales, and other online and mobile paid services through our own platforms.Prior to 2016, our paid service revenues mainly comprised of the revenues generated from MVAS and games and others. Digital reading was previouslyclassified under “games and others”. In order to align with our overall strategies, in 2016, digital reading was re-classified from “Games and others”, anddigital reading together with MVAS was determined as “Digital entertainment”. We derived 81.2% and 18.8% of our paid services revenues, respectively,from our digital entertainment and games and others in 2017. Due to an increase in revenues generated from digital reading business, our paid servicesrevenues increased from RMB212.7 million in 2016 to RMB221.6 million (US$34.1 million) in 2017. Our business and operating results are affected by general factors affecting China’s new media industry, which include China’s overall economicgrowth, per capita disposable income, the trend of media convergence, growth of new media and its popularity as an advertising medium, growth of Internet(including mobile Internet) penetration, adoption of paid services, including 3G /4G mobile services, and smart phones. Unfavorable changes in any of thesegeneral industry conditions could negatively affect demand for our services and negatively and materially affect our operating results. Our business, operating results, financial condition and future growth are more directly affected by company specific factors and trends, including: 84Table of Contents · our ability to maintain and expand our target user base; · our ability to provide effective advertising services and enhance our pricing power; · our ability to grow our paid services on both mobile operators’ platforms and our own platforms; and · our ability to procure and produce content in a cost-effective manner. Critical Accounting Policies and Estimates The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financialstatements and other disclosures included in this annual report. When reviewing our financial statements, you should consider (i) our selection of criticalaccounting policies, (ii) judgment and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes inconditions and assumptions. Basis of Presentation; Principles of Consolidation and Recognition of Noncontrolling Interests The consolidated financial statements include the financial statements of us, our subsidiaries, our affiliated consolidated entities, and the subsidiariesof our affiliated consolidated entities. The consolidated financial statements have been prepared in accordance with U.S. GAAP and on a going concern basis.All significant transactions and balances among us, our subsidiaries, our affiliated consolidated entities and the subsidiaries of our affiliated consolidatedentities have been eliminated upon consolidation. We consolidate our affiliated consolidated entities and the subsidiaries of our affiliated consolidatedentities as required by Accounting Standards Codification, or ASC, 810 Consolidation, because Fenghuang On-line and Qieyiyou hold all the variableinterests of our affiliated consolidated entities and the subsidiaries of our affiliated consolidated entities and have been determined to be the primarybeneficiary of our affiliated consolidated entities. Use of Estimates The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ materially from such estimates. These estimates and assumptions include, butare not limited to, the accounting for advertising and paid services revenues, the determination of estimated selling prices of multiple elements revenuescontract, accounting for income taxes and uncertain tax positions, allowance for doubtful accounts, share-based compensation, consolidation, foreigncurrency translation, determination of the estimated useful lives of property and equipment and intangible assets, assessment of impairment of long-livedassets and equity investments, and determination of fair value of financial instruments. Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, service is performed and the collectabilityof the related fee is reasonably assured. In October 2009, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, orASU, 2009-13, Multiple Deliverable Revenue Arrangements, to address the accounting for multiple-deliverable arrangements. We have applied ASU 2009-13to all revenue arrangements for all years presented in the financial statements (i) Net Advertising Revenues Advertising revenues are derived principally from advertising arrangements where the advertisers pay to place their advertisements on our ifeng.com,mobile Internet website i.ifeng.com and our mobile applications in different formats over a particular period of time. Such formats generally include but arenot limited to banners, news feed, text-links, videos, logos, buttons and rich media. The majority of our advertising revenue arrangements involve multiple element deliverables, including placements of different advertisement formatson our PC websites, mobile applications and mobile websites over different periods of time. We break down the multiple element arrangements into singleunits of accounting when possible, and allocate total consideration to each single unit of accounting using the relative selling price method. For mostdeliverables in its multiple element arrangements, we use management’s best estimate of the selling price in the allocation as the vendor-specific objectiveevidence or third-party evidence of selling price is not available for those deliverables. The best estimate of the selling price is determined based on thepublicly published advertising rate card, times the relevant discount rates, which are taking into considerations of the historical trend, the pricing ofadvertising areas sold with similar popularities, advertisements with similar formats and quoted prices from competitors, and other relevant marketconditions. We recognize revenue on the elements delivered and defers the recognition of revenue for the estimated value of the undelivered elements untilthe remaining obligations have been satisfied. When all of the elements within an arrangement are delivered uniformly over the agreement period, therevenues are recognized on a straight-line basis over the contract period. 85Table of Contents Currently the advertising business has three main types of pricing models, consisting of the Fixed Price model, the Cost Per Impression (“CPM”) model,and the Cost Per Click (“CPC”) model. Fixed Price model. Under the Fixed Price model, advertisements on our PC websites, mobile applications and mobile websites are generally charged onthe basis of duration, and advertising contractual arrangements are entered to establish the fixed price and the advertising services to be provided. Wherecollectability is reasonably assured, advertising revenues from advertising contractual arrangements are recognized ratably over the contract period ofdisplay. CPM model. The CPM model refers to advertising bought on the basis of impression. This is in contrast to the various types of pay-for-performanceadvertising, whereby payment is only triggered by a mutually agreed upon activity (i.e. click-through, lead, sale). CPC model. Under the CPC model, there is no overall fixed price for advertising services stated in the contract with the advertiser. Wecharge advertisers on a per-click basis when the users click on the advertisements. The unit price for each click is auction-based. The revenue is recognizedbased on qualified clicks and the corresponding unit price. We provide cash incentives in the form of agency service fees to certain third-party advertising agencies based on their sales performance, and accountfor such incentives as a reduction item of revenues in accordance with ASC 605-50-25, Customer Payments and Incentives: Recognition. We enter into barter transactions involving advertising services and follow ASC 605-20, Revenue Recognition: Services. Revenues or expenses frombarter transactions are recognized at fair value during the period in which the advertisements are provided only if the fair value of the advertising servicessurrendered in the transaction is determinable based on our own historical practice of receiving cash and cash equivalents, marketable securities, or otherconsideration that is readily convertible to a known amount of cash for similar advertising from buyers unrelated to the counterparty in the barter transaction.We did not recognize revenue and expenses for advertising-for-advertising barter transactions since the fair value of the advertising services surrendered orreceived in the transaction is not determinable for the years ended December 31, 2015, 2016 and 2017. (ii) Paid Services Revenues We offer a wide variety of paid services primarily through mobile channel and operations with the telecom operators. Prior to 2016, our paid servicerevenues mainly comprised of the revenues generated from MVAS and games and others. Digital reading was previously classified under “games and others”.In order to align with our overall strategies, in 2016, digital reading was re-classified from “Games and others”, and digital reading together with MVAS wasdetermined as “Digital entertainment”. As such, effective in 2016, paid services revenues now 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 throughour own platforms. Digital entertainment. Digital Entertainment revenues mainly comprised revenues generated from MVAS and digital reading. MVAS MVAS revenues are derived from providing mobile phone users with mobile newspaper services, mobile game services delivered through the telecomoperators’ platforms, mobile video services, and WVAS. WVAS include SMS, music services such as RBT, IVR services, MMS and animation services.Revenues from MVAS are charged on a monthly or per-usage basis, and are recognized in the period in which the service is performed, provided that nosignificant obligation remains, collection of the receivables is reasonably assured and the amounts can be accurately estimated. We mainly contract with China Mobile and its subsidiaries, and to a lesser degree, with other mobile operators, for billing, collection and transmissionservices related to the MVAS offered to our users. The determination of whether to record these revenues using the gross or net method is based on anassessment of various factors. The primary factors are whether we are acting as the principal in offering services to the customer or as an agent in thetransaction, and the specific requirement of each contract. Most of revenues from mobile newspaper services, mobile video services, and most WVAS arerecorded on a net basis as we are acting as an agent of operators in these transactions. For most of mobile game services delivered through telecom operators,we are responsible to provide desired services to the customers and have primary responsibility and broad discretion to establish price. Therefore, we areconsidered the primary obligor in these transactions, and revenues from these services are recorded on a gross basis. 86Table of Contents Due to the time lag between when the services are rendered and when the operators’ billing statements are received, most MVAS revenues are estimatedbased on our internal billing records and transmissions for the month, adjusting for prior periods’ confirmation rates with operators and prior periods’discrepancies between internally estimated revenues and actual revenues confirmed by operators. There was no significant difference between our estimatesand the operators’ billing statements for all the years presented. We also contract with China Mobile to provide news content and other services to China Mobile. News content and other services are charged for fixedfees respectively. The revenues attributable to the news content are recognized on a straight-line basis over the periods in which the news content is provided.Revenues attributable to other services are recognized when the other services are provided. Digital reading Digital reading revenues are derived from providing fee-based Internet literatures from writers and digital format books licensed from third-partypublishers to customers on both of our PC and mobile platforms. Most revenues generated from digital reading are recorded on a gross basis and recognizedevenly over the subscription period, or in the period in which a pay-per-view service is provided, as we are responsible for providing the desired services tothe customers and have primary responsibility and broad discretion to establish price, therefore we are considered the primary obligor in these transactions. Games and others Games and others include web-based games, mobile games, content sales, and other online and mobile paid services through our own platforms.Revenues from these services are recognized over the periods in which the services are performed, provided that no significant obligations remain, collectionof the receivables is reasonably assured and the amounts can be accurately estimated. For web-based game services, all of the web-based games provided on our platforms are developed by third-party game developers and can be accessedand played by game players without downloading separate software. We primarily view the game developers to be our customers and consider ourresponsibility under our agreements with the game developers to be promotion of the game developers’ games. We only collect payments from game playersin connection with the sale of in-game virtual currencies and remit certain agreed-upon percentages of the proceeds to the game developers. Revenue fromthe sale of in-game virtual currency is recorded net of remittances to game developers and deferred until the estimated consumption date of the virtual items,which is within a short period of time, typically a few days, after purchase of the in-game virtual currency. We also provide video programming through our online subscription and pay-per-view services to the customers. Revenues from these services, whichare recorded on a gross basis, are recognized evenly over the subscription period, or in the period in which a pay-per-view service is provided. We generate revenues from video content sales agreements for television programming mainly produced by Phoenix TV Group and content purchasedfrom third parties. The video content sales agreements we enter into involve the transfer of non-exclusive broadcasting rights to other third party websites orother Internet and mobile media companies for a definitive license period. In accordance with ASC 926-605, Entertainment-Films, Revenue Recognition, werecognize revenues in respect of our video content sales arrangements when the following criteria are met: persuasive evidence of a video content salesarrangement with a customer exists, the content has been delivered or is available for immediate and unconditional delivery, the sublicense period of thearrangement has begun and the customer can begin its exhibition, the arrangement fee is fixed or determinable and collection of the arrangement fee isreasonably assured. Expense Allocation with Phoenix TV We and Phoenix TV Group have engaged in various mutual cooperation activities in content, branding, promotions, technical support and corporatemanagement. Fenghuang On-line entered into the Phoenix TV Cooperation Agreement with Phoenix TV Group which stipulates the costs and expensescharged to us related to content and other services provided by. Based on the Phoenix TV Cooperation Agreement, we paid to Phoenix TV Group 50% of theafter-tax revenues earned from sublicensing Phoenix TV Group’s video content to third parties, plus a fixed amount of payment to cover other servicesprovided by Phoenix TV Group. The fixed amount was RMB1.6 million for the first year of the Agreement, and increased by 25% annually. The Phoenix TVCooperation Agreement was effective as of January 1, 2010 and expired on May 27, 2016. We and Phoenix TV Group entered into the New Agreements,effective as of May 27, 2016 and will expire on May 26, 2019, to amend and replace the previous Phoenix TV Cooperation Agreement and provide the termsof continued cooperation. The fees payable to Phoenix TV Group by us are RMB10.0 million for the first year of the New Agreements, which willincrementally increase by 15% for each subsequent year of the New Agreements. Unlike the previous agreements, the New Agreements do not grant us theright to sublicense Phoenix TV Group’s copyrighted content to third parties. As such, we do not incur such revenue sharing fee to Phoenix TV Groupaccordingly. We and Phoenix TV Group entered into new trademark license agreements in December 2017, which became effective on December 8, 2017 andwill expire on December 7, 2020. These agreements no longer allow us to use the double-phoenix logo of Phoenix TV Group on a stand-alone basis and haveincreased the annual license fee payable to Phoenix TV Group from a total of US$10,000 to the greater of 2% of the annual revenues of Tianying Jiuzhou andYifeng Lianhe or US$100,000 for each company. 87Table of Contents Apart from the above cooperation agreements, Phoenix TV Group also paid certain expenses on our behalf, such as data line usage and other generaland administrative expenses, which we needed to settle with Phoenix TV Group based on the actual amount and were recorded in the consolidated statementsof comprehensive income. Share-based Compensation We have share incentive plans for the granting of share-based awards, including share options, restricted shares and restricted share units. We measurethe cost of employee services received in exchange for share-based compensation at the grant date fair value of the award. We recognize the share-basedcompensation as costs and/or expenses in our consolidated statements of comprehensive income, net of estimated forfeitures, on a graded-vesting basis overthe vesting term of the awards. The share-based awards to nonemployees are accounted for based on the fair value of the consideration received or the fair value of the award issued,whichever is more reliably measurable. Share-based compensation expense for share options granted to non-employees is measured at fair value at the earlierof the performance commitment date or the date service is completed and recognized over the period during which the service is provided. We apply theguidance in ASC 505-50 to re-measure share options granted to non-employees based on the then-current fair value at each reporting date until the servicehas been provided and the performance targets have been met. Cancellation of an award accompanied by the concurrent grant of a replacement award is accounted for as a modification of the terms of the cancelledaward, or modification awards. The share-based compensation cost associated with the modification awards are recognized if either the original vestingcondition or the new vesting condition has been achieved. Such compensation costs cannot be less than the grant-date fair value of the original award. Theincremental compensation cost is measured as the excess of the fair value of the replacement award over the fair value of the cancelled award at thecancellation date. Therefore, in relation to the modification awards, we recognize share-based compensation over the vesting periods of the new awards,which comprises, (1) the amortization of the incremental portion of share-based compensation over the remaining vesting term and (2) any unrecognizedcompensation cost of original award, using either the original term or the new term, whichever is higher for each reporting period. We used the Black-Scholes option pricing model to determine the fair value of share options based on the fair value of underlying ordinary shares atthe grant date. The assumptions used in calculating the fair value of share options represent management’s best estimates, but these estimates involveinherent uncertainties and the application of management judgment. The fair values of the options granted during 2015, 2016 and 2017 used the followingassumptions. For the Years Ended December 31,2015 2016 2017Expected volatility rate54.23%-54.32%50.67%-55.65%48.84%-57.06%Expected dividend yield———Expected term (years)5.91-6.163.91-6.163.13-6.16Risk-free interest rate (per annum)1.90%-1.98%1.30%-1.55%0.90%-1.92% Expected Volatility. We estimated the expected volatility at the date of grant based on the average annualized standard deviation of the share prices ofcomparable listed companies. Expected Dividend Yield. The Black-Scholes option pricing model calls for a single expected dividend yield as an input. We have not declared or paidany cash dividends on our capital stock, and we do not anticipate any dividend payments on our ordinary shares in the foreseeable future. Expected Term. We estimated the expected term based on the vesting schedule and the exercise period of the options. Risk-Free Interest Rate. We estimated the risk-free interest rate used in the Black-Scholes option pricing model based on the derived market yield of theUSD denominated Chinese government bonds for the term approximating the expected life of award at the time of grant. We determined the fair value of restricted share and restricted share units based on the fair value of the underlying ordinary shares at the grant date andconsidered the dilutive effect of restricted share and restricted share units. Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. We usehistorical data to estimate pre-vesting option and restricted share units forfeitures and record share-based compensation only for those awards that areexpected to vest. 88Table of Contents Income Taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are notassessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are providedusing an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applyingenacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets andliabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose. The effect on deferred taxes of a change in taxrates is recognized in our consolidated statements of comprehensive income in the period of change. A valuation allowance is provided to reduce the amountof deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized. In order to assess uncertain tax positions, we apply a more likely than not threshold and a two-step approach for the tax position measurement andfinancial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight ofavailable evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes,if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. We did not havesignificant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefit as of and forthe years ended December 31, 2015, 2016 and 2017. Allowance for Doubtful Accounts Receivable The carrying value of accounts receivable is reduced by an allowance that reflects our best estimate of the amounts that will not be collected. We makeestimations for general allowance considering many factors, including but not limited to reviewing accounts receivable balances, historical bad debt rates,aging analysis, customer credit worthiness, and industry trend analysis. We also make the specific allowance if there is evidence showing that the receivableis unlikely to be collected. Accounts receivable balances are written off against the allowance when they are determined to be uncollectible. If the economicsituation and the financial condition of a customer deteriorates which results in an impairment of its ability to make payments, additional allowances mightbe required. Foreign Currency Our functional currency is the U.S. dollar. Our subsidiaries and affiliated consolidated entities in the British Virgin Islands, Hong Kong and China usetheir respective currencies as their functional currencies. An entity’s functional currency is the currency of the primary economic environment in which theentity operates or, in the case of a start-up entity, is the currency that the entity plans to use on a long-term basis. Management must use judgment indetermining an entity’s functional currency, assessing economic factors including cash flow, sales price, sales market, expense, financing and inter-companytransactions and arrangements. The determination of our functional currency as the U.S. dollar is based largely on our planned future operations overseas. Tothe extent we significantly change how we carry out these plans or they do not materialize, we would need to re-assess the determination of our functionalcurrency. To the extent a re-assessment results in a change to our functional currency our financial position and operating results may be materially impacted. Impact from exchange rate changes related to transactions denominated in currencies other than the functional currency is recorded as a gain and loss inour consolidated statements of comprehensive income, while impact from exchange rate changes related to translating a foreign entity’s financial statementsfrom its functional currency to our reporting currency, the RMB, is disclosed and accumulated in a separate component under the equity section of ourconsolidated balance sheets. Translation adjustments are not released to net income unless the associated net investment has been sold, liquidated orsubstantially liquidated. Management uses judgment in determining the timing of recognition of translation gains or losses. Such determination requiresassessing whether translation gains or losses were derived from the sale or complete or substantially complete liquidation of an investment in a foreign entity.Different judgments or assumptions resulting in a change of the timing of recognition of foreign exchange gains or losses may materially impact our financialposition and operating results. Fair Value Determination Related to Financial Instruments Accounted for at Fair Value U.S. GAAP establishes a three-tier hierarchy to prioritize the inputs used in the valuation methodologies in measuring the fair value of financialinstruments. This hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fairvalue. The three-tier fair value hierarchy is: 89Table of Contents Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2— Include other inputs that are directly or indirectly observable in the marketplace Level 3— Unobservable inputs which are supported by little or no market activity U.S. GAAP describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) costapproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets orliabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on thevalue indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required toreplace an asset. When available, we use quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, wewill measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interestrates and currency rates. All financial assets and liabilities are recognized or disclosed at fair value in the consolidated financial statements on a recurringbasis. We have a significant amount of financial instruments that are classified as Level 2 and Level 3 according to ASC 820 Fair Value Measurement andDisclosures. The financial instruments classified as Level 2 are short term investments. The valuation for the available-for-sale investments classified as Level3 are determined based on unobservable inputs which require significant judgment. The valuation for the available-for-sale investments has been performedby valuation specialists under our management’s supervision. We believe that the estimated fair value of the available-for-sale investments is based onreasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ from those estimates. The key inputs used in available-for-sale investments valuation as of December 31, 2016 and 2017 were as follows: As of December 31, 2016 2017 Discount rate23.0%23.0%Lack of marketability discount (“DLOM”)25.0%25.0%Volatility47.0%45.3%Revenue growth rate10.0-349.0%5.0-93.8%Terminal growth rate3.0%3.0% Term deposits, short term investments Term deposits represent term deposits placed with banks with original maturity of more than three months and up to one year. Short term investments represent investments in financial instruments with a variable interest rate indexed to performance of underlying assets andinvestments that we have positive intent and ability to hold to maturity, all of which are with original maturity of less than 12 months. In accordance with ASC 825, for investments in financial instruments with a variable interest rate indexed to performance of underlying assets, weelected the fair value method at the date of initial recognition and carried these investments at fair value. Fair value is estimated based on quoted prices ofsimilar products provided by banks at the end of each period. We classify the valuation techniques that use these inputs as Level 2 of fair valuemeasurements. Convertible loans due from a related party Convertible loans due from a related party represent short-term loans advanced to a related party of which we may at our option to convert all or aportion into preferred shares. We have determined that the convertible loans are not within the scope ASC 320 Investment — debt and equity securities andtherefore are accounted for under ASC 310 Receivables. The conversion features were considered as embedded derivatives that do not meet the criteria to bebifurcated under ASC 815-15-25-1 and were accounted for in a similar method as for the short-term loans advanced to a related party. We account for theconvertible loans due from a related party at an amortized cost basis after deduction of any other-than-temporary impairment loss and review for impairmenton a regular basis. 90Table of Contents Available-for-sale investments In accordance with ASC topic 320 Investments-Debt and Equity Securities, we classify the investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, The securities that we have positive intent and ability to hold to maturity are classified as held-to-maturitysecurities. The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Investmentsnot classified as trading or as held-to-maturity are classified as available-for-sale investments. Available-for-sale investments are reported at fair value, whichis estimated by management after considering an independent appraisal performed by a reputable appraisal firm, with unrealized gains and losses, if any,recorded in the accumulated other comprehensive loss or income in shareholder’s equity. Realized gains and losses are reflected in earnings during the yearin which the gains and losses are realized. An impairment loss on the available-for-sale investments would be recognized in the consolidated statements ofcomprehensive income when the decline in value is determined to be other-than-temporary. Investments with maturities of greater than 12 months arerecorded in non-current assets. Equity investments Investments in entities in which we can exercise significant influence but does not own a majority equity interest or control are accounted for usingthe equity method of accounting in accordance with ASC topic 323 Investments-Equity Method and Joint Ventures. We adjust the carrying amount of equitymethod investment for its share of the income or losses of the investee and report the recognized income or losses in the consolidated statements ofcomprehensive income. Our shares of the income or losses of an investee are based on the shares of common stock and in-substance common stock held byus. Investments in entities in which we do not have significant influence and which does not have readily determinable fair value are accounted for usingthe cost method of accounting in accordance with ASC subtopic 325-20 Investments-Other-Cost Method Investments. An impairment loss on the equity investments is recognized in the consolidated statements of comprehensive income when the decline in value isdetermined to be other-than-temporary. We assess our equity investments for other-than-temporary impairment by considering factors as well as all relevant and available informationincluding, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends andother company-specific information such as financing rounds. Segment Reporting Our segments are business units that offer different services and are reviewed separately by the chief operating decision maker (the “CODM”) indeciding how to allocate resources and in assessing performance. Our CODM has been identified as the Chief Executive Officer. As our long-lived assets andrevenues are substantially located in and derived from the PRC, no geographical segments are presented. Our organizational structure is based on a number of factors that the CODM uses to evaluate, view and run our business operations, which include,but are not limited to, customer base, homogeneity of products and technology. Our operating segments are based on our organizational structure andinformation reviewed by our CODM to evaluate the operating segment results. Description of Key Statement of Comprehensive Income Items Revenues The following table sets forth the principal components of our total revenues by amount and by percentage of total revenues for the years presented. For the Years Ended December 31,2015 2016 2017RMB % RMB % RMB US$ %(In thousands except percentages)Revenues:Net advertising revenues1,226,51676.21,232,21085.31,353,480208,02685.9Paid services revenues382,68023.8212,69714.7221,61234,06114.1Total revenues1,609,196100.01,444,907100.01,575,092242,087100.0 91Table of Contents Revenues We derive our revenues from advertising services and paid services. Advertising services. Our net advertising revenues accounted for 76.2%, 85.3% and 85.9% of our total revenues in 2015, 2016 and 2017, respectively.We generate our net advertising revenues from payments made by advertisers to place their advertisements on our ifeng.com, mobile Internet websitesi.ifeng.com and our mobile applications in different formats over a particular period of time. Such formats generally include but are not limited to banners,news feed, videos, text-links, logos, buttons and rich media. Advertisers purchase our advertising services primarily through third-party advertising agencies. Currently the advertising business has three maintypes of pricing models, consisting of the Fixed Price model, the Cost Per Impression (“CPM”) model, and the Cost Per Click (“CPC”) model. We recognizeadvertising revenues on a net basis after deducting service fees earned by advertising agencies. Going forward, we expect our net advertising revenues tocomprise an increasing share of our total revenues. We also earn advertising revenues from related parties, including Phoenix TV, for joint TV and online advertising solutions which we provide togetherwith Phoenix TV to certain Phoenix TV advertising customers, China Mobile and our investees for online advertising services. We also record these revenuesas net advertising revenues earned from related parties. Our net advertising revenues earned from related parties accounted for 5.8%, 8.0% and 5.0% of our netadvertising revenues in 2015, 2016 and 2017, respectively. Paid services. Our paid services revenues contributed 23.8%, 14.7% and 14.1% of our total revenues in 2015, 2016 and 2017, respectively. Thefollowing table sets forth our paid services offerings and their respective contributions to our paid services revenues and total revenues in 2015, 2016 and2017, respectively. For the Years Ended December 31, % of Paid Services Revenues % of Total RevenuesPaid Services Offerings 2015 2016 2017 2015 2016 2017Digital entertainment (1)80.774.681.219.211.011.5Games and others (2)19.325.418.84.63.72.6 Notes:(1) Prior to 2016, our paid service revenues mainly comprised of the revenues generated from MVAS and games and others. Digital reading was previouslyclassified under “games and others”. In order to align with our overall strategies, in 2016, digital reading was re-classified from “Games and others”, anddigital reading together with MVAS was determined as “Digital entertainment”. Accordingly, the percentage of paid services revenues and thepercentage of total revenues in 2015 have been revised to conform to those of 2016 and 2017. (2) Games and others include web-based games, online digital reading, content sales, and other online and mobile paid services through our ownplatforms. As mentioned in note (1) above, the percentage of paid services revenues and the percentage of total revenues in 2015 have been revised toconform to those of 2016 and 2017. These revenues were recorded either on gross or net basis depending on the nature of the services that we provided to the customers. Our paid services revenues generated from China Mobile, a related party, accounted for 71.5%, 57.7% and 62.6% of our paid services revenues in 2015,2016 and 2017, respectively. We generated paid services revenues of RMB262.7 million, RMB105.4 million and RMB126.7 million (US$19.5 million) fromproviding services to customers of China Mobile and collecting fees through arrangements with China Mobile in 2015, 2016 and 2017, respectively. Theincrease in paid services revenues with China Mobile was primarily due to an increase in the MVAS revenues related to certain short-term new business. Wederived paid services revenues of RMB10.8 million, RMB17.3 million and RMB12.0 million (US$1.8 million) for the years ended December 31, 2015, 2016and 2017, respectively, from fixed fees from China Mobile for our mobile newspaper service. Cost of Revenues Our cost of revenues consists primarily of (1) revenue sharing fees, including service fees retained by mobile operators, which are recognized as cost ofrevenues for revenues recorded on gross basis, and revenue sharing fees paid to our channel and content partners, (2) content and operational costs, includingpersonnel-related cost associated with content production and certain advertisement sales support personnel, content procurement costs to third-partyprofessional media companies and to Phoenix TV Group, direct costs related to in-house content production, channel testing costs, rental cost, depreciationand amortization and other miscellaneous costs, (3) bandwidth costs and (4) sales taxes and surcharges, including value added tax, or VAT, and othersurcharges. The following table sets forth the components of our cost of revenues by amount and by percentage of total revenues for the years indicated. 92Table of Contents For the Years Ended December 31,2015 2016 2017RMB % RMB % RMB US$ %(In thousands except percentages)Cost of revenues:Revenue sharing fees216,97213.572,0275.072,61311,1604.6Content and operational costs406,74125.3470,81332.6466,37971,68129.6Bandwidth costs83,1715.264,2004.455,0508,4613.5Sales taxes and surcharges122,5027.6119,7678.3133,15520,4668.5Total cost of revenues829,38651.5726,80750.3727,197111,76846.2 Revenue Sharing Fees. We share the revenues generated from these services with the mobile operators through whose networks and/or service platformswe offer our services to our users, and record the revenue sharing fee as cost of revenues. We also share the revenues generated from our paid services withchannel partners through whose platforms we market and distribute our services and with certain content providers, as applicable. The percentage allocationsfor our revenue sharing are determined with the relevant parties and vary by service. Content and Operational Costs. Our content costs consist of (i) personnel-related costs which include share-based compensation associated withcontent production and advertising sales support staff, (ii) payments we make to third-party professional media companies, (iii) revenue sharing fees we payto Phoenix TV Group for sales of its video content, (iv) the license fees we pay to Phoenix TV Group for the use of its content, (v) production costs related toour in-house produced content, and (vi) operational costs which consist of channel testing costs, event costs incurred in connection with advertising revenue-generating activities, rental costs, depreciation and amortization costs, and other miscellaneous costs. Bandwidth Costs. Bandwidth costs are the fees we pay to mobile operators and other service providers for telecommunications services and for hostingour servers at their Internet data centers. Sales Taxes and Surcharges. On May 1, 2016, the transition from the imposition of Business Tax to the imposition of VAT was expanded to allindustries in China, and all of our revenues have been subject to VAT since that date. We are also subject to a cultural development fee on the provision ofadvertising services in the PRC and the applicable tax rate is 3% of the net advertising revenues. For more information about such taxes, surcharges and fees, see “—Taxation.” For more information about risks related to potential changes in thetaxes applicable to us, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—The discontinuation of any of thepreferential tax treatments available to us in China could materially and adversely affect our operating results and financial condition.” Operating Expenses Our operating expenses consist of sales and marketing expenses, general and administrative expenses and technology and product developmentexpenses, and include allocations of expenses from Phoenix TV. Share-based compensation is included in our operating expenses as they are incurred. Thedecrease in operating expenses from 2015 to 2016 was primarily attributable to a decrease in share-based compensation expenses, which was partially offsetby an increase in expenses associated with traffic acquisition. The increase in operating expenses from 2016 to 2017 was primarily attributable to increasedtraffic acquisition expenses and share-based compensation expenses. The following table sets forth our operating expenses, divided into their major categories, by amount and by percentage of total revenues for the yearsindicated. For the Years Ended December 31,2015 2016 2017RMB % RMB % RMB US$ %(In thousands except percentages)Operating expenses:Sales and marketing expenses346,13321.5339,17123.5493,66475,87531.3General and administrative expenses183,98911.4181,67712.6146,92322,5829.3Technology and product development expenses170,71410.6161,88011.2192,32529,56012.2Total operating expenses700,83643.6682,72847.3832,912128,01752.8 93Table of Contents Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of sales and marketing personnel-related expenses, including salescommissions, advertising and promotion expenses including traffic acquisition expenses, rental expenses, and depreciation and amortization expenses. General and Administrative Expenses. Our general and administrative expenses primarily consist of personnel-related expenses for management andadministrative staff, professional service expenses, bad debt provision, rental expenses, and depreciation and amortization expenses. Technology and Product Development Expenses. Our technology and product development expenses mainly consist of personnel-related expensesassociated with the development and maintenance of, and enhancement to our PC websites, mobile applications and mobile websites, expenses associatedwith new technology and product development and enhancement, rental expenses, and depreciation and amortization expenses. Share-based Compensation We measure the cost of employee services received in exchange for share-based compensation at the grant date fair value of the award. We recognizeshare-based compensation, net of forfeitures, on a graded-vesting basis over the vesting term of the award. We adopt the Black-Scholes option pricing modelto determine the fair value of stock options, and determine the fair value of restricted share and restricted share units based on the fair value of the underlyingordinary shares at the grant date considering the dilutive effect of restricted share and restricted share units. We account for share-based compensation usingan estimated forfeiture rate at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-basedcompensation is recorded net of estimated forfeitures such that expenses are recorded only for share-based awards that are expected to vest. Related Party Transactions In 2015, 2016 and 2017, we have entered into transactions with our related parties Phoenix TV and China Mobile that impact our net advertisingrevenues, paid services revenues, cost of revenues, sales and marketing expenses and general and administrative expenses. In 2015, 2016 and 2017, we alsohave entered into transactions with our certain investees. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”The following table sets forth the significant transactions with our related parties. For the Years Ended December 31,2015 2016 2017RMB RMB RMB US$(In thousands)Transactions with the non-US listed part of Phoenix TV Group :Content provided by Phoenix TV Group(4,730)(7,447)(12,090)(1,858)Data line services provided by Phoenix TV Group(180)———Advertising and promotion expenses charged by Phoenix TV Group(1,788)(1,277)(23)(4)Corporate administrative expenses charged by Phoenix TV Group(1,812)(260)(6,245)(960)Project cost charged by Phoenix TV Group(55)—(1,217)(187)Revenues earned from Phoenix TV Group16,51010,3569,4541,453Transactions with China Mobile:Advertising revenues earned from China Mobile35,78731,95633,4915,147Paid services revenues earned from and through China Mobile273,510122,672138,71221,320Revenue sharing fees and bandwidth cost charged by China Mobile(44,359)(20,941)(43,604)(6,702)Transactions with Investees :Loans provided to FM8,000———Advances provided to/(repaid by) FM71(102)——Loans repaid by FM—(7,056)——Revenues earned through FM——855131Advertising revenues earned from Tianbo4,38413,48213,8692,132Advances provided to/(repaid by) Tianbo1,177(1,177)294Advertising revenues earned from Lilita14,41442,61910,0001,537Brand license authorization revenues earned from Lilita3,15517216125Advertising resources provided by Tianbo(39)(670)——Advances provided to Fenghuang Jingcai40919——Loans provided to Particle and related interest income including the effectof foreign exchange—50,33787,51413,451Loans repaid by Particle——(48,747)(7,492)Issuance of convertible loans to Particle and related interest incomeincluding the effect of foreign exchange—248,249(1,799)(277)Corporate administrative expenses charged by Particle——(725)(111)Sales of assets to Particle at carrying value——4,740729Revenue sharing fees charged by investees——(111)(17) 94Table of Contents Other Income, net Our other income, net reflects government subsidies, interest income, interest expense, foreign currency exchange gain or loss, income/ (loss) fromequity investments, including impairment, and others, net. Taxation We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition,dividend payments are not subject to withholding tax in the Cayman Islands. Our subsidiaries incorporated in the British Virgin Islands are exempted from income tax on their foreign-derived income and are not subject towithholding taxes. Our subsidiaries incorporated in Hong Kong are subject to a tax rate of 16.5% on the estimated assessable profit arising in Hong Kong. Each of our PRC subsidiaries and our affiliated consolidated entities are obligated to pay income tax in the PRC. The CIT Law generally applies anincome tax rate of 25% to all enterprises, but grants preferential tax treatment to High and New Technology Enterprises (“HNTEs”) and Software Enterprises.Under these preferential tax treatments, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status everythree years and Software Enterprises are entitled to an income tax exemption for two years beginning from its first profitable year and a 50% reduction to arate of 12.5% for the subsequent three years. Fenghuang On-line had been qualified as an HNTE in November 2014 and August 2017, respectively, and was entitled to a preferential tax rate of 15%.Therefore, Fenghuang On-line was subject to a 15% income tax rate for the years from 2015 to 2017 and would be subject to a 15% income tax rate from2018 to 2019. Tianying Jiuzhou resubmitted applications for qualification and was approved as an HNTE in 2014 and 2017, respectively, and therefore, TianyingJiuzhou was subject to a 15% income tax rate from 2015 to 2017 and would be subject to a 15% income tax rate from 2018 to 2019. In 2012, Fenghuang Yutian was qualified as a Software Enterprise. As 2013 was the first year Fenghuang Yutian generated taxable profit, it wasexempted from income taxes for the years 2013 and 2014, and was subject to a 12.5% income tax rate from 2015 to 2017. In 2017, Fenghuang Yutian hadbeen qualified as an HNTE, and therefore, Fenghuang Yutian would be subject to a 15% income tax rate from 2018 to 2019. In 2016, Fenghuang Borui was qualified as a Software Enterprise. As 2016 was the first year Fenghuang Borui generated taxable profit, it was exemptedfrom income taxes for the years 2016 and 2017, and would be subject to a 12.5% income tax rate from 2018 to 2020. All our other PRC subsidiaries and affiliated consolidated entities were subject to a 25% income tax rate for all the years presented. Under the CIT Law, dividends paid from our PRC subsidiaries are subject to a withholding tax at 10%. This new dividend withholding tax, however,will only be levied on our PRC subsidiaries in respect of profits earned in 2008 onwards. Profits distributed after January 1, 2008 but related to financialresults generated in the year ended December 31, 2007 and prior years will not be subject to dividend withholding tax. The dividend withholding tax ratecan be lower than 10% subject to tax treaties between China and foreign countries or regions. The CIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” islocated in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for itsglobal income. On April 22, 2009, the SAT issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “defacto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Under Circular 82, an offshore incorporatedenterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto managementbody” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary locationof the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or aresubject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and boardand shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in thePRC. Based on a review of surrounding facts and circumstances, we do not believe that it is more likely than not that our operations outside of the PRCshould be considered a resident enterprise for PRC tax purposes. However, there is limited guidance and implementation history with respect to the CIT Law.Should we be treated as a resident enterprise for PRC tax purposes, we would be subject to PRC tax on worldwide income at a uniform tax rate of 25%retroactive to January 1, 2008. 95Table of Contents On May 1, 2016, the transition from the imposition of Business Tax to the imposition of VAT was expanded to all industries in China, and all of ourrevenues have been subject to VAT since that date. We are also subject to a cultural development fee on the provision of advertising services in China. Theapplicable tax rate is 3% of the net advertising revenues. For more information about risks related to potential changes in the taxes applicable to us, see “Item3. Key Information — D. Risk Factors — Risks Relating to Our Business and Industry — The discontinuation of any of the preferential tax treatmentsavailable to us in China could materially and adversely affect our operating results and financial condition.” A. Results of Operations Selected Consolidated Financial Information The following table sets forth the selected consolidated statements of comprehensive income data by amount and by percentage of total revenues forthe years indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annualreport. The operating results in any period are not necessarily indicative of the results you may expect for future periods. For the Years Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (In thousands, except for percentages)Consolidated Statements of ComprehensiveIncome DataRevenues:Net advertising revenues1,226,51676.21,232,21085.31,353,480208,02685.9Paid services revenues382,68023.8212,69714.7221,61234,06114.1Total revenues1,609,196100.01,444,9071001,575,092242,087100.0Cost of revenues (1)(829,386)(51.5)(726,807)(50.3)(727,197)(111,768)(46.2)Gross profit779,81048.5718,10049.7847,895130,31953.8Operating expenses (1) :Sales and marketing expenses(346,133)(21.5)(339,171)(23.5)(493,664)(75,875)(31.3)General and administrative expenses(183,989)(11.4)(181,677)(12.6)(146,923)(22,582)(9.3)Technology and product developmentexpenses(170,714)(10.6)(161,880)(11.2)(192,325)(29,560)(12.2)Total operating expenses(700,836)(43.6)(682,728)(47.3)(832,912)(128,017)(52.8)Income from operations78,9744.935,3722.414,9832,3021.0Other income, net18,9281.256,9373.934,2245,2612.2Income before tax97,9026.192,3096.449,2077,5633.2Income tax expense(25,517)(1.6)(14,089)(1.0)(14,783)(2,272)(0.9)Net income72,3854.578,2205.434,4245,2912.3Net loss attributable to noncontrollinginterests1,1990.12,3910.23,0484680.2Net income attributable to Phoenix NewMedia Limited73,5844.680,6115.637,4725,7592.5Net income72,3854.578,2205.434,4245,2912.3Other comprehensive income, net of tax: fairvalue remeasurement for available-for-saleinvestments15,8691.0247,33617.1321,53849,41920.4Other comprehensive income/(loss), net oftax: foreign currency translationadjustment22,8131.427,6691.9(49,640)(7,630)(3.2)Comprehensive income111,0676.9353,22524.4306,32247,08019.5Comprehensive loss attributable tononcontrolling interests1,1990.12,3910.23,0484680.2Comprehensive income attributable toPhoenix New Media Limited112,2667.0355,61624.6309,37047,54819.7 For the Years Ended December 31, 2015 2016 2017 RMB % RMB % RMB US$ % (In thousands, except for percentages)Non-GAAP gross profit (2)786,14548.9713,73349.4852,912131,09054.1Non-GAAP income from operations (2)113,3287.037,2622.635,8355,5062.3Non-GAAP adjusted net income attributableto Phoenix New Media Limited (3)145,1569.084,2775.852,0287,9953.3 96Table of Contents Notes:(1) Includes share-based compensation as follows: For the Years Ended December 31, 2015 2016 2017 RMB RMB RMB US$ (In thousands)Allocation of share-based compensation:Cost of revenues6,335(4,367)5,017771Sales and marketing expenses3,043(2,842)1,877288General and administrative expenses21,83611,02510,7961,659Technology and product development expenses3,140(1,926)3,162486Total share-based compensation included in cost of revenues and operatingexpenses34,3541,89020,8523,204 (2) Non-GAAP gross profit and non-GAAP income from operations are both non-GAAP financial measures. Non-GAAP gross profit is gross profit excludingshare-based compensation. Non-GAAP income from operations is income from operations excluding share-based compensation. (3) We define non-GAAP adjusted net income attributable to Phoenix New Media Limited as net income attributable to Phoenix New Media Limitedexcluding share-based compensation, income or loss from equity investments, including impairments, and gain on disposal of subsidiaries and acquisition ofequity investments. We believe the separate analysis and exclusion of the following non-GAAP to GAAP reconciling items add clarity to the constituent parts of ourperformances. We review non-GAAP gross profit, non-GAAP income from operations and non-GAAP adjusted net income attributable to Phoenix New MediaLimited together with gross profit, income from operations and net income attributable to Phoenix New Media Limited to obtain a better understanding ofour operating performance. We use these non-GAAP financial measures for planning and forecasting and measuring results against the forecast. Using thesenon-GAAP financial measures to evaluate our business allows us and our investors to assess our relative performance against our competitors and ultimatelymonitor our capacity to generate returns for our investors. We also believe it is useful supplemental information for investors and analysts to assess ouroperating performance without the effect of items like share-based compensation, income or loss from equity investments, including impairments, which havebeen and will continue to be significant recurring items, and without the effect of gain on disposal of subsidiaries and acquisition of equity investments, andgain on disposal of an equity investment and acquisition of available-for-sale investments, which have been significant and one-time items. However, the useof non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they donot include all items that impact our gross profit, income from operations and net income attributable to Phoenix New Media Limited for the period. Inaddition, because non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similar titledmeasures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures in isolation from or as analternative to the financial measures prepared in accordance with U.S. GAAP. Non-GAAP to GAAP reconciling items have no income tax effect. Our non-GAAP gross profit, non-GAAP income from operations and non-GAAP adjusted net income attributable to Phoenix New Media Limited arecalculated as follows for the years presented: For the Years Ended December 31,2015 2016 2017RMB RMB RMB US$(In thousands)Gross Profit779,810718,100847,895130,319Excluding:Share-based compensation6,335(4,367)5,017771Non-GAAP gross profit786,145713,733852,912131,090 Income from operations78,97435,37214,9832,302Excluding:Share-based compensation34,3541,89020,8523,204Non-GAAP income from operations113,32837,26235,8355,506 Net income attributable to Phoenix New Media Limited73,58480,61137,4725,759Excluding:Share-based compensation34,3541,89020,8523,204Loss /(income) from equity investments including impairments41,8611,776(6,296)(968)Gain on disposal of an equity investment and acquisition of available-for-sale investments(4,643)———Non-GAAP adjusted net income attributable to Phoenix New Media Limited145,15684,27752,0287,995 97Table of Contents Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 Revenues. Our total revenues increased by 9.0% from RMB1.4 billion in 2016 to RMB1.6 billion (US$242.1 million) in 2017. Net advertisingrevenues (net of advertising agency service fees) increased by 9.8% from RMB1.2 billion in 2016 to RMB1.4 billion (US$208.0 million), primarily due tothe 46.5% year-over-year growth in mobile advertising revenues, which was partially offset by the decrease in PC advertising revenues. Paid service revenuesincreased by 4.2% from RMB212.7 million in 2016 to RMB221.6 million (US$34.1 million) in 2017, which was primarily due to the 51.3% year-over-yearincrease in digital reading revenues, and partially offset by the decrease in games and others revenues. Cost of Revenues. Our cost of revenues for the years ended December 31, 2016 and 2017 were RMB726.8 million and RMB727.2 million (US$111.8million), respectively. Cost of revenues as a percentage of our revenues decreased from 50.3% in 2016 to 46.2% in 2017. · Revenue sharing fees. Our revenue sharing fees for the years ended December 31, 2016 and 2017 were RMB72.0 million and RMB72.6million (US$11.2 million), respectively. · Content and operational costs. Our content and operational costs for the years ended December 31, 2016 and 2017 were RMB470.8 millionand RMB466.4 million (US$71.7 million), respectively. · Bandwidth costs. Our bandwidth costs decreased by 14.3% from RMB64.2 million in 2016 to RMB55.1 million (US$8.5 million) in 2017primarily due to a decline in the unit purchasing price of bandwidth costs. · Sales taxes and surcharges. Our sales taxes and surcharges increased by 11.2% from RMB119.8 million in 2016 to RMB133.2 million(US$20.5 million) in 2017. This increase was primarily due to a year-over-year increase in revenues. · Share-based compensation. Our share-based compensation allocated to cost of revenues as part of content and operational costs above,increased from negative RMB4.4 million in 2016 to RMB5.0 million (US$0.8 million) in 2017. The negative amount of 2016 was mainly dueto the reversal of share-based compensation caused by the increase in estimated forfeiture rate of share-based awards based on the actualforfeiture rate in the year. As a result of the foregoing, our gross profit increased by 18.1% from RMB718.1 million in 2016 to RMB847.9 million (US$130.3 million) in 2017.Our gross margin increased from 49.7% in 2016 to 53.8% in 2017 mainly due to the increase of revenues and the decrease of cost of revenues as explainedabove. Operating Expenses. Our operating expenses increased by 22.0% from RMB682.7 million in 2016 to RMB832.9 million (US$128.0 million) in 2017,primarily due to the increase in traffic acquisition expenses. Our operating expenses as a percentage of revenues increased from 47.3% in 2016 to 52.8% in2017. · Sales and marketing expenses. Our sales and marketing expenses increased by 45.5% from RMB339.2 million in 2016 to RMB493.7 million(US$75.9 million) in 2017. This increase was mainly due to the increase in traffic acquisition expenses. · General and administrative expenses. Our general and administrative expenses decreased by 19.1% from RMB181.7 million in 2016 toRMB146.9 million (US$22.6 million) in 2017. This decrease was mainly due to a year-over-year decrease in bad debt provision expense ofRMB41.6 million (US$6.4 million), primarily caused by the negative RMB9.1 million (US$1.4 million) of bad debt provision expenserecognized in 2017 resulting from the subsequent collection of previously fully-reserved receivables of RMB25.4 million (US$3.9 million) in2017 and the one-off specific bad debt provision expense of RMB23.8 million recognized in 2016. · Technology and product development expenses. Our technology and product development expenses increased by 18.8% from RMB161.9million in 2016 to RMB192.3 million (US$29.6 million) in 2017. This increase was primarily due to an increase in staff cost. · Share-based compensation. Our share-based compensation allocated to each of the three categories of operating expenses increased by153.0% from RMB6.3 million in 2016 to RMB15.8 million (US$2.4 million) in 2017. This increase was mainly due to the share-based awardsnewly granted in 2017 and our option exchange program implemented in the fourth quarter of 2016 while there was a reversal of share-basedcompensation in 2016 caused by the increase of estimated forfeiture rate of share-based awards based on the actual forfeiture rate in the year. Related Party Transactions · Our net advertising revenues from related parties decreased by 31.5% from RMB98.4 million in 2016 to RMB67.4 million (US$10.4 million)in 2017, which was primarily attributable to the decrease in advertising revenues earned from Phoenix TV Group and its customers. 98Table of Contents · Our paid service revenues from related parties increased by 13.3% from RMB122.8 million in 2017 to RMB139.1 million (US$21.4 million)in 2017, which was primarily attributable to the increase in paid services revenues generated from China Mobile. · Our cost of revenues due to transactions with related parties increased by 96.6% from RMB29.1 million in 2016 to RMB57.1 million (US$8.8million) in 2017, which was primarily due to the increase in revenues sharing and bandwidth cost with China Mobile. · Our operating expenses due to transactions with related parties increased by 354.8% from RMB1.5 million in 2016 to RMB7.0 million(US$1.1 million) in 2017, which was mainly attributable to an increase in trademark license fee charged by Phoenix TV Group. Other Income, Net. Our other income, net decreased by 39.9% from RMB56.9 million in 2016 to RMB34.2 million (US$5.3 million) in 2017. Thedecrease in other income, net in 2017 was mainly due to the foreign currency exchange loss caused by the appreciation of Renminbi against US dollars. Income Tax Expense. Our income tax expense increased by 4.9% from RMB14.1 million in 2016 to RMB14.8 million (US$2.3 million) in 2017. Oureffective tax rate decreased from 15.9% in 2016 to 14.1% in 2017. The decrease in effective tax rate was mainly due to a lesser increase in valuationallowance in 2017 as compared to that of 2016. Net Income Attributable to Phoenix New Media Limited. As a result of the foregoing, net income attributable to our company decreased by 53.5%from RMB80.6 million in 2016 to RMB37.5 million (US$5.8 million) in 2017. Year Ended December 31, 2016 Compared to Year Ended December 31, 2015 Revenues. Our revenues for the years ended December 31, 2015 and 2016 were RMB1.6 billion and RMB1.4 billion, respectively. Paid servicesrevenues decreased by 44.4% from RMB382.7 million in 2015 to RMB212.7 million in 2016. This decrease was mainly due to the decrease in revenuesgenerated from MVAS with telecom operators resulted from the decline in users’ demand for services provided through telecom operators in China, whichwas consistent with our expectations given the shrinking demand for such services in general. Cost of Revenues. Our cost of revenues decreased by 12.4% from RMB829.4 million in 2015 to RMB726.8 million in 2016. Cost of revenues as apercentage of our revenues decreased from 51.5% in 2015 to 50.3% in 2016. · Revenue sharing fees. Our revenue sharing fees decreased by 66.8% from RMB217.0 million in 2015 to RMB72.0 million in 2016 primarilydue to the decrease in sales of MVAS. · Content and operational costs. Our content and operational costs increased by 15.8% from RMB406.7 million in 2015 to RMB470.8 millionin 2016 primarily due to an increase in personnel-related cost and advertisement-related content production costs. Personnel-related costincreased mainly due to a general increase in salary. · Bandwidth costs. Our bandwidth costs decreased by 22.8% from RMB83.2 million in 2015 to RMB64.2 million in 2016 primarily due to adecline in the unit purchasing price of bandwidth costs. · Sales taxes and surcharges. Our sales taxes and surcharges for the years ended December 31, 2015 and 2016 were RMB122.5 million andRMB119.8 million, respectively, decreased in line with the year-over-year decreases in revenues. · Share-based compensation. Our share-based compensation allocated to cost of revenues as part of content and operational costs above,decreased from RMB6.3 million in 2015 to negative RMB4.4 million in 2016. This decrease was mainly due to the increase of the estimatedforfeiture rate of share-based awards in 2016, which was partially offset by our option exchange program implemented in the fourth quarter of2016. As a result of the foregoing, our gross profit decreased by 7.9% from RMB779.8 million in 2015 to RMB718.1 million in 2016. Our gross marginincreased from 48.5% in 2015 to 49.7% in 2016 mainly due to the reduction of sales from low gross margin products in paid services. Operating Expenses. Our operating expenses decreased by 2.6% from RMB700.8 million in 2015 to RMB682.7 million in 2016, primarily due to adecrease in share-based compensation, which was partially offset by an increase in expenses associated with traffic acquisition. Our operating expenses as apercentage of revenues increased from 43.6% in 2015 to 47.3% in 2016. · Sales and marketing expenses. Our sales and marketing expenses decreased by 2.0% from RMB346.1 million in 2015 to RMB339.2 millionin 2016. This decrease was mainly due to a decrease in staff costs, general operating expense and promotion fees, which was partially offset byan increase in traffic acquisition expenses. 99Table of Contents · General and administrative expenses. Our general and administrative expenses decreased by 1.3% from RMB184.0 million in 2015 toRMB181.7 million in 2016. This decrease was mainly due to a decrease in share-based compensation which was offset by an increase in staffcost and other general operating cost. · Technology and product development expenses. Our technology and product development expenses decreased by 5.2% from RMB170.7million in 2015 to RMB161.9 million in 2016. This decrease was primarily due to a decrease in share-based compensation and technicalservice cost which was offset by an increase in staff cost. · Share-based compensation. Our share-based compensation allocated to each of the three categories of operating expenses decreased by 77.7%from RMB28.0 million in 2015 to RMB6.3 million in 2016. This decrease was mainly due to the increase of the estimated forfeiture rates ofshare-based awards based on the actual forfeiture rates in 2016. Related Party Transactions · Our net advertising revenues from related parties increased by 38.5% from RMB71.0 million in 2015 to RMB98.4 million in 2016, which wasprimarily attributable to advertising revenues earned from Phoenix TV Group and its customers, China Mobile and our investees. · Our paid services revenues from related parties decreased by 55.6% from RMB276.7 million in 2015 to RMB122.8 million in 2016, whichwas primarily attributable to the decrease in paid services revenues generated from China Mobile resulted from the decline in users’ demandfor services provided through telecom operators in China, which was consistent with our expectations given the shrinking demand for suchservices in general. · Our cost of revenues due to transactions with related parties decreased by 41.1% from RMB49.4 million in 2015 to RMB29.1 million in 2016,which was primarily due to the decrease in revenues sharing and bandwidth cost with China Mobile. · Our operating expenses due to transactions with related parties decreased by 57.3% from RMB3.6 million in 2015 to RMB1.5 million in2016, which was attributable to a decrease expense incurred by Phoenix TV Group on our behalf. Other Income, Net. Our other income, net increased by 200.8 % from RMB18.9 million in 2015 to RMB56.9 million in 2016. The increase in otherincome, net was mainly due to the loss from equity investments including impairments recognized in 2015. Income Tax Expense. Our income tax expense decreased by 44.8 % from RMB25.5 million in 2015 to RMB14.1 million in 2016. Our effective tax ratedecreased from 16.0% in 2015 to 15.9% in 2016. The decrease in effective tax rate was mainly due to the effect of changes to certain preferential tax benefits,for example, the income tax rate for Fenghuang Borui changed from 25.0% in 2015 to 0% in 2016. Net Income Attributable to Phoenix New Media Limited. As a result of the foregoing, net income attributable to our company increased by 9.5% fromRMB73.6 million in 2015 to RMB80.6 million in 2016. B. Liquidity and Capital Resources The following table sets forth a summary of our cash flows for the years indicated: For the Years Ended December 31,2015 2016 2017RMB RMB RMB US$(In thousands)Net cash provided by operating activities220,812203,686172,98026,588Net cash used in investing activities(1,131,868)(313,547)(6,390)(983)Net cash provided by/(used in) financing activities64,366217,148(16,234)(2,495)Effect of exchange rate changes on cash, cash equivalents and restricted cash(3,488)14,340(8,090)(1,243)Net (decrease)/increase in cash, cash equivalents and restricted cash(850,178)121,627142,26621,867Cash, cash equivalents and restricted cash at the beginning of the year1,285,847435,669557,29685,654Cash, cash equivalents and restricted cash at the end of the year435,669557,296699,562107,521 As of December 31, 2017, we had RMB362.9 million (US$55.8 million) in cash and cash equivalents and RMB336.7 million (US$51.8 million) inrestricted cash. Our cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal or use, and which haveoriginal maturities of three months or less. Our restricted cash represents guarantee of banking facility which is restricted to withdrawal or usage. We have notencountered any difficulties in meeting our cash obligations to date. As of December 31, 2017, we also had RMB737.7 million (US$113.4 million) in termdeposits and short term investments with maturities up to one year. We believe that our operating cash flows, existing cash balances and term deposits andshort term investments will be sufficient to meet our anticipated cash needs for the next twelve months from April 26, 2018. 100Table of Contents We are a holding company, and we rely principally on dividends and other distributions from our subsidiaries in China for our cash requirements.Current PRC regulations permit our subsidiaries to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chineseaccounting standards and regulations. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely limit ourability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business. Any earnings that our PRC subsidiaries distribute would be paid to our offshore intermediate holding company primarily through dividends. To date,our PRC subsidiaries have not paid dividends to us. As a holding company, we have not required cash for our operations outside of China and therefore ourPRC subsidiaries have retained their earnings for the purpose of conducting our business operations in China. As of December 31, 2015, 2016 and 2017, ourPRC subsidiaries’ retained earnings were RMB799.8 million, RMB898.7 million and RMB993.1 million (US$152.6 million), respectively, and our PRCsubsidiaries’ cash and cash equivalents were RMB103.3 million, RMB58.5 million and RMB117.6 million (US$18.1 million), respectively. Although we currently anticipate that we will be able to fund operations for at least the next twelve months with operating cash flows, existing cashbalances and term deposits and short term investments, we may require additional cash resources due to changed business conditions or other futuredevelopments, including any investments or acquisitions we may decide to pursue. If these sources are insufficient to satisfy cash requirements, we may seekto sell additional equity or debt securities or to obtain additional credit facilities. The sale of additional equity or equity-linked securities could result inadditional dilution to shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating andfinancial covenants that would restrict operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Operating Activities In 2017, our operating activities generated net cash of RMB173.0 million (US$26.6 million). This was primarily due to (i) net income of RMB34.4million, (ii) non-cash adjustments which primarily included depreciation and amortization expenses of RMB35.6 million, foreign currency exchange loss ofRMB23.6 million, and share-based compensation of RMB20.9 million, (iii) an increase in accrued expenses and other current liabilities of RMB62.0 million,(iv) an increase in advances from customers of RMB37.4 million, and (v) an increase in tax payable of RMB16.6 million. These items were partially offset by(i) an increase in accounts receivable of RMB44.6 million mainly attributable to the increase of advertising revenues, and (ii) an increase in amounts duefrom related parties of RMB23.0 million mainly attributable to increase in the loans granted to Particle in 2017. In 2016, our operating activities generated net cash of RMB203.7 million. This was primarily due to (i) net income of RMB78.2 million, (ii) non-cashadjustments which primarily included depreciation and amortization expenses of RMB42.0 million and provision for allowance for doubtful accounts ofRMB48.2 million, (iii) a decrease in accounts receivable of RMB55.3 million primarily due to the accelerated collection of accounts receivables fromcustomers, (iv) an increase in accrued expenses and other current liabilities of RMB30.2 million and (v) an increase in advances from customers of RMB12.6million. These items were partially offset by (i) a decrease in accounts payable of RMB31.5 million mainly attributable to the payment of our revenue sharingfees, (ii) an increase in prepayments and other current assets of RMB18.5 million, (iii) an increase in deferred income tax of RMB18.3 million, (iv) a decreasein tax payable of RMB17.5 million, and (v) foreign currency exchange gain of RMB9.6 million. In 2015, our operating activities generated net cash of RMB220.8 million. This was primarily due to (i) net income of RMB72.4 million, (ii) non-cashadjustments which primarily include depreciation and amortization expenses of RMB45.5 million mainly attributable to increased acquisition of propertyand equipment, provision for allowance for doubtful accounts of RMB49.3 million, impairment of intangible assets of RMB3.8 million, loss from equityinvestments including impairments of RMB41.9 million and share-based compensation of RMB34.4 million, (iii) an increase in accounts payable ofRMB24.4 million primarily due to increases in our revenue sharing fees and advertising agency fees, and (iv) a decrease in amounts due from related partiesof RMB41.4 million primarily due to the settlement of advertising revenues earned from Phoenix TV Group. These items were partially offset by (i) anincrease in deferred income tax of RMB11.4 million, (ii) an increase in accounts receivable of RMB59.8 million mainly attributable to an increase in days ofreceivable recovery and (iii) an increase in prepayments and other current assets of RMB18.3 million. Investing Activities We had net cash used in investing activities of RMB6.4 million (US$1.0 million) for 2017. This was primarily due to (i) placement of term deposits andshort term investments of RMB2.8 billion, (ii) loan provided to Particle of RMB74.0 million, and (iii) capital expenditures of RMB27.8 million as describedin “—Capital Expenditures”, partially offset by the maturity of term deposits and short term investments of RMB2.8 billion and loan repaid by a related partyof RMB53.1 million. We had net cash used in investing activities of RMB313.5 million for 2016. This was primarily due to (i) placement of term deposits and short terminvestments of RMB3.2 billion, (ii) loans provided to Particle of RMB45.9 million and issuance of convertible loans to Particle of RMB228.3 million, and(iii) capital expenditures of RMB29.3 million as described in “—Capital Expenditures”, partially offset by the maturity of term deposits and short terminvestments of RMB3.2 billion. We had net cash used in investing activities of RMB1.1 billion for 2015. This was primarily due to (i) placement of term deposits and short terminvestments of RMB3.3 billion, (ii) cash paid for available-for-sale investments in Particle of RMB352.0 million, and (iii) capital expenditures of RMB43.5million, partially offset by the maturity of term deposits and short term investments of RMB2.6 billion. 101Table of Contents Financing Activities We had net cash used in financing activities of RMB16.2 million (US$2.5 million) for 2017, mainly attributable to the repayment of short-term bankloans of RMB357.1 million, partially offset by proceeds from short-term bank loans of RMB328.5 million and proceeds from exercise of stock option ofRMB12.4 million. We had net cash provided by financing activities of RMB217.1 million for 2016, mainly attributable to proceeds from short-term bank loans ofRMB214.7 million and proceeds from exercise of stock option of RMB2.4 million. We had net cash provided by financing activities of RMB64.4 million for 2015, mainly attributable to proceeds from short-term loans of RMB123.6million and proceeds from exercise of stock option of RMB6.9 million, offset by RMB66.4 million used in connection with the repurchase of our ADS. Capital Expenditures We had capital expenditures of RMB43.5 million, RMB29.3 million and RMB27.8 million (US$4.3 million) in 2015, 2016 and 2017, respectively.The capital expenditures were mainly attributable to purchasing servers and network equipment. We expect capital expenditures to increase to approximatelyRMB63.5 million in 2018. We plan to fund our capital expenditures in 2018 with cash flows from our operations and cash and. cash equivalents. Recently Issued Accounting Standards Revenue from Contracts with Customers. In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contractswith Customers (Topic 606). This guidance supersedes current guidance on revenue recognition in Topic 605: Revenue Recognition. The new revenuestandard is effective beginning on January 1, 2018, and early adoption is permitted. The guidance permits two methods of adoption: retrospectively to eachprior reporting period presented (full retrospective approach), or retrospectively with the cumulative effect of initially applying the guidance recognized atthe date of initial application (the modified retrospective approach). We will adopt the new standard effective January 1, 2018, using the modifiedretrospective method. The cumulative effect of initially applying the guidance that will be recognized at the date of initial application is not expected to bematerial and the financial statements of prior periods will not be retrospectively adjusted. We have substantially completed the assessment andimplementation work, and the main impact will be (1) the reclassification of sales taxes and surcharges from cost of revenues to a reduction of revenues,(2) revenues or expenses from some advertising barter transactions will be recognized beginning from January 1, 2018 in accordance with the new guidance,as the provision of Topic 605 exempting some advertising-for-advertising barter transactions, for which the fair value of the advertising services surrenderedor received was not determinable, from being reported at fair value has been superseded. If presented net of sales taxes and surcharges, revenues for the yearended December 31, 2017 would have been approximately 8.5% lower than currently presented. Total revenues from advertising-for-advertising bartertransactions not recognized in 2017 were RMB2.4 million (US$0.4 million), which would be recognized as revenues and increase the amount of revenuesunder Topic 606 beginning from January 1, 2018. Recognition and Measurement of Financial Assets and Financial Liabilities. On January 5, 2016, the FASB issued ASU 2016-01, Recognition andMeasurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure offinancial instruments. This amendment requires all equity investments to be measured at fair value, with changes in the fair value recognized through netincome (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). This standard is effective forfiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We will apply the new standard beginning January 1,2018 and recognize the changes in fair value for all equity investments other than those accounted for under equity method of accounting measured at fairvalue through net income/(loss). For investments in equity securities lacking of readily determinable fair values, we will elect to use the measurementalternative defined as cost, less impairments, adjusted by observable price changes. We anticipate that the adoption of ASU 2016-01 will increase thevolatility of our other income/(expense), net, as a result of the remeasurement of our equity securities upon the occurrence of observable price changes andimpairments. Leases. On February 25, 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 specifies the accounting for leases. For operating leases, ASU2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balancesheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on agenerally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. ASU2016-02 is effective for public companies for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Earlyadoption is permitted. We are currently evaluating the impact of adopting this standard on our consolidated financial statements. Financial Instruments-Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requiresentities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonableand supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured atamortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early applicationwill be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently evaluatingthe impact that the standard will have on our consolidated financial statements and related disclosures. 102Table of Contents Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued ASU 2016-15, Statementof Cash Flows — Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts andcash payments in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017,and interim periods within those fiscal years. Early adoption is permitted. We do not expect this standard to have a material impact on our consolidatedfinancial statements. Statement of Cash Flows (Topic 230): Restricted Cash. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230):Restricted Cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amountsgenerally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalentsshould be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement ofcash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years and is appliedretrospectively. We have early adopted this guidance retrospectively. Accordingly, the item “changes in restricted cash” previously included in investingactivities in the consolidated statements of cash flows for the years ended December 31, 2015 and 2016 with an amount of RMB125.0 million andRMB229.6 million, respectively, had been removed from cash flows from investing activities and included in beginning and ending cash, cash equivalentsand restricted cash balances retrospectively. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within thebalance sheet that sum to the total of the same such amounts shown in the statement of cash flows. For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$(In thousands)Cash and cash equivalents310,669202,694362,86255,771Restricted cash125,000354,602336,70051,750Total cash, cash equivalents, and restricted cash shown in the statement ofcash flows435,669557,296699,562107,521 Business Combinations (Topic 805): Clarifying the Definition of a Business. In January 2017, the FASB issued ASU 2017-01, BusinessCombinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assistentities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscalyears beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be appliedprospectively on or after the effective date. We are currently evaluating the impact of adopting this standard prospectively upon any transactions ofacquisitions or disposals of assets or businesses and do not expect this standard to have a material impact on our consolidated financial statements. Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the termsor conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance is effective for annual periods,and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period.The guidance should be applied prospectively to an award modified on or after the adoption date. We are currently evaluating the impact of adopting thisstandard on our consolidated financial statements and do not expect this standard to have a material impact on our consolidated financial statements. C. Research and Development, Patents and Licenses, etc. Product Development See “Item 4. Information on the Company—B. Business Overview—Research and Development.” Intellectual Property See “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D. Trend Information Please refer to “—A. Results of Operations” for a discussion of the most recent trends in our services, sales and marketing by the end of 2017. Inaddition, please refer to discussions included in such Item for a discussion of known trends, uncertainties, demands, commitments or events that we believeare reasonably likely to have a material effect on our net sales and operating revenues, income from continuing operations, profitability, liquidity or capitalresources, or that would cause reported financial information to be not necessarily indicative of our future operating results or financial condition. 103Table of Contents E. Off-Balance Sheet Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, wehave not entered into any derivative contracts that are indexed to our own shares and classified as shareholder’s equity, or that are not reflected in ourconsolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that servesas credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing,liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. F. Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2017. Payments Due by PeriodTotal 2018 2019 2020 2021 2022 and Thereafter(RMB in thousands)Rental149,96537,22432,65430,91731,99217,178Bandwidth purchases15,8928,1322,1912,1912,1911,187Cooperation with Phoenix TV Group17,1299,0166,8121,301——Content purchases44,99229,90011,4205093192,844Property and equipment, and intangibleassets1,722970752———Others7,4445,4691,850125——Total237,14490,71155,67935,04334,50221,209 As a result of our adoption of Accounting Standard Codification 740 Income Taxes, we recorded uncertain tax positions of RMB24.7 million (US$3.8million) as of December 31, 2017 and recognized it as long-term liabilities, as ASC 740 specifies that tax positions for which the timing of the ultimateresolution is uncertain should be recognized as long-term liabilities. At this time, we are unable to make a reasonable estimate on the timing of payments inindividual years beyond 12 months due to uncertainties in the timing. As a result, this amount is not included in the table above. G. Safe Harbor This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements ofhistorical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actualresults, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify these forward-looking statements by words or phrases such as “aim”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “likelyto”, “may”, “plan”, “will” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projectionsabout future events and financial trends that we believe may affect our financial condition, operating results, business strategy and financial needs. Theseforward-looking statements include: · our growth strategies, including without limitation strategies to grow particular products or services; · our future business development, operating results and financial condition; · expected changes in our revenues, including in components of our total revenues, and cost or expense items; · our ability to continue and manage the expansion of our operations; and · changes in general economic and business conditions in China. The forward-looking statements made in this annual report on Form 20-F relate only to events or information as of the date on which the statements aremade in this annual report on Form 20-F. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of newinformation, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should readthis annual report on Form 20-F and the documents that we reference in this annual report on Form 20-F and have filed as exhibits hereto with theunderstanding that our actual future results may be materially different from what we expect. You should not rely upon forward-looking statements aspredictions of future events. Other sections of this annual report on Form 20-F include additional factors that could adversely impact our business and financial performance.Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management topredict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination offactors, may cause actual results to differ materially from those contained in any forward-looking statements. 104Table of Contents ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Executive Officers and Directors The following table sets forth information regarding our executive officers and directors as of the date of this annual report. Directors and Executive Officers Age Position/TitleKeung Chui67Chairman of the Board of DirectorsShuang Liu48Director, Chief Executive OfficerDaguang He61DirectorKa Keung Yeung59DirectorBetty Yip Ho49Director, Chief Financial OfficerCarson Wen66Independent DirectorJerry Juying Zhang58Independent DirectorXiaoyan Chi39Senior Vice President Keung Chui has served as the chairman of our board of directors since the establishment of Phoenix New Media Limited in November 2007. Mr. Chuihas served as the deputy Chief Executive Officer in charge of administration of Phoenix Satellite Television Company Limited since 1998. He served as vicechairman of the board of directors of Hong Kong Letian Development Limited from 1993 to 1996. From 1980 to 1992, Mr. Chui worked at China CentralPeople’s Radio Station, where he served as a journalist, editor and senior editor. Mr. Chui has served as a director of Phoenix Satellite Television CompanyLimited since 1996 and is a director of numerous subsidiaries of Phoenix TV. Mr. Chui has also served as a director of PCNE Holdings Limited since 2000, adirector of Shenzhen Wutongshan TV and Broadcasting Co., Ltd. since 2001 and a director of Green Lagoon Investments Limited since 2006. Mr. Chuireceived a bachelor’s degree from Fudan University. Shuang Liu has served as our director and Chief Executive Officer since the establishment of Phoenix New Media Limited in November 2007. Mr. Liuwas also promoted to the position of Chief Operating Officer of Phoenix TV in February 2014. Mr. Liu has been employed by Phoenix TV from 2001 to thepresent, and where he has served in various managing positions, including chief director of business development and vice president in charge of investment,finance, investor relationships, legal affairs, public affairs and development of the finance channel. Before joining Phoenix TV, Mr. Liu worked at SimpsonThacher & Bartlett LLP, Milbank, Tweed, Hadley & McCloy LLP and Morrison & Foerster LLP from 1996 to 2001. Mr. Liu received a J.D. degree from DukeUniversity Law School, and a bachelor’s degree from University of International Business & Economic. Daguang He was appointed as the executive vice president of Phoenix TV and Phoenix Satellite Television Company Limited on 10 October 2015 andMr. He is also a member of the risk management committee of Phoenix TV. Mr. He joined Phoenix in 2001, since then he served as Chief Financial Officer(mainland China) and vice president of Phoenix TV. He currently assists on Phoenix TV’s departmental coordination and daily affairs and is responsible formanaging Phoenix TV’s daily operation as well as finance, personnel and administration affairs. Mr. He graduated from Shaanxi Institute of Finance andEconomics in 1983. Since his graduation, Mr. He worked for China International Water & Electric Corporation as the deputy chief accountant and managingdirector subsequently. During such period, Mr. He was mainly responsible for business and financial management in respect of investment and developmentprojects in collaboration with various international financial institutions. Ka Keung Yeung has served as our director since May 2011. Mr. Yeung is the executive vice president and Chief Financial Officer of Phoenix SatelliteTelevision Company Limited in charge of corporate finance, human resources and administration. He is also the qualified accountant and company secretaryof Phoenix Satellite Television Company Limited. Mr. Yeung joined Phoenix Satellite Television Company Limited in March 1996 and has been in chargeof all of such company’s internal and external financial management and arrangements, as well as the supervision of administration and personnel matterssince that time. Mr. Yeung received a B.A. from the University of Birmingham and remained in the United Kingdom until 1992 after obtaining hisqualification as a chartered accountant. Upon returning to Hong Kong, he worked at Hutchison Telecommunications and Star Television Limited in the fieldsof finance and business development. Mr. Yeung currently serves as an independent director for The9 Limited (NASDAQ:NCTY). Betty Yip Ho joined our company as Chief Financial Officer in October 2013 and has served as our director since November 2017. Ms. Ho has over 20years of professional experience working for publicly listed companies, and in investment banking and private equity fields in multiple sectors includingInternet, TMT, manufacturing and consumer retail. Before joining us, Ms. Ho served as Chief Financial Officer for Rock Mobile Corporations from 2011 to2013, and Chief Financial Officer and executive director for A8 Digital Music Holdings Limited (HKEx: 800) from 2007 to 2011. From 2001 to 2007, shewas the senior vice president at LJ International Inc. (NASDAQ: JADE) responsible for corporate finance, investor relations and mergers and acquisitions. In1998, Ms. Ho cofounded the Strategic Capital Group, an e-commerce private equity firm. Prior to that, she held management positions in audit and directinvestment with Arthur Andersen & Co and United Overseas Bank (UOB) Asia. Ms. Ho received her Bachelor degree of Commerce in Finance from theUniversity of Toronto and is a Certified Public Accountant as well as member of the AICPA and HKICPA. Carson Wen has served as an independent director of our company since May 2011. Mr. Wen was formerly a Partner and then an Of Counsel at JonesDay, and has more than 30 years of experience in business, corporate and securities law. Mr. Wen is also Chairman of BOA Financial Group, Bank of Asia(BVI) Limited and the Sancus Group of Companies. Mr. Wen is a Justice of the Peace of Hong Kong and was awarded the Bronze Bauhinia Star by the HongKong government for his contribution to economic ties between Hong Kong, the PRC and the rest of the world. He is a guest professor of the Law School ofSun Yat-Sen University (Zhongshan University) in Guangzhou, China, and sits on the board of numerous organizations, including the China Africa BusinessCouncil (Hong Kong), and the Pacific Basin Economic Council. He is a member of the Business Advisory Council of the United Nation Economic and SocialCommission for Asia and the Pacific (UNESCAP) and the chairman of its Green Business Task Force. He was a deputy of the National People’s Congress ofthe PRC. Mr. Wen holds a B.A. and M.A. degree in Law from Oxford University, where he was a Younger Prizeman in law at Balliol College, and a B.A. inEconomics from Columbia University. Mr. Wen currently serves as an independent director for Winox Limited (HKEx: 6838). 105Table of Contents Jerry Juying Zhang has served as an independent director of our company since May 2011. Mr. Zhang has been a managing director of China OrientAsset Management (International) in Hong Kong since March 2015. He was a senior managing director of CITIC Capital Holdings Limited betweenJune 2009 and December 2014. Prior to joining CITIC Capital Holdings Limited, Mr. Zhang was a managing director in the investment banking division ofDeutsche Bank in Hong Kong from August 2006 to June 2009. He served as a managing director and the head of investment banking of CITIC CapitalMarkets Holdings Limited in Hong Kong from March 2003 to July 2006 and, prior to that time, as executive director in the communications, media andentertainment group of the investment banking department of Goldman Sachs in Hong Kong from April 2001 to January 2003. Mr. Zhang held the positionsof associate, vice president and director at Salomon Smith Barney from August 1994 to March 2001. Prior to joining Salomon Smith Barney, he served asaccounting manager for Town & Country Homes in Chicago from January 1990 to December 1993 and as accountant, audit senior and supervisor at Ernst &Young in Chicago and Hong Kong. Mr. Zhang held CPA qualifications in China and the State of Kentucky, both of which he has surrendered voluntarily. Heholds an M.B.A. from the University of Chicago, an M.A. in Accounting from the Ministry of Finance Graduate School in the PRC and a B.A. degree fromInner Mongolia University. Xiaoyan Chi has served as our Senior Vice President since January 2018. Ms. Chi joined our company in 2009 as part of our team providing brandedadvertising and marketing solutions to advertisers. Prior to the promotion to the position of Senior Vice President, Ms. Chi served as Vice President inadvertising since 2016. Ms. Chi has more than 16 years of experience in media marketing and management. She is the co-founder of China InternetAdvertising Summit and Online Advertising Competition. She served as a final judgment committee member of Effie Awards of Greater China, visitingprofessor of Communication University of China, vice president of Digital Marketing Committee of China Advertising Association of Commerce and thespecial columnist of Digital Marketing Magazine. She has extensive experience in branded communications and advertisement sales. Ms. Chi received anEMBA and a master’s degree from Peking University and a bachelor’s degree from Beijing Technology and Business University. B. Compensation of Directors, Supervisors and Executive Directors For the year ended December 31, 2017, we paid an aggregate of approximately US$1.5 million in cash to our executive officers and directors. Share Incentive Plans In June 2008, we adopted the 2008 share option plan, and in March 2011, we adopted the 2011 restricted share and restricted share unit plan, together,the share incentive plans, to attract and retain the best available personnel, provide additional incentives to our employees, directors and consultants, andpromote the success of our business. The share incentive plans provide for the grant of options, restricted shares and restricted share units, collectivelyreferred to as “awards.” We have already granted the full number of awards that were authorized under the 2011 restricted share and restricted share unit plan.In June and August 2012, June 2014 and October 2016, the shareholders of each of Phoenix TV and our company approved three refreshments of the totalnumber of Class A ordinary shares, which may be issued upon exercise of all options to be granted under the 2008 share option plan (excluding awardspreviously granted, outstanding, cancelled, lapsed or exercised). As of March 31, 2018, a total of 15,244,026 Class A ordinary shares are available for grant ofadditional options under the 2008 share option plan. Plan Administration. Our compensation committee administers the share incentive plans and determines the participants to receive awards, the typeand number of awards to be granted, the terms and conditions of each award grant. Award Agreements. Awards granted under the share incentive plans are evidenced by an award agreement that sets forth the terms, conditions andlimitations for each award, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates,and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. Option Exercise. The term of awards granted under the share incentive plans may not exceed ten years from the date of grant. Restricted Shares and Restricted Share Units. Restricted ordinary shares granted under the 2011 restricted share and restricted share unit plan aresubject to applicable vesting, transfer, forfeiture and other restrictions as set forth in the plan and, as applicable, in the award agreements. Each restricted shareunit is an unsecured promise of our company to issue and delivery one ordinary share on a specified date, which unit is subject to applicable vesting, transfer,forfeiture and other restrictions as set forth in the plan and, as applicable, in the award agreements. Transfer Restrictions. The right of a grantee in an award granted under the share incentive plans may not be transferred in any manner by the granteeother than by will or the laws of succession and, with limited exceptions, may be exercised during the lifetime of the grantee only by the grantee. Acceleration upon a Takeover Offer. If a takeover offer for our company becomes unconditional or is approved by the necessary number ofshareholders, as the case may be, the vesting of the awards shall be accelerated. Termination and Amendment. Our board of directors has the authority to amend or terminate the share incentive plans subject to shareholder approvalto the extent necessary to comply with applicable law. In addition, our shareholders may, by ordinary resolution, terminate our share incentive plans at anytime. 106Table of Contents Lapse of Awards. An award will lapse if the optionee ceases to be eligible by reason of, among other things, (i) illness, injury, disability or death;(ii) retirement; (iii) voluntary resignation; (iv) termination of employment for serious misconduct; and (v) breach of contract. We granted awards to our employees, directors and consultants under the share incentive plans in November 2008, July 2009, September 2009,January 2010, July 2010, March 2011, March 2013, May 2013, October 2013, December 2013, March 2014, June 2014, July 2014, October 2014, July 2015,October 2016, September 2017, November 2017 and January 2018. With the approvals of the board of directors and shareholders of us and Phoenix TV, we implemented an option exchange program from October 21,2016 to November 1, 2016 whereby our directors, employees and consultants exchanged options to purchase 21,011,951 Class A ordinary shares grantedunder the 2008 share option plan with various exercise prices greater than US$0.4823 per share (or US$3.8587 per ADS) for new options granted under thesame plan with a new exercise price of US$0.4823 per share and a new vesting schedule that generally adds 12 months to each original vesting date, and thenew options would vest no sooner than May 1, 2017. As of March 31, 2018, options to purchase 36,516,603 Class A ordinary shares granted under the 2008 share option plan were outstanding. The tablebelow sets forth the awards that we granted in 2017 to our directors and executive officers (including pursuant to the exchange program described above) andwere outstanding as of March 31, 2018: NameClass AOrdinary SharesUnderlyingOutstandingAwards ExercisePrice orPurchase Price(US$/Share) Date ofGrant Date ofExpirationShuang Liu6,800,000US$0.4657,US$0.4823May 23, 2013,October 21, 2016May 22, 2023,July 10, 2024,July 15, 2025Betty Yip Ho*US$0.4823October 21, 2016October 7, 2023,October 10, 2024Xiaoyan Chi*US$0.0322,US$0.4657,US$0.4823,US$0.4734,US$0.4149July 31, 2009,September 15,2009,May 23,2013,October 21,2016,October 17,2016,September 14,2017July 30, 2019,September 14,2019,May 22,2023,July 10,2024,July 15,2025,October 16,2026,September 13,2027Total10,642,799 * Less than 1% of our total outstanding Class A ordinary shares. As of March 31, 2018, other employees and consultants in aggregate held awards entitling them to receive 29,775,050 Class A ordinary shares, withexercise prices ranging from US$0 to US$1.3100 per Class A ordinary share. C. Board Practices Board of Directors Our board of directors currently consists of seven directors. Our directors are elected by the holders of our ordinary shares, which will include holders ofour Class A ordinary shares and Class B ordinary shares. A director is not required to hold any shares in our company by way of qualification. Subject to any separate requirement for audit committee approvaland unless disqualified by the chairman of the meeting, a director may vote with respect to any contract, proposed contract or arrangement in which he or sheis materially interested provided they have disclosed such interest to the board. The board may exercise all the powers of our company to borrow money,mortgage its undertaking, property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for anyobligation of our company or of any third party. 107Table of Contents Committees of the Board of Directors We have established three committees under the board of directors: the audit committee, the compensation committee and the corporate governanceand nominating committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Jerry Juying Zhang and Carson Wen. Our board of directors has determined that each of Jerry JuyingZhang and Carson Wen satisfies the “independence” requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended, and Section 303Aof the New York Stock Exchange Listed Company Manual, or the NYSE Manual. Jerry Juying Zhang is the chairman of our audit committee and meets thecriteria of an audit committee financial expert as set forth under the applicable rules of the SEC. Our audit committee oversees our accounting and financialreporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things: · selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independentauditors; · reviewing with the independent auditors any audit problems or difficulties and management’s response; · reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; · discussing the annual audited financial statements with management and the independent auditors; · reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material controldeficiencies; annually reviewing and reassessing the adequacy of our audit committee charter; · meeting separately and periodically with management and the independent auditors; and · reporting regularly to our board of directors. Compensation Committee. Our compensation committee consists of Shuang Liu, Daguang He, Jerry Juying Zhang and Carson Wen. Our board ofdirectors has determined that each of Jerry Juying Zhang and Carson Wen satisfies the “independence” requirements of Section 303A of the NYSE Manual.Shuang Liu is the chairman of our compensation committee. Our compensation committee assists the board in reviewing and approving the compensationstructure, including all forms of compensation, relating to our directors and executive officers. Our Chief Executive Officer may not be present at anycommittee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things: · reviewing and recommending to the board with respect to the total compensation package for our three most senior executives; · approving and overseeing the total compensation package for our executives other than the three most senior executives; · reviewing and recommending to the board with respect to the compensation of our directors; and · reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annualbonuses, employee pension and welfare benefit plans. Corporate Governance and Nominating Committee. Our corporate and nominating committee consists of Keung Chui, Shuang Liu and Carson Wen.Our board of directors has determined that Carson Wen satisfies the “independence” requirements of Section 303A of the NYSE Manual. Keung Chui is thechairman of our corporate governance and nominating committee. Our corporate governance and nominating committee assists the board of directors inselecting individuals qualified to become our directors and in determining the composition of the board and its committees. The corporate governance andnominating committee is responsible for, among other things: 108Table of Contents · selecting and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy; · reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills,experience and availability of service to us; · selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee,as well as the corporate governance and nominating committee itself; · advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as ourcompliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and onany remedial action to be taken; and · monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our proceduresto ensure proper compliance. Duties of Directors Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests. Our directors alsohave a duty to exercise the skills they actually possess and such care and diligence that a reasonably prudent person would exercise in comparablecircumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended andrestated from time to time. Subject to laws, a shareholder has the right to seek damages if a duty owed by our directors is breached. The functions and powers of our board of directors include, among others: · convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; · issuing authorized but unissued shares and redeem or purchase outstanding shares of our company; · declaring dividends and other distributions; · appointing officers and determining the term of office of officers; · exercising the borrowing powers of our company and mortgaging the property of our company; and · approving the transfer of shares of our company, including the registering of such shares in our share register. Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and hold office inaccordance with the articles of association, which provide that at each annual general meeting, one-third of the directors for the time being (or, if their numberis not a multiple of three, the number nearest to but not greater than one-third) shall retire from office by rotation provided that the chairman of the boardand/or the managing director of our company shall not, whilst holding such office, be subject to retirement by rotation or be taken into account indetermining the number of directors to retire in each year. A retiring director shall be eligible for re-election. A director will be removed from officeautomatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found byour company to be or becomes of unsound mind. No benefits are payable to members of the board upon termination of their relationship with us. D. Employees See “Item 4. Information on the Company—B. Business Overview—Employees.” 109Table of Contents E. Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of ourordinary shares, as of March 31, 2018: · each of our directors and executive officers; and · each person known to us to own beneficially more than 5% of each class of our ordinary shares. The calculations in the tables below assume there are 261,403,976 Class A ordinary shares and 317,325,360 Class B ordinary shares, outstanding as ofMarch 31, 2018. Beneficial ownership is determined in accordance with Rule 13d-3 of the General Rules and Regulations under the Exchange Act. Incomputing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has theright to acquire within 60 days of this annual report on Form 20-F, including through the exercise of any option, the vesting of any contingently issuableshare, restricted share, restricted share unit or the conversion of any other security. These shares, however, are not included in the computation of thepercentage ownership of any other person. Class A Ordinary SharesBeneficially Owned Number % (1)Class A ordinary sharesKeung Chui——Shuang Liu (2)15,855,5006.07Daguang He——Ka Keung Yeung——Carson Wen——Jerry Juying Zhang——Betty Yip Ho (3)2,991,7071.14Xiaoyan Chi (4)**All Directors and Executive Officers as a Group (5)19,330,7077.39Principal Shareholders:International Value Advisers, LLC (6)2,830,8188.83 * Less than 1% of our total outstanding Class A ordinary shares.(1) Percentages disclosed are with respect to Class A ordinary shares.(2) Represents 15,855,500 Class A ordinary shares, including 8,170,000 Class A ordinary shares in the form of ADSs.(3) Represents options to purchase Class A ordinary shares.(4) Represents options to purchase Class A ordinary shares.(5) Represents 19,330,707 Class A ordinary shares, including 8,170,000 Class A ordinary shares in the form of ADSs.(6) Information is as of December 31, 2017, based on the Amendment No.3 to Schedule 13G filed on February 13, 2018 by International ValueAdvisers, LLC, and consists of 2,830,818 Class A ordinary shares in the form of 353,852 ADSs. The principal business office of International ValueAdvisers, LLC is 717 Fifth Avenue, 10th Floor, New York, NY 10022. Class B Ordinary SharesBeneficially Owned Number % (1)Class B ordinary sharesPhoenix Satellite Television (B.V.I.) Holding Limited (2)317,325,360100.0 (1) Percentages disclosed are with respect to Class B ordinary shares.(2) Information based on the Schedule 13G filed on February 14, 2012 on behalf of Phoenix Satellite Television Holdings Limited andPhoenix Satellite Television (B.V.I.) Holding Limited. Represents 317,325,360 Class B ordinary shares. Phoenix Satellite Television (B.V.I.) HoldingLimited is controlled by Phoenix Satellite Television Holdings Limited, a public company listed on the Hong Kong Stock Exchange. The registeredoffice for Phoenix Satellite Television Holdings Limited is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. 110Table of Contents As of March 31, 2018, 260,547,720 Class A ordinary shares or 98.6% of our outstanding Class A ordinary shares in the form of ADSs are held by onerecord holder in the United States, JPMorgan Chase Bank, N.A. Because many of these shares are held by brokers or other nominees, we cannot ascertain theexact number of beneficial shareholders with addresses in the United States. Holders of Class A ordinary shares are entitled to one vote per share, while the holder of Class B ordinary shares are entitled to 1.3 votes per share. Ourmajor shareholders have the same voting rights as our other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in achange of control of our company. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership” B. Related Party Transactions We conduct business with related parties on arm’s length basis and generally follow market practice for similar transactions between unrelated partiesto the extent possible. In accordance with our audit committee charter, all of our related party transactions described in this annual report have been reviewedand approved by our audit committee. Phoenix TV, through its wholly owned subsidiary, is our controlling shareholder, with beneficial ownership and voting power of 54.8% and 61.2%,respectively, of our outstanding ordinary shares as of March 31, 2018. Phoenix TV has the power acting alone to approve any action requiring a vote of themajority of our ordinary shares. Transactions Related to Our Corporate Structure To comply with the applicable PRC laws, rules and regulations, we conduct our operations in China through contractual arrangements between ourwholly owned PRC subsidiaries, Fenghuang On-line, Qieyiyou and our affiliated consolidated entities. See “Item 4. Information on the Company—C.Organizational Structure—Contractual Arrangements with Our Affiliated Consolidated Entities.” Agreements and Transactions with Phoenix TV and Certain of its Subsidiaries Phoenix TV Cooperation Agreement and Phoenix TV Content License Agreements Fenghuang On-line entered into a Content, Branding, Promotion and Technology Cooperation Agreement, or the Phoenix TV Cooperation Agreement,with Phoenix TV on November 24, 2009, certain terms of which were amended pursuant to a supplemental agreement entered into by the parties onMarch 28, 2011. Pursuant to the Phoenix TV Cooperation Agreement, Phoenix TV agreed to procure and procured its subsidiaries, Phoenix SatelliteTelevision Company Limited and Phoenix Satellite Television Trademark Limited, respectively, to enter into content license agreements, or the ContentLicense Agreements, and trademark license agreements, or the Old Trademark License Agreements, with Tianying Jiuzhou and Yifeng Lianhe. FenghuangOn-line agreed to provide Phoenix TV with our proprietary text, image, sound and video content. In addition, Fenghuang On-line and Phoenix TV agreed topromote one another’s brand and content on their respective new media and TV platforms. As compensation for the rights granted to Fenghuang On-lineunder the agreement, Fenghuang On-line is obligated to pay Phoenix TV an annual service fee in the amount of RMB1.6 million for the first year of theagreement, which incrementally increases by 25% for each subsequent year of the agreement. The annual service payment to Phoenix TV under the PhoenixTV Cooperation Agreement for 2016 before expiration of the agreement was RMB2.5 million. Fenghuang On-line must also pay to Phoenix TV 50% of theafter-tax revenues Tianying Jiuzhou earns from sublicensing Phoenix TV’s video content to third parties. In the event that Phoenix TV’s indirect votinginterest in Fenghuang On-line falls to 50% or below, Phoenix TV has the right to amend the annual service fee, provided that it may not be raised to morethan 500% of the original annual service fee. If Phoenix TV’s beneficial ownership stake in us decreases to 35% or below, Phoenix TV has the right toimmediately terminate or renegotiate the Phoenix TV Cooperation Agreement. Pursuant to the Phoenix TV Cooperation Agreement, Tianying Jiuzhou and Yifeng Lianhe each entered into a Content License Agreement withPhoenix Satellite Television Company Limited on November 24, 2009. Pursuant to the Content License Agreements, Phoenix TV granted each of TianyingJiuzhou and Yifeng Lianhe an exclusive license to use its copyrighted text, images, sound and videos on its Internet and mobile channels, as applicable, inChina. Payments for the content license are made in accordance with the payment provisions set forth in the Phoenix TV Cooperation Agreement. TheContent License Agreements can be terminated earlier (i) by the non-breaching party in the event of a breach and if the breach is not cured within tenbusiness days after receipt of notice of breach from the non-breaching party, (ii) in the event of bankruptcy or the cessation of business operations of eitherparty, or a change in the shareholder or equity structure of the relevant affiliated consolidated entity, other than in connection with the contractualarrangements, (iii) if either party’s performance of its obligations is held unlawful under PRC law; or (iv) if an event occurs that adversely affects theperformance of either party of its respective obligations and upon written notice by the unaffected party. All of the above agreements expired on May 27, 2016 and were replaced by the Program License Agreements described below. 111Table of Contents Program License Agreements As the Phoenix TV Cooperation Agreement and Phoenix TV Content License Agreements expired in May 2016, Phoenix Satellite Television CompanyLimited, a wholly owned subsidiary of Phoenix TV, and each of Tianying Jiuzhou, Yifeng Lianhe, and Fengyu Network entered into a Program ResourceLicense Agreements and a Program Text/Graphics Resource License Agreements, or the Program License Agreements, in May 2016. Under these agreements,Phoenix TV Group agreed to grant Tianying Jiuzhou, Yifeng Lianhe and Fengyu Network the license with priority over any third party to broadcast PhoenixTV Group’s copyrighted video content from three television channels of Phoenix TV Group on ifeng.com (our main Internet channel), i.ifeng.com (a mobileInternet channel of ours), and ifeng News, ifeng Video and ifeng VIP (three mobile applications of ours) in China concurrently with such content broadcastedon the three television channels of Phoenix TV Group, pursuant to the Program License Agreements; and Phoenix TV Group agreed to grant TianyingJiuzhou, Yifeng Lianhe and Fengyu Network a non-exclusive license to use Phoenix TV Group’s copyrighted text and graphics on the same Internet andmobile channels for which Phoenix TV Group’s copyrighted video content license, above, was granted. The fees payable to Phoenix TV Group by us for allcontent licenses described above will be RMB10.0 million for the first year of the agreements, which will incrementally increase by 15% for each subsequentyear of the agreement. Unlike the previous agreements, the Program License Agreements do not grant us the right to sublicense Phoenix TV Group’scopyrighted content to third parties. While we are in the process of negotiating with Phoenix TV Group to potentially re-acquire such right of sublicense, wecannot assure you that we will be able to re-acquire such right at reasonable costs or at all. Each of the Program License Agreements has an initial term of three years and will expire on May 26, 2019 and may be renewed on an annual basisthereafter upon agreement of both parties. Each of the parties to the Program License Agreements has the right to terminate the Program License Agreementsbefore their expiration date by 6-month prior written notice to the other party. In addition, each of the Program License Agreements can be terminated earlier(i) by the non-breaching party in the event of a breach and if the breach is not cured within ten business days after receipt of notice of breach from the non-breaching party, (ii) in the event of bankruptcy or the cessation of business operations of either party, or a change in the shareholder or equity structure ofTianying Jiuzhou, Yifeng Lianhe or Fengyu Network, other than in connection with the contractual arrangements, (iii) by Phoenix Satellite TelevisionCompany Limited in the event that our shareholders or ownership structure change so that the shares held by Phoenix TV Group account for 50% or less ofour actual total issued shares, or in the event that we lose control of Tianying Jiuzhou, Yifeng Lianhe or Fengyu Network; or if Tianying Jiuzhou, YifengLianhe or Fengyu Network, as applicable, ceases business operation; (iv) if either party’s performance of its obligations is held unlawful under PRC law; or(v) if an event occurs that adversely affects the performance by either party of its obligations and upon written notice by the unaffected party. Phoenix TV Trademark License Agreements Pursuant to the Phoenix TV Cooperation Agreement, Tianying Jiuzhou and Yifeng Lianhe each entered into the Old Trademark License Agreementwith Phoenix Satellite Television Trademark Limited on November 24, 2009. Pursuant to the Old Trademark License Agreements, Phoenix SatelliteTelevision Trademark Limited granted Tianying Jiuzhou and Yifeng Lianhe non-exclusive rights to use certain of its logos for the purpose of conductingTianying Jiuzhou’s and Yifeng Lianhe’s respective businesses. Tianying Jiuzhou may sub-license such trademarks to China Mobile, pursuant to the ChinaMobile Cooperation Agreement, as described below. Tianying Jiuzhou is obligated to pay Phoenix Satellite Television Trademark Limited an annual licensefee of US$7,000, while Yifeng Lianhe is obligated to pay Phoenix Satellite Television Trademark Limited an annual license fee of US$3,000, under therespective Old Trademark License Agreement. Phoenix Satellite Television Trademark Limited may in its discretion waive such license fees. On December 8, 2017, Tianying Jiuzhou and Yifeng Lianhe each entered into a new trademark license agreement, or the New Trademark LicenseAgreements, with Phoenix Satellite Television Trademark Limited to replace the Old Trademark License Agreements. Under the New Trademark LicenseAgreements, Phoenix Satellite Television Holdings Limited agreed to continue to license to Tianying Jiuzhou and Yifeng Lianhe certain trademarkscontaining the double-phoenix logo and the Chinese or English words of “Phoenix New Media” or “ifeng” for an initial term of three years, while TianyingJiuzhou and Yifeng Lianhe are not allowed to use the double-phoenix logo on a stand-alone basis. Tianying Jiuzhou and Yifeng Lianhe are also granted aone-year license to continue to use the current marks of our two mobile applications which contain the Chinese words of “Phoenix News” and “PhoenixVideo” which will be automatically renewed upon its expiration unless Phoenix TV raises any objection. The annual license fee payable to Phoenix SatelliteTelevision Holdings Limited by each of Tianying Jiuzhou and Yifeng Lianhe will be the greater of 2% of the annual revenues of Tianying Jiuzhou or YifengLianhe (as the case may be) or US$100,000 for each company, while the annual fee under the Old Trademark License Agreements was US$10,000 inaggregate. Transactions with Phoenix TV and Certain of its Subsidiaries Costs for content provided to us by Phoenix TV Group were RMB4.7 million, RMB7.4 million and RMB12.1 million (US$1.9 million) in 2015, 2016and 2017, respectively. Costs for data line services provided to us by Phoenix TV Group were RMB0.2 million, nil and nil in 2015, 2016 and 2017,respectively. We were charged by Phoenix TV Group for advertising and promotion expenses of RMB1.8 million, RMB1.3 million and RMB0.02 million(US$0.004 million) in 2015, 2016 and 2017, respectively. We were charged corporate administrative expenses by Phoenix TV Group in the total amounts ofRMB1.8 million, RMB0.2 million and RMB2.7 million (US$0.4 million) in 2015, 2016 and 2017, respectively. We were also charged Trademark license feeby Phoenix TV Group with the total amounts of RMB0.1 million, RMB0.1 million and RMB3.6 million (US$0.5 million) in 2015, 2016 and 2017,respectively. 112Table of Contents We provided joint advertising campaign solutions together with Phoenix TV Group to Phoenix TV Group’s advertisers from which we earnedadvertising revenues of RMB16.5 million and RMB10.4 million and RMB9.5 million (US$1.5 million) in 2015, 2016 and 2017, respectively. As of December 31, 2015, 2016 and 2017, we had amounts due from Phoenix TV Group with the amounts of RMB20.1 million, RMB31.5 million andRMB10.5 million (US$1.6 million), respectively, and accounts due to Phoenix TV Group with the amounts of RMB17.1, RMB17.7 million and RMB8.6million (US$1.3 million), respectively. Cooperation Agreement with China Mobile Communication Corporation China Mobile Communication Corporation, or China Mobile, is a shareholder of our parent company, Phoenix TV. As of March 31, 2018, ChinaMobile held 19.7% of the outstanding shares of Phoenix TV. In each of 2015, 2016 and 2017, Tianying Jiuzhou entered into a cooperation agreement withChina Mobile, together, the China Mobile Cooperation Agreements. Pursuant to the China Mobile Cooperation Agreements, Tianying Jiuzhou agreed toproduce certain MMS content exclusively for China Mobile to be used in China Mobile’s mobile newspaper service offerings and provide other media andcontent resource to China Mobile, and China Mobile agreed to pay fees of RMB40.0 million, RMB19.8 million and RMB14.9 million (US$2.1 million) forsuch content purchased by China Mobile in 2015, 2016 and 2017, respectively. Tianying Jiuzhou has also granted to China Mobile non-exclusive sub-licenses under the China Mobile Cooperation Agreements to use certain trademarks of Phoenix TV in China, and has agreed to co-host certain offline eventswith China Mobile free of charge. We obtained revenues for our paid services through China Mobile of RMB273.5 million, RMB122.7 million and RMB138.7 million (US$21.3million) in 2015, 2016 and 2017, respectively. We earned revenues from China Mobile for advertising services of RMB35.8 million, RMB32.0 million andRMB33.5 million (US$5.2 million) in 2015, 2016 and 2017, respectively. We incurred revenue sharing and bandwidth costs in connection with MVASprovided through China Mobile’s platforms in the amounts of RMB44.4 million, RMB20.9 million and RMB43.6 million (US$6.7 million) in 2015, 2016and 2017, respectively. As of December 31, 2015, 2016 and 2017, we had amounts due from China Mobile with the amounts of RMB58.3 million, RMB48.8 million andRMB63.2 million (US$9.7 million), respectively, and accounts due to China Mobile with the amounts of RMB1.8 million, RMB0.2 million and RMB4.0million (US$0.6 million), respectively. Cooperation Agreement and License Agreement with Lilita In September 2014, Tianying Jiuzhou entered into a brand authorization cooperation agreement with Lilita, or the Lilita Cooperation Agreement,pursuant to which, Tianying Jiuzhou granted Lilita an exclusive right to use its brand resources, including operating on the platforms of jr.ifeng.com, for thepurpose of conducting P2P lending and reward-based crowd-funding businesses. Lilita is obligated to pay Tianying Jiuzhou an annual license fee of RMB3.0million for using its brand resources under the Lilita Cooperation Agreement. In December 2014, Tianying Jiuzhou and Lilita further entered into a platformslicense agreement, or the Lilita Plarforms License Agreement, pursuant to which Lilita was granted an exclusive right to conduct P2P lending and reward-based crowd-funding businesses on the platforms of www.ifeng.com, 3g.ifeng.com and v.ifeng.com for a term of three years. Lilita is obligated to payTianying Jiuzhou an annual license fee of RMB0.17 million for the first two years and RMB0.16 million for the third year for conducting businesses on thelicensed platforms. In December 2015, Tianying Jiuzhou and Lilita further entered into an advertisement cooperation framework agreement, or the LilitaFramework Agreement, pursuant to which Lilita agreed to place, and Tianying Jiuzhou agreed to launch, Internet advertisements provided by Lilita from timeto time on the PC websites, mobile applications and mobile websites operated by Tianying Jiuzhou. The Lilita Framework Agreement amended the LilitaCooperation Agreement by enlarging the scope of advertising services to be provided by Tianying Jiuzhou to Lilita, by increasing the annual revenue cap forthe calendar year ended December 31, 2015 to HK$17.5 million, by increasing the annual revenue cap for the calendar year ended December 31, 2016 toHK$38.0 million, and by setting the annual revenue cap for the calendar year ending December 31, 2017 at HK$57.0 million. As Lilita subsequently advisedTianying Jiuzhou that its business growth exceeded its expectations in 2016 and the existing annual revenue caps would no longer meet its business needs,Tianying Jiuzhou entered into a supplemental agreement with Lilita in May 2016 in order to increase the annual revenue caps set forth in the LilitaFramework Agreement to RMB49.0 million and RMB80.0 million for the calendar years ended December 31, 2016 and 2017, respectively. Both the LilitaPlatforms License Agreement and the Lilita Framework Agreement have expired and we have not entered into any new agreements with Lilita as of the dateof this annual report. We earned revenues from Lilita for advertising services of RMB14.4 million, RMB42.6 million and RMB10.0 million (US$1.5 million) in 2015, 2016and 2017, respectively. We also earned revenues from Lilita for brand license authorization of RMB3.2 million, RMB0.2 million and RMB0.2 million(US$0.03 million) in 2015, 2016 and 2017, respectively. As of December 31, 2015, 2016, we had accounts due from Lilita with the amounts of RMB18.2 million and RMB9.5 million, respectively. In 2017,Lilita repaid RMB9.5 million (US$1.5 million) of the amount due to us. As of December 31, 2017, our net amount due from Lilita was RMB9.2 million(US$1.4 million) netting off a bad debt provision of RMB1.0 million (US$0.2 million). 113Table of Contents Convertible Loans and Loans Provided to Particle In January and April 2016, we granted two unsecured short-term convertible loans to Particle with an aggregate principal amount of US$20.0 million,and we converted the principal amounts of these loans and all accrued interests with a total amount of US$20.7 million into Series D1 convertible redeemablepreferred shares of Particle in December 2016. In August 2016, we granted an unsecured short-term loan to Particle with a principal amount of US$14.8million at an interest rate of 4.35% per annum and with an initial term of six months, which was extended to twenty-four months after several extensions.Particle agreed to grant us the right to convert, at our option, all or a portion of the principal amount of the loan granted to Particle in August 2016 (plusinterests incurred as of the conversion) into Series D1 convertible redeemable preferred shares to be issued by Particle at a conversion price of US$1.071803per share before August 9, 2018. Our rights under the aforementioned convertible loan granted in August 2016 are expected to assign to Long De or itsdesignated affiliates, and Long De or its affiliates should pay us approximately US$17.0 million for the assignment. In November 2016, we granted anunsecured short-term loan to Particle with a principal amount of approximately US$6.8 million at an interest rate of 9% per annum and with an initial term ofsix months, which was subsequently extended to twelve months and repaid in November 2017. In January 2017, we granted an unsecured short-term loan toParticle with a principal amount of RMB74.0 million (US$10.8 million) at an interest rate of 9% per annum and with an initial term of twelve months, whichwere extended to eighteen months. Particle is required to use the proceeds of the loans for its working capital requirements in the ordinary course of itsbusiness. Particle informed us that it intends to use the proceeds of these loans mainly for market promotion and expansion of its user base. Loans and Advances Provided to Phoenix FM We have provided financial support to Phoenix FM in the form of unsecured short-term loans and financial advanced expenses. Phoenix FM was oursubsidiary in 2013 and became our affiliate in 2014. As of December 31, 2014 and 2015, the outstanding balance of our loans and financial advancedexpenses to Phoenix FM was RMB7.1 million and RMB15.2 million, respectively. We charged interest on all of our loans to Phoenix FM at the bank loanbenchmark interest rate effective in China during the life of the loans. In 2016, Phoenix FM repaid certain of the financial advanced expenses and loans witha total amount of RMB7.2 million. As of the date of this annual report, the outstanding amount of our loans to Phoenix FM is RMB8.0 million (US$1.2million) which had been fully impaired as of December 31, 2017. Our loans to Phoenix FM are unsecured and do not have any priority over Phoenix FM’s other debts. Therefore, if Phoenix FM becomes unable torepay all of its debts, we will be competing with Phoenix FM’s other unsecured creditors for its remaining assets. In particular, Mr. Ya Li, the chairman ofPhoenix FM, and a director and the co-president of our company until his resignation on September 8, 2017, granted loans in the amount of RMB10.8million, RMB10.0 million and RMB6.3 million (US$1.0 million) to Phoenix FM in 2015, 2016 and 2017, respectively, which ranks paripassu with our loans.Mr. Ya Li granted the loans for his personal investment purpose and used his personal funds for the loan. Advertisement Agreement with Tianbo In 2013, Tianying Jiuzhou and Tianbo entered into an Agreement on Operation and Advertisement Agency for Real Estate Channel and anAdvertisement Source Purchase Agreement, or the Previous Tianbo Agreements, pursuant to which, Tianying Jiuzhou granted Tianbo the exclusive right tooperate our real estate channel (house.ifeng.com) and act as the exclusive agent for placement of real estate advertisements on ifeng.com (鳳凰網). ThePrevious Tianbo Agreements expired on March 31, 2018 and we entered into series of new agreements, or the New Tianbo Agreements, in April 2018 withTianbo to continue the business cooperation with Tianbo. Different from the Previous Tianbo Agreements, the New Tianbo Agreements granted Tianbo anon-exclusive right to operate our real estate channel and act as the non-exclusive agent for placement of real estate advertisements on Internet. As ofDecember 31 2016, the amount due from Tianbo was RMB16.0 million. In 2017, Tianbo repaid RMB0.5 million (US$0.1 million) of the amount due to us.As of December 31, 2017, the net amount due from Tianbo was approximately RMB14.8 million (US$2.3 million) netting off a bad debt provision ofRMB14.7 million (US$2.3 million), which was recognized in 2017. Other Transactions with Certain Directors and Affiliates See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors, Supervisors and Executive Directors.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors, Supervisors and Executive Directors—Share IncentivePlans.” C. Interests of Experts and Counsel Not applicable. 114Table of Contents ITEM 8. FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information Please refer to Item 18 for a list of our annual consolidated financial statements filed as part of this annual report on Form 20-F. Legal Proceedings See “Item 4. Information on the Company—B. Business Overview—Legal and Administrative Proceedings.” Dividend Policy and Distributions Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to pay dividends, the form,frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractualrestrictions and other factors that our board of directors may deem relevant. We have not paid in the past and do not have any present plan to declare and pay any dividends on our ordinary shares or ADSs in the near future. Wecurrently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in China, which in turn relies on thepayments received from our affiliated consolidated entities in China pursuant to the contractual arrangements that established our corporate structure.Current PRC laws, rules and regulations permit our PRC subsidiaries to pay dividends to us only out of its accumulated profits, if any, determined inaccordance with PRC accounting standards and regulations. In addition, our subsidiaries in China are required to set aside a certain amount of theiraccumulated after-tax profits each year to fund statutory reserves. These reserves may not be distributed as cash dividends. Further, if our subsidiaries inChina incur debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our Class A ordinary shares, subject to the terms of the depositagreement, including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars. B. Significant Changes We have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report. ITEM 9. THE OFFER AND LISTING Our ADSs, each representing eight of Class A ordinary shares, have been listed on the New York Stock Exchange since May 12, 2011 under the symbol“FENG.” The table below shows, for the periods indicated, the high and low market prices on the New York Stock Exchange for our ADSs. 115Table of Contents Market Price for Each ADS High Low US$ US$Annual highs and lows20159.903.8720165.983.1120178.142.43Quarterly highs and lowsSecond quarter 20159.905.60Third quarter 20158.063.87Fourth quarter 20156.194.31First quarter 20165.983.31Second quarter 20164.563.49Third quarter 20164.053.40Fourth quarter 20163.993.11First quarter 20174.303.12Second quarter 20173.682.55Third quarter 20176.732.43Fourth quarter 20178.144.50First quarter 20187.424.02Second quarter 2018 (through April 20, 2018)4.443.99Monthly highs and lowsOctober 20176.604.50November 20178.145.07December 20177.216.05January 20187.426.49February 20186.865.07March 20186.004.02April 2018 (through April 20, 2018)4.443.99 B. Plan of Distribution Not applicable. C. Markets Our ADSs, each representing eight of our ordinary shares, have been trading on the New York Stock Exchange since May 12, 2011 under the symbol“FENG.” D. Selling Shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the Issue Not applicable. 116Table of Contents ITEM 10. ADDITIONAL INFORMATION A. Share Capital Not applicable. B. Memorandum and Articles of Association We incorporate by reference into this annual report the description of our second amended and restated memorandum and articles of associationcontained in our Form F-1 registration statement (File No. 333-173666), as amended, initially filed with the Commission on April 21, 2011. Our shareholdersadopted our second amended and restated memorandum and articles of association on April 21, 2011. C. Material Contracts In the past three fiscal years, we have not entered into any material contracts other than in the ordinary course of business or other than those describedelsewhere in this annual report. D. Exchange Controls See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulation of Foreign Exchange Control andAdministration.” E. Taxation Cayman Islands Taxation Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, our company has obtained an undertaking from theGovernor-in-Cabinet (1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shallapply to our company or its operations; and (2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or inrespect of the shares, debentures or other obligations of our company. The undertaking for our company is for a period of twenty years from December 4,2007. The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxationin the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our company levied by the Government of the Cayman Islandssave for certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the CaymanIslands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double taxtreaties. 117Table of Contents No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in theCayman Islands. An exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including anybranch register of members, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax InformationAuthority Law of the Cayman Islands. People’s Republic of China Taxation The CIT Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered “residententerprises” of China. Under the implementation regulations for the CIT Law issued by the PRC State Council, “de facto management body” is defined as abody that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances andtreasury, and acquisition and disposal of properties and other assets of an enterprise. Despite the present uncertainties as a result of limited guidance fromPRC tax authorities on the issue, we do not believe that our legal entities organized outside of the PRC should be treated as residents under the CIT Law. Under the CIT Law and implementation regulations issued by the State Council, PRC withholding tax at the rate of 10% is applicable to dividendspayable to investors that are “non-resident enterprises,” which do not have an establishment or place of business in the PRC, or which have suchestablishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent suchdividends have their sources within the PRC. Similarly, any gain realized on the transfer of ADSs or shares by such investors is also subject to 10% PRCincome tax if such gain is regarded as income derived from sources within the PRC. The implementation regulations of the CIT Law set forth that, (i) if theenterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC,then such dividends or capital gains are treated as China-sourced income. It is not clear how “domicile” may be interpreted under the CIT Law, and it may beinterpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered a PRC “resident enterprise”, dividends we pay to our non-PRC enterprise investors with respect to our Class A ordinary shares or ADSs, or the gain our non-PRC enterprise investors may realize from the transfer of ourClass A ordinary shares or ADSs, may be treated as income derived from sources within the PRC and be subject to PRC tax. In addition, it is unclear whetherour non-PRC individual investors would be subject to any PRC tax in the event we are deemed a “PRC resident enterprise”. If any PRC tax were to apply tosuch dividends or gains of non-PRC individual investors, it would generally apply at a tax rate of 20%. Furthermore, it is unclear whether, if we areconsidered a PRC “resident enterprise”, holders of our Class A ordinary shares or ADSs might be able to claim the benefit of income tax treaties entered intobetween China and other countries or regions. Material United States Federal Income Tax Consequences The following summary describes material United States federal income tax consequences of the ownership and disposition of our ADSs and Class Aordinary shares as of the date hereof. The discussion is applicable only to United States Holders (as defined below) who hold our ADSs or Class A ordinaryshares as capital assets (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). As usedherein, the term “United States Holder” means a beneficial owner of an ADS or Class A ordinary share that is for United States federal income tax purposes: · an individual who is a citizen or resident of the United States; · a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the lawsof the United States, any state thereof or the District of Columbia; · an estate the income of which is subject to United States federal income taxation regardless of its source; or · a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have theauthority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable United States Treasuryregulations to be treated as a United States person. This summary does not purport to be a detailed description of the United States federal income tax consequences applicable to you if you are subject tospecial treatment under the United States federal income tax laws, such as: · a dealer in securities or currencies; · a financial institution; · a regulated investment company; · a real estate investment trust; · an insurance company; · a tax-exempt organization; · a person holding our ADSs or Class A ordinary shares as part of a hedging, integrated or conversion transaction, a constructive sale or astraddle; · a trader in securities that has elected the mark-to-market method of accounting for your securities; · a person liable for alternative minimum tax; 118Table of Contents · a person who owns or is deemed to own 10% or more of our voting stock; · a partnership or other pass-through entity for United States federal income tax purposes; or · a person whose “functional currency” is not the United States dollar. The discussion below is based upon the provisions of the Code and United States Treasury regulations, rulings and judicial decisions thereunder as ofthe date hereof. Such authorities may be replaced, revoked or modified so as to result in United States federal income tax consequences different from thosediscussed below. In addition, this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreement, andall other related agreements, will be performed in accordance with their terms. This discussion does not consider the tax treatment of partnerships or other pass-through entities that hold our ADSs or Class A ordinary shares, or ofpersons who hold our ADSs or Class A ordinary shares through such entities. If a partnership holds ADSs or Class A ordinary shares, the tax treatment of apartner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our ADSs orClass A ordinary shares, you should consult your tax advisors. This summary does not contain a detailed description of all the United States federal income tax consequences to you in light of your particularcircumstances and does not address the effects of any state, local or non-United States tax laws. If you are considering the purchase, ownership or disposition of our ADSs or Class A ordinary shares , you should consult your own tax advisorsconcerning the United States federal income tax consequences to you in light of your particular situation as well as any consequences arising under thelaws of any other taxing jurisdiction. ADSs If you hold ADSs, for United States federal income tax purposes, you generally will be treated as the owner of the underlying Class A ordinary sharesthat are represented by such ADSs. Accordingly, deposits or withdrawals of Class A ordinary shares for ADSs will not be subject to United States federalincome tax. Taxation of Dividends Subject to the rules discussed under “—Passive Foreign Investment Company” below, the gross amount of distributions with respect to our ADSs orClass A ordinary shares (including any amounts withheld to reflect PRC withholding taxes) will be taxable as dividends, to the extent paid out of our currentor accumulated earnings and profits, as determined under United States federal income tax principles. Such income (including withheld taxes) will beincludable in your gross income as dividend income on the day actually or constructively received by you, in the case of the Class A ordinary shares, or bythe depositary, in the case of ADSs. Such dividends will not be eligible for the dividends received deduction allowed to corporations under the Code. With respect to non-corporate United States Holders, certain dividends received from a qualified foreign corporation may be subject to reduced rates oftaxation. A non-United States corporation is treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADSsbacked by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that ourADSs (but not our Class A ordinary shares), which are listed on the New York Stock Exchange, are readily tradable on an established securities market in theUnited States. Thus, we believe that dividends we pay on our Class A ordinary shares that are represented by ADSs, but not on our Class A ordinary sharesthat are not so represented, will meet such conditions required for the reduced tax rates. There can be no assurance that our ADSs will be considered readilytradable on an established securities market in later years. A qualified foreign corporation also includes a foreign corporation that is eligible for the benefitsof certain income tax treaties with the United States. In the event that we are deemed to be a PRC “resident enterprise” under the PRC tax law (see discussionunder “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation”), we may be eligible for the benefits of the income tax treatybetween the United States and the PRC, and if we are eligible for such benefits, dividends we pay on our Class A ordinary shares, regardless of whether suchshares are represented by ADSs, would be subject to the reduced rates of taxation. Non-corporate United States Holders that do not meet a minimum holdingperiod requirement during which they are not protected from the risk of loss, or that elect to treat the dividend income as “investment income” pursuant toSection 163(d)(4) of the Code, will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, therate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantiallysimilar or related property. This disallowance applies even if the minimum holding period has been met. Furthermore, non-corporate United States Holderswill not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC (as discussed below under “—Passive Foreign InvestmentCompany”) in the taxable year in which such dividends are paid or in the preceding taxable year (as we believe there is a substantial risk of in 2017). Youshould consult your own tax advisors regarding the application of these rules given your particular circumstances. In the event that we are deemed to be a PRC “resident enterprise” under the PRC tax law, you may be subject to PRC withholding taxes on dividendspaid to you with respect to the ADSs or Class A ordinary shares. In that case, however, you may be able to obtain a reduced rate of PRC withholding taxesunder the treaty between the United States and the PRC if certain requirements are met. In addition, subject to certain conditions and limitations, PRCwithholding taxes on dividends, if any, may be treated as foreign taxes eligible for credit against your United States federal income tax liability. For purposesof calculating the foreign tax credit, dividends paid to you with respect to our ADSs or Class A ordinary shares will be treated as income from sources outsidethe United States and will generally constitute passive category income. Furthermore, in certain circumstances, if you have held our ADSs or Class A ordinaryshares for less than a specified minimum period during which you are not protected from risk of loss, or are obligated to make payments related to thedividends, you will not be allowed a foreign tax credit for any PRC withholding taxes imposed on dividends paid on our ADSs or Class A ordinary shares.The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit underyour particular circumstances. 119Table of Contents To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined underUnited States federal income tax principles, the distribution will be treated first as a tax-free return of your tax basis in our ADSs or Class A ordinary sharesheld by you, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain recognized on a sale orexchange. We do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that adistribution will generally be treated as a dividend (as discussed above). Passive Foreign Investment Company In general, we will be a PFIC for any taxable year in which: · at least 75% of our gross income is passive income, or · at least 50% of the value (determined based on a quarterly average) of our assets is attributable to assets that produce or are held for theproduction of passive income. For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conductof a trade or business and not derived from a related person). If we own at least 25% (by value) of the stock of another corporation, we will be treated, forpurposes of the PFIC tests, as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of the other corporation’sincome. However, it is not entirely clear how the contractual arrangements between us and our affiliated consolidated entities will be treated for purposes ofthe PFIC rules. If it is determined that we do not own the stock of the affiliated consolidated entities for United States federal income tax purposes (forinstance, because the relevant PRC authorities do not respect these arrangements), we are more likely to be treated as a PFIC. Based on the composition of our income, assets, including goodwill, and valuation of our assets, we believe there is a substantial risk that we will beclassified as a PFIC for U.S. federal income tax purposes for 2017. The determination of whether we are a PFIC is made annually. Accordingly, it is possiblethat our status as a PFIC may change in any future taxable year due to changes in our asset or income composition. The determination of PFIC status is anannual analysis that involves ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of income we earn.Because this involves extensive factual investigation and cannot be completed until the close of a taxable year, our U.S. counsel expresses no opinion withrespect to our PFIC status. If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares, you will be subject to special tax rules discussedbelow for that year and for each subsequent year in which you hold the ADSs or Class A ordinary shares (even if we do not qualify as a PFIC in suchsubsequent years). However, if we cease to be a PFIC, you can avoid the continuing impact of the PFIC rules by making a special election (a “PurgingElection”) to recognize gain in the manner described below as if your ADSs or Class A ordinary shares had been sold on the last day of the last taxable yearduring which we were a PFIC. In addition, a new holding period would be deemed to begin for your ADSs or Class A ordinary shares for purposes of the PFICrules. After the Purging Election, your ADSs or Class A ordinary shares with respect to which the Purging Election was made will not be treated as shares in aPFIC unless we subsequently become a PFIC. You are urged to consult your own tax advisor about the availability of this election, and whether making theelection would be advisable in your particular circumstances. If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares, you will be subject to special tax rules with respect toany “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of our ADSs or Class A ordinary shares.Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three precedingtaxable years or your holding period for our ADSs or Class A ordinary shares will be treated as excess distributions. Under these special tax rules: · the excess distribution or gain will be allocated ratably over your holding period for our ADSs or Class A ordinary shares, · the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated asordinary income, and · the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generallyapplicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. In addition, non-corporate United States Holders will not be eligible for reduced rates of taxation on any dividends received from us (as describedabove under “—Taxation of Dividends”) if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year. You willgenerally be required to file Internal Revenue Service Form 8621 if you hold our ADSs or Class A ordinary shares in any year in which we are classified as aPFIC. If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares and any of our non-United States subsidiaries is also aPFIC, a United States Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the applicationof these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries. 120Table of Contents In certain circumstances, in lieu of being subject to the excess distribution rules discussed above, you may make an election to include gain on thestock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is regularly traded on a qualified exchange. Under current law,the mark-to-market election may be available to holders of our ADSs because they are listed on the New York Stock Exchange, which constitutes a qualifiedexchange, although there can be no assurance that our ADSs will be “regularly traded” for purposes of the mark-to-market election. It should also be notedthat only our ADSs and not our Class A ordinary shares are listed on the New York Stock Exchange. Consequently, if you are a holder of our Class A ordinaryshares that are not represented by ADSs, you generally will not be eligible to make a mark-to-market election if we are a PFIC. If you make an effective mark-to-market election, you will include in each taxable year that we are a PFIC, as ordinary income, the excess of the fairmarket value of our ADSs held by you at the end of the year over your adjusted tax basis in our ADSs. You will be entitled to deduct as an ordinary loss ineach such year the excess of your adjusted tax basis in our ADSs over their fair market value at the end of the year, but only to the extent of the net amountpreviously included in income as a result of the mark-to-market election. If you make an effective mark-to-market election, in each year that we are a PFIC,any gain you recognize upon the sale or other disposition of our ADSs will be treated as ordinary income and any loss will be treated as ordinary loss, butonly to the extent of the net amount previously included in income as a result of the mark-to-market election. Your adjusted tax basis in our ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under themark-to-market rules. If you make a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxableyears, unless our ADSs are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation of the election.Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a United States Holder may continue to be subject to the PFICrules with respect to such United States Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for UnitedStates federal income tax purposes. You are urged to consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable inyour particular circumstances. Alternatively, you can sometimes avoid the rules described above with respect to the stock you own in a PFIC by electing to treat such PFIC as a“qualified electing fund” under Section 1295 of the Code. However, this option is not available to you because we do not intend to comply with therequirements necessary to permit you to make this election. You are urged to consult your tax advisors concerning the United States federal income taxconsequences of holding our ADSs or Class A ordinary shares if we are considered a PFIC in any taxable year. Taxation of Capital Gains For United States federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange of our ADSs or Class A ordinary sharesin an amount equal to the difference between the amount realized for our ADSs or Class A ordinary shares and your tax basis in such ADSs or Class Aordinary shares. Subject to the discussion under “—Passive Foreign Investment Company” above, such gain or loss will generally be capital gain or loss.Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility ofcapital losses is subject to limitations. Any gain or loss recognized by you will generally be treated as United States source gain or loss. Consequently, youmay not be able to use the foreign tax credit arising from any PRC tax imposed on the disposition of our ADSs or Class A ordinary shares unless such creditcan be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. However, in the event that we aredeemed to be a PRC “resident enterprise” under the PRC tax law and PRC tax is imposed on any gain from the sale or exchange of our ADSs or Class Aordinary shares, a United States Holder eligible for the benefits of the income tax treaty between the United States and the PRC may be able to elect to treatsuch gain as PRC-source income. You are urged to consult your tax advisors regarding the tax consequences if a foreign withholding tax is imposed on adisposition of our ADSs or Class A ordinary shares, including the availability of the foreign tax credit under your particular circumstances. Information Reporting and Backup Withholding Pursuant to the Hiring Incentives to Restore Employment Act enacted on March 18, 2010, an individual United States Holder may be required tosubmit to the Internal Revenue Service certain information reporting with respect to his or her beneficial ownership of our ADSs or Class A ordinary shares,unless such ADSs were held on his or her behalf by a United States financial institution. This law also imposes penalties if an individual United States Holderis required to submit such information to the Internal Revenue Service and fails to do so. Moreover, information reporting will apply to dividends in respect of our ADSs or Class A ordinary shares and the proceeds from the sale, exchange orredemption of our ADSs or Class A ordinary shares that are paid to you within the United States (and in certain cases, outside the United States), unless youare an exempt recipient. Backup withholding may apply to such payments if you fail to provide a taxpayer identification number or certification of otherexempt status or fail to report in full dividend and interest income. Backup withholding is not a tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your UnitedStates federal income tax liability provided the required information is timely furnished to the Internal Revenue Service. You should consult your taxadvisors regarding the application of the United States information reporting and backup withholding rules to your particular circumstances. F. Dividends and Paying Agents Not applicable. 121Table of Contents G. Statement by Experts Not applicable. H. Documents on Display We have filed this annual report on Form 20-F, including exhibits, with the SEC. As allowed by the SEC, in Item 19 of this annual report, weincorporate by reference certain information we filed with the SEC. This means that we can disclose important information to you by referring you to anotherdocument filed separately with the SEC. The information incorporated by reference is considered to be part of this annual report. You may read and copy this annual report, including the exhibits incorporated by reference in this annual report, at the SEC’s Public ReferenceRoom at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices in New York, New York, and Chicago, Illinois. You can also requestcopies of this annual report, including the exhibits incorporated by reference in this annual report, upon payment of a duplicating fee, by writing to the SEC’sPublic Reference Room for information. The SEC also maintains a websites that contains reports, proxy statements and other information about issuers, such as us, who file electronically withthe SEC. The address of that websites is http://www.sec.gov. The information on that websites is not a part of this annual report. I. Subsidiary Information Not applicable. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Concentration risk We depend on China Mobile, which is a shareholder of Phoenix TV, for a significant portion of our business. The revenues generated from advertisingand paid services we provided through China Mobile for the years ended December 31, 2015, 2016 and 2017 were RMB309.3 million, RMB154.6 millionand RMB172.2 million (US$26.5 million), respectively, which accounted for 19.2%, 10.7% and 10.9% of our total revenues in the respective years. We had accounts receivable from China Mobile as of December 31, 2016 and 2017 of RMB48.8 million and RMB63.2 million (US$9.7 million),respectively, which are included on our balance sheets as “Amounts due from related parties.” Apart from China Mobile and an advertising agent, we have noother customer with revenues or accounts receivable accounting for over 10% of our total revenues or total account receivables, net and due from relatedparties, respectively. Credit risk Our credit risk arises from cash and cash equivalents, term deposits and short term investments and restricted cash, as well as credit exposures toreceivables due from our customers, related parties and other parties. We believe that there is no significant credit risk associated with cash and cash equivalents, term deposits and short term investments and restrictedcash for short-term bank loans which were held by reputable financial institutions in the jurisdictions where we are located. We believe that we are notexposed to unusual risks as these financial institutions have high credit quality. As of the date hereof, we had two outstanding unsecured short-term loans to Particle, including (i) a convertible loan with a principal amount ofUS$14.8 million at an interest rate of 4.35% per annum due in August 2018 after several extensions, which can be converted into Series D1 convertibleredeemable preferred shares of Particle at a conversion price of US$1.071803 per share before August 9, 2018; (ii) a loan with a principal amount of RMB74.0million (US$10.8 million) at an interest rate of 9% per annum due in July 2018. Particle is required to use the proceeds of the loans for its working capitalrequirements in the ordinary course of their businesses. We depend on the ability of Particle to generate sufficient cash flow from its operations or financingactivities to repay our loans. As such, we are exposed to the credit risk of Particle. We have no significant concentrations of credit risk with respect to our customers and related parties, except for the account receivable from ChinaMobile and an advertising agent, and unsecured short-term loans to Particle as discussed above. We assess the credit quality of, and set credit limits on ourcustomers by taking into account their financial position, the availability of guarantees from third parties, their credit history and other factors such as currentmarket conditions. Inflation Risk In recent years, inflation has not had a material impact on our operating results. According to the National Bureau of Statistics of China, the change inthe Consumer Price Index in China was 1.4%, 2.0% and 1.6% in 2015, 2016 and 2017, respectively. Although we have not been materially affected byinflation in the past, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China. We do not anticipate beingexposed to material risks due to changes in market interest rates. However, our future interest income may fall short of expectations due to changes in marketinterest rates. 122Table of Contents Foreign Currency Risk Substantially all our revenues and expenses are denominated in Renminbi. We have not had any material foreign exchange gains or losses. Although ingeneral, our exposure to foreign exchange risks should be limited, the value of your investment in our ADSs will be affected by the foreign exchange ratebetween U.S. dollars relative to the Renminbi because the value of our business is effectively denominated in Renminbi, while the ADSs are traded in U.S.dollars. Furthermore, a decline in the value of the Renminbi could reduce the U.S. dollar equivalent of the value of the earnings from, and our investments in,our subsidiaries and PRC-incorporated affiliates in China. In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollarwould affect our reported financial results in U.S. dollar terms. As of December 31, 2017, we had RMB denominated cash and cash equivalents, term depositsand short term investments and restricted cash, totaling RMB1.4 billion (US$215.2 million), and U.S. dollar denominated cash and cash equivalents and termdeposits totaling US$5.0 million. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Fluctuations in exchangerates of the Renminbi could materially affect our reported operating results.” ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A. Debt Securities Not applicable. B. Warrants and Rights Not applicable. C. Other Securities Not applicable. D. American Depositary Shares In July 2016, we appointed JPMorgan Chase Bank, N.A., or JPMorgan, as the successor depositary for our ADR program. JPMorgan replaced DeutscheBank Trust Company Americas, or Deutsche Bank, as depositary for our ADR program effective from July 18, 2016. We entered into an amended and restateddeposit agreement with JPMorgan, as depositary, and all holders from time to time of our ADRs in July 2016 to amend and restate the previous depositagreement with Deutsche Bank dated as of May 11, 2011. Fees and Charges As an ADS holder, you will be required to pay the following service fees to JPMorgan as the depositary bank: Service: Fee:Issuance of ADSs, including issuances resulting from a distribution of sharesor rights or other property$5.00 for each 100 ADSs (or portion thereof) issued Cancellation of ADSs, including in the case of termination of the depositagreement$5.00 for each 100 ADSs (or portion thereof) cancelled Distribution of cash dividends or other cash distributionsUp to $0.05 per ADS held Distribution of ADSs pursuant to share dividends, free share distributions orexercise of rightsUp to $0.05 per ADS held Distribution of securities other than ADSs or rights to purchase ADSs oradditional ADSsA fee being in an amount equal to the fee for the execution and delivery ofADSs which would have been charged as a result of the deposit of suchsecurities Depositary servicesAn aggregate fee of U.S.$0.05 per ADS per calendar year (or portion thereof)for services performed by the Depositary in administering the ADRs Transfer of ADRs$1.50 per certificate presented for transfer As an ADS holder, you will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmentalcharges such as: Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e.,upon deposit and withdrawal of ordinary shares). 123Table of Contents · Expenses incurred for converting foreign currency into U.S. dollars. · Expenses for cable, telex and fax transmissions and for delivery of securities. · Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e.,when ordinary shares are deposited or withdrawn from deposit). · Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. · Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable toordinary shares, deposited securities, ADSs and ADRs. · Any applicable fees and penalties thereon. The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of theirclients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bankfor cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADSholders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date. The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion of distributableproperty to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank charges the applicable fee to the ADSrecord date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in directregistration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts(via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held inDTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts inturn charge their clients’ accounts the amount of the fees paid to the depositary banks. In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service untilpayment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. The depositary has agreed to reimburse us for a portion of certain expenses we incur that are related to establishment and maintenance of the ADRprogram, including investor relations expenses. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount ofreimbursement available to us is not related to the amounts of fees the depositary collects from investors. Further, the depositary has agreed to reimburse uscertain fees payable to the depositary by holders of ADSs. Neither the depositary nor we can determine the exact amount to be made available to us because(i) the number of ADSs that will be issued and outstanding, (ii) the level of service fees to be charged to holders of ADSs and (iii) our reimbursable expensesrelated to the program are not known at this time. Payments by Depositary As of March 31, 2018, we had received total payments of US$0.37 million from JPMorgan, the current depositary bank for our ADR program forreimbursement of investor relations expenses and other program related expenses. PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None of these events occurred in any of the years ended December 31, 2015, 2016 and 2017. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS A. Modifications of Rights See “Item 10. Additional Information—B. Memorandum and Articles of Association” for a description of the rights of securities holders, which remainunchanged. B. Use of Proceeds Not applicable. 124Table of Contents ITEM 15. CONTROLS AND PROCEDURES Disclosure Controls and Procedures As of December 31, 2017, an evaluation has been carried out under the supervision and with the participation of our management, including our ChiefExecutive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term isdefined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Disclosure controls and procedures aredesigned to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, andreported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management,including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosures. There areinherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumventionor overriding of the controls and procedures. Disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.Based upon our evaluation, our management has concluded that, as of December 31, 2017, our disclosure controls and procedures were effective. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended, for our company. Internal control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generallyaccepted accounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and disposals of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of consolidated financial statements in accordance with U.S. GAAP and that a company’s receipts and expenditures are being made only inaccordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposal of our assets that could have a material effect on our consolidated financial statements. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect toconsolidated financial statements preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the Securities and Exchange Commission, ourmanagement, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of internal control over financial reporting as ofDecember 31, 2017 using the criteria set forth in the report “Internal Control—Integrated Framework (2013)” published by the Committee of SponsoringOrganizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effectiveas of December 31, 2017. Attestation Report of the Independent Registered Public Accounting Firm The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers Zhong TianLLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 of this annual report on Form 20-F. Changes in Internal Control over Financial Reporting We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance that our books and recordsaccurately reflect our transactions and that our established policies and procedures are followed. As required by Rule 13a-15(d), under the Exchange Act, ourmanagement, including our Chief Executive Officer, president and our Chief Financial Officer, has also conducted an evaluation of our internal control overfinancial reporting to determine whether any changes occurred during the period covered by this report have materially affected, or are reasonably likely tomaterially affect, our internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during theyear ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT Our Board of Directors has determined that Jerry Juying Zhang, who is an independent director, qualifies as an audit committee financial expert asdefined in Item 16A of the instruction to Form 20-F. ITEM 16B. CODE OF ETHICS We have adopted a code of ethics which applies to our directors, employees, advisors and officers, including our Chief Executive Officer and ChiefFinancial Officer. No changes have been made to the code of ethics since its adoption and no waivers have been granted therefrom to our directors oremployees. We have filed our code of business conduct and ethics as an exhibit to our F-1 registration statement (File No. 333-173666), as amended, initiallyfiled with the Commission on April 21, 2011, and a copy is available to any shareholder upon request. This code of ethics is also available on our website atir.ifeng.com. 125Table of Contents ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES PricewaterhouseCoopers Zhong Tian LLP has served as our independent public accountant for each of the fiscal years in the three-year period endedDecember 31, 2017, for which audited financial statements appear in this annual report. The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered byPricewaterhouseCoopers Zhong Tian LLP, for the years indicated. For the Years EndedDecember 31, 2016 2017 (In thousands of US dollars)Audit Fees (1)1,0751,173Tax Fees (2)3015All Other Fees (3)5017Total1,1551,205 (1) Audit fees consist of fees associated with the annual audit, reviews of our quarterly financial statements and related statutory and regulatoryfilings. For 2016 and 2017, the audit refers to financial audit and audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. (2) Tax fees include fees billed for tax compliance and tax advice services. (3) All other fees comprise fees for all other services provided by PricewaterhouseCoopers Zhong Tian LLP, other than those services covered infootnotes (1) to (2) above. Pre-Approval Policies and Procedures Our audit committee is responsible for the oversight of our independent accountants’ work. The policy of our audit committee is to pre-approve allaudit and non-audit services provided by PricewaterhouseCoopers Zhong Tian LLP, including audit services, audit-related services, tax services and otherservices, as described above. All audit and non-audit services performed by PricewaterhouseCoopers Zhong Tian LLP must be pre-approved by the Audit Committee. 126Table of Contents ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES None. ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS None. ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM 16G. CORPORATE GOVERNANCE We are a “foreign private issuer” (as such term is defined in Rule 3b-4 under the Exchange Act), and our ADSs, each representing eight ordinary shares,are listed on the New York Stock Exchange. Under Section 303A of the New York Stock Exchange Listed Company Manual, New York Stock Exchangelisted companies that are foreign private issuers are permitted to follow home country practice in lieu of the corporate governance provisions specified by theNew York Stock Exchange with limited exceptions. The following summarizes some significant ways in which our corporate governance practices differ fromthose followed by domestic companies under the listing standards of the New York Stock Exchange. · In respect of independent directors on our Board of Directors: Only two of our seven directors are independent directors: As our home countrypractice does not require a majority of our Board of Directors to be independent, two of our seven directors are independent. · In respect of composition of our audit committee: As our home country practice does not require us to have a minimum of three members ofour audit committee, our audit committee is comprised of two independent directors. · In respect of the oversight of our executive officer compensation and director nominations matters: As our home country practice does notrequire independent director oversight of executive officer compensation and director nomination matters, our compensation and corporategovernance and nominating committees are not comprise solely of independent directors. ITEM 16H. MINE SAFETY Not applicable. PART III ITEM 17. FINANCIAL STATEMENTS The Registrant has elected to provide the financial statements and related information specified in Item 18. ITEM 18. FINANCIAL STATEMENTS The consolidated financial statements of Phoenix New Media Limited are included at the end of this annual report. ITEM 19. EXHIBIT INDEX ExhibitNumber Description of Exhibits 1.1Second Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference Exhibit 3.2 to ourRegistration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21,2011). 2.1Registrant’s Specimen American Depositary Receipt (included in Exhibit 4.3) (incorporated by reference Exhibit (a) to our RegistrationStatement on Form F-6 (File No. 333-212488) with respect to American depositary shares representing our Class A ordinary shares, filedwith the Securities and Exchange Commission on July 12, 2016) 2.2Registrant’s Specimen Certificate for Class A ordinary shares (incorporated by reference Exhibit 4.2 to our Registration Statement onForm F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 2.3Form of Amended and Restated Deposit Agreement, among the Registrant, JPMorgan Chase Bank, N.A., as depositary, and all holdersfrom time to time of ADRs issued thereunder (incorporated by reference Exhibit (a) to our Registration Statement on Form F-6 (FileNo. 333-212488) with respect to American depositary shares representing our Class A ordinary shares, filed with the Securities andExchange Commission on July 12, 2016). 4.1Preferred Share Purchase Agreement, dated as of November 9, 2009, in respect of the sale of the Series A convertible redeemablepreferred shares of the Registrant (incorporated by reference Exhibit 4.4 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 127Table of Contents ExhibitNumber Description of Exhibits 4.2Shareholders’ Agreement, dated as of November 24, 2009, by and among the Registrant and the other parties thereto (incorporated byreference Exhibit 4.5 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and ExchangeCommission on April 21, 2011). 4.3Form of the Registrant’s Employment Agreements for its executive officers (incorporated by reference Exhibit 10.1 to our RegistrationStatement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.4Registrant’s 2008 Share Option Plan (incorporated by reference Exhibit 10.2 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.5Registrant’s 2011 Restricted Share Unit and Restricted Share Plan (incorporated by reference Exhibit 10.3 to our Registration Statementon Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.6Form of Indemnification Agreement with the Registrant’s directors and officers (incorporated by reference Exhibit 10.4 to ourRegistration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21,2011). 4.7Translation of the Exclusive Equity Option Agreement, dated as of December 31, 2009, between Fenghuang On-line and TianyingJiuzhou and its shareholders (incorporated by reference Exhibit 10.5 to our Registration Statement on Form F-1 (File No. 333-173666),initially filed with the Securities and Exchange Commission on April 21, 2011). 4.8Translation of the Exclusive Equity Option Agreement, dated as of December 31, 2009, between Fenghuang On-line and Yifeng Lianheand its shareholders (incorporated by reference Exhibit 10.6 to our Registration Statement on Form F-1 (File No. 333-173666), initiallyfiled with the Securities and Exchange Commission on April 21, 2011). *4.8ATranslation of the Exclusive Equity Option Agreement, dated as of January 13, 2014, between Qieyiyou and Chenhuan.and itsshareholders. 4.9Translation of the Equity Pledge Agreement, dated as of December 31, 2009, between Fenghuang On-line and Tianying Jiuzhou and itsshareholders (incorporated by reference Exhibit 10.7 to our Registration Statement on Form F-1 (File No. 333-173666), initially filedwith the Securities and Exchange Commission on April 21, 2011). 4.10Translation of the Equity Pledge Agreement, dated as of December 31, 2009, between Fenghuang On-line and Yifeng Lianhe and itsshareholders(incorporated by reference Exhibit 10.8 to our Registration Statement on Form F-1 (File No. 333-173666), initially filedwith the Securities and Exchange Commission on April 21, 2011). *4.10ATranslation of the Equity Pledge Agreement, dated as of January 13, 2014, between Fenghuang On-line and Chenhuan and itsshareholders. 4.11Translation of the Exclusive Technical Consulting & Service Agreement, dated as of December 31, 2009, between Fenghuang On-lineand Tianying Jiuzhou (incorporated by reference Exhibit 10.9 to our Registration Statement on Form F-1 (File No. 333-173666),initially filed with the Securities and Exchange Commission on April 21, 2011). 4.12Translation of the Exclusive Technical Consulting & Service Agreement, dated as of December 31, 2009, between Fenghuang On-lineand Yifeng Lianhe (incorporated by reference Exhibit 10.10 to our Registration Statement on Form F-1 (File No. 333-173666), initiallyfiled with the Securities and Exchange Commission on April 21, 2011). *4.12ATranslation of the Exclusive Technical Consulting & Service Agreement, dated as of January 13, 2014, between Qieyiyou andChenhuan.and its shareholders. *4.12BTranslation of the Business Management Agreement, dated as of January 13, 2014, between Qieyiyou and Chenhuan.and itsshareholders. 4.13Translation of Loan Agreement, dated as of December 31, 2009, between Fenghuang On-line and the shareholders of Tianying Jiuzhou(incorporated by reference Exhibit 10.11 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with theSecurities and Exchange Commission on April 21, 2011). 4.14Translation of the Loan Agreement, dated as of December 31, 2009, between Fenghuang On-line and the shareholders of Yifeng Lianhe(incorporated by reference Exhibit 10.12 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with theSecurities and Exchange Commission on April 21, 2011). *4.14ATranslation of the Loan Agreement, dated as of January 13, 2015, between Qieyiyou and shareholders of Chenhuan. 4.15Translation of the Voting Right Entrustment Agreement, dated as of December 31, 2009, between Fenghuang On-line and shareholdersof Tianying Jiuzhou (incorporated by reference Exhibit 10.13 to our Registration Statement on Form F-1 (File No. 333-173666),initially filed with the Securities and Exchange Commission on April 21, 2011). 128Table of Contents ExhibitNumber Description of Exhibits 4.16Translation of the Voting Right Entrustment Agreement, dated as of December 31, 2009, between Fenghuang On-line and theshareholders of Yifeng Lianhe (incorporated by reference Exhibit 10.14 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). *4.16ATranslation of the Voting Right Entrustment Agreement, dated as of January 13, 2014, between Qieyiyou and Chenhuan.and itsshareholders. 4.17Translation of the Content, Branding, Promotion and Technology Cooperation Agreement, dated November 24, 2009, betweenFenghuang On-line and Phoenix TV (incorporated by reference Exhibit 10.15 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.18Translation of the Supplemental Agreement to the Content, Branding, Promotion and Technology Cooperation Agreement, datedMarch 28, 2011, between Fenghuang On-line and Phoenix TV (incorporated by reference Exhibit 10.16 to our Registration Statementon Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.19Translation of the Second Supplemental Agreement to the Content, Branding, Promotion and Technology Cooperation Agreement,dated March 24, 2016, between Fenghuang On-line and Phoenix TV (incorporated by reference Exhibit 4.19 to our Annual Report onForm 20-F for the Fiscal Year Ended December 31, 2015 (File No. 001-35158), initially filed with the Securities and ExchangeCommission on April 28, 2016). 4.20Translation of the Program Content License Agreement, dated November 24, 2009, between Phoenix TV and Tianying Jiuzhou(incorporated by reference Exhibit 10.17 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with theSecurities and Exchange Commission on April 21, 2011). 4.21Schedule of Material Differences between the Program Content Agreements entered into between Tianying Jiuzhou and Yifeng Lianhe,respectively, and Phoenix TV (incorporated by reference Exhibit 10.18 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.22Confirmation Letter, dated April 14, 2011, among Tianying Jiuzhou, Yifeng Lianhe and Phoenix Satellite Television Company Limited(incorporated by reference Exhibit 10.19 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with theSecurities and Exchange Commission on April 21, 2011). 4.23Translation of the Second Supplemental Agreement to the Program Content License Agreement, dated March 24, 2016, betweenPhoenix TV, Tianying Jiuzhou and Yifeng Lianhe (incorporated by reference Exhibit 4.23 to our Annual Report on Form 20-F for theFiscal Year Ended December 31, 2015 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 28,2016). 4.24Translation of the Trademark License Agreement, dated as of November 24, 2009, between Phoenix Satellite Television TrademarkLimited and Tianying Jiuzhou (incorporated by reference Exhibit 10.20 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.25Schedule of material differences between the Trademark License Agreements entered into between Tianying Jiuzhou and Yifeng Lianhe,respectively, and Phoenix Satellite Television Trademark Limited (incorporated by reference Exhibit 10.21 to our RegistrationStatement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.26Confirmation Letter, dated April 14, 2011, among Tianying Jiuzhou, Yifeng Lianhe and Phoenix Satellite Television TrademarkLimited (incorporated by reference Exhibit 10.22 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed withthe Securities and Exchange Commission on April 21, 2011). 4.27Translation of the Second Supplemental Agreement to the Trademark License Agreement, dated March 24, 2016, between Phoenix TV,Tianying Jiuzhou and Yifeng Lianhe (incorporated by reference Exhibit 4.27 to our Annual Report on Form 20-F for the Fiscal YearEnded December 31, 2015 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 28, 2016). 4.28Program Resource License Agreement between Phoenix Satellite Television Company Limited and Beijing Tianying Jiuzhou NetworkTechnology Co., Ltd., dated May 27, 2016 (incorporated by reference Exhibit 99.2 to our report on Form 6-K (File No. 001-35158) filedwith the Securities and Exchange Commission on May 27, 2016). 4.29Program Text/Graphics Resource License Agreement between Phoenix Satellite Television Company Limited and Beijing TianyingJiuzhou Network Technology Co., Ltd., dated May 27, 2016 (incorporated by reference Exhibit 99.3 to our report on Form 6-K (FileNo. 001-35158) filed with the Securities and Exchange Commission on May 27, 2016). 129Table of Contents ExhibitNumber Description of Exhibits 4.30Program Resource License Agreement between Phoenix Satellite Television Company Limited and Yifeng Lianhe (Beijing) TechnologyCo., Ltd., dated May 27, 2016 (incorporated by reference Exhibit 99.4 to our report on Form 6-K (File No. 001-35158) filed with theSecurities and Exchange Commission on May 27, 2016). 4.31Program Text/Graphics Resource License Agreement between Phoenix Satellite Television Company Limited and Yifeng Lianhe(Beijing) Technology Co., Ltd., dated May 27, 2016 (incorporated by reference Exhibit 99.5 to our report on Form 6-K (File No. 001-35158) filed with the Securities and Exchange Commission on May 27, 2016). 4.32Program Resource License Agreement between Phoenix Satellite Television Company Limited and Beijing Fenghuang InteractiveEntertainment Network Technology Co., Ltd, dated May 27, 2016 (incorporated by reference Exhibit 99.6 to our report on Form 6-K(File No. 001-35158) filed with the Securities and Exchange Commission on May 27, 2016). 4.33Program Text/Graphics Resource License Agreement between Phoenix Satellite Television Company Limited and Beijing FenghuangInteractive Entertainment Network Technology Co., Ltd, dated May 27, 2016 (incorporated by reference Exhibit 99.7 to our report onForm 6-K (File No. 001-35158) filed with the Securities and Exchange Commission on May 27, 2016). 4.34The Third Supplemental Agreement to the Trademark License Agreement by and among Phoenix Satellite Television TrademarkLimited, Beijing Tianying Jiuzhou Network Technology Co., Ltd. and Yifeng Lianhe (Beijing) Technology Co., Ltd., dated May 27,2016 (incorporated by reference Exhibit 99.8 to our report on Form 6-K (File No. 001-35158) filed with the Securities and ExchangeCommission on May 27, 2016). 4.35Translation of the Fourth Supplemental Agreement to the Trademark License Agreement by and among Phoenix Satellite TelevisionTrademark Limited, Beijing Tianying Jiuzhou Network Technology Co., Ltd. and Yifeng Lianhe (Beijing) Technology Co., Ltd., datedSeptember 29, 2017 (incorporated by reference Exhibit 99.2 to our report on Form 6-K (File No. 001-35158) filed with the Securities andExchange Commission on September 29, 2017). 4.36Translation of the Trademark License Agreement, dated as of December 8, 2017, between Phoenix Satellite Television TrademarkLimited and Beijing Tianying Jiuzhou Network Technology Co., Ltd. (incorporated by reference Exhibit 99.2 to our report on Form 6-K(File No. 001-35158) filed with the Securities and Exchange Commission on December 8, 2017). 4.37Translation of the Trademark License Agreement, dated as of December 8, 2017, between Phoenix Satellite Television TrademarkLimited and Yifeng Lianhe (Beijing) Technology Co., Ltd. (incorporated by reference Exhibit 99.3 to our report on Form 6-K (FileNo. 001-35158) filed with the Securities and Exchange Commission on December 8, 2017). 4.38Loan Agreement Memorandum, dated as of January 3, 2011, between Phoenix Satellite Television Co., Ltd and Phoenix SatelliteTelevision Information Limited (incorporated by reference Exhibit 10.23 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). 4.39Translation of the Cooperation Agreement, dated as of December 29, 2009, between China Mobile Communications Corporation andTianying Jiuzhou (incorporated by reference Exhibit 10.24 to our Registration Statement on Form F-1 (File No. 333-173666), initiallyfiled with the Securities and Exchange Commission on April 21, 2011). 4.40Translation of the Cooperation Agreement, dated as of February 14, 2011, between China Mobile Communications Corporation andTianying Jiuzhou (incorporated by reference Exhibit 10.25 to our Registration Statement on Form F-1 (File No. 333-173666), initiallyfiled with the Securities and Exchange Commission on April 21, 2011). *4.41Schedule of Material Differences between the Cooperation Agreement, dated as of February 14, 2011, between China MobileCommunications Corporation and Beijing Tianying Jiuzhou Network Technology Co., Ltd. entered into in 2011, filed as Exhibit 10.25to the Registration Statement on Form F-1 (File No. 333-173666) (“Cooperation Agreement 2011”), the Cooperation Agreement, datedas of June 20, 2014, between China Mobile Communications Corporation and Beijing Tianying Jiuzhou Network Technology Co., Ltd.entered into in 2014 (“Cooperation Agreement 2014”), the Cooperation Agreement, dated as of September 16, 2015, between ChinaMobile Communications Corporation and Beijing Tianying Jiuzhou Network Technology Co., Ltd. entered into in 2015 (“CooperationAgreement 2015”), the Cooperation Agreement, dated as of January 16, 2017, between China Mobile Communications Corporation andBeijing Tianying Jiuzhou Network Technology Co., Ltd. entered into in 2017 and as to 2016 and 2017 (“Cooperation Agreement2016”), and the Cooperation Agreement, dated as of October 18, 2017, between China Mobile Communications Corporation andBeijing Tianying Jiuzhou Network Technology Co., Ltd. entered into in 2017 and as to 2017 and 2018 (“Cooperation Agreement2017”). 4.42Share Purchase Agreement, dated as of September 10, 2014, among Particle Inc., Particle (HK) Limited, Beijing Particle InformationTechnology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., Zhaohui Zheng, Xuyang Ren, Xin Li, Rongqing Lu, Shunwei TMTII Limited, Red Better Limited and our company (incorporated by reference Exhibit 4.29 to our Annual Report on Form 20-F for theFiscal Year Ended December 31, 2014 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 30,2015). 130Table of Contents ExhibitNumber Description of Exhibits 4.43Share Purchase Agreement, dated as of November 7, 2014, among Zhaohui Zheng, Xin Li, Rongqing Lu, Tengteng Kong, Weijian Lin,Kaifeng Xu, Miao Liu, Yuanyuan Wang, Xiaoxi Wu, Fubo Wang, Shi’an Peng, Sha Zhou, Qiyu Tan and our company (incorporated byreference Exhibit 4.30 to our Annual Report on Form 20-F for the Fiscal Year Ended December 31, 2014 (File No. 001-35158), initiallyfiled with the Securities and Exchange Commission on April 30, 2015). 4.44Share Purchase Agreement, dated as of February 10, 2015, among Particle Inc., Particle (HK) Limited, Beijing Particle InformationTechnology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., Zhaohui Zheng, Xuyang Ren, Xin Li, Rongqing Lu, Shunwei TMTII Limited, Red Better Limited and our company (incorporated by reference Exhibit 4.31 to our Annual Report on Form 20-F for theFiscal Year Ended December 31, 2014 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 30,2015). 4.45Share Purchase Agreement, dated as of February 10, 2015, among IDG Technology Venture Investment V, L.P., Yifang TechnologyGroup, Ltd. and our company (incorporated by reference Exhibit 4.32 to our Annual Report on Form 20-F for the Fiscal Year EndedDecember 31, 2014 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 30, 2015). 4.46Loan Agreement, dated as of January 28, 2016, among Particle Inc., Particle (HK) Limited, Beijing Particle Information TechnologyCo., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company (incorporated by reference Exhibit 4.36 to our Annual Reporton Form 20-F for the Fiscal Year Ended December 31, 2015 (File No. 001-35158), initially filed with the Securities and ExchangeCommission on April 28, 2016). 4.47Loan Agreement, dated as of April 5, 2016, among Particle Inc., Particle (HK) Limited, Beijing Particle Information TechnologyCo., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company (incorporated by reference Exhibit 4.37 to our Annual Reporton Form 20-F for the Fiscal Year Ended December 31, 2015 (File No. 001-35158), initially filed with the Securities and ExchangeCommission on April 28, 2016). 4.48Loan Agreement, dated as of August 10, 2016, among Particle Inc., Particle (HK) Limited, Beijing Particle Information TechnologyCo., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company (incorporated by reference Exhibit 4.45 to our Annual Reporton Form 20-F for the Fiscal Year Ended December 31, 2016 (File No. 001-35158), initially filed with the Securities and ExchangeCommission on April 28, 2017). 4.49Amendment No. 1 to Loan Agreement Dated as of August 10, 2016, dated as of January 20, 2017, among Particle Inc., Particle (HK)Limited, Beijing Particle Information Technology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company(incorporated by reference Exhibit 4.46 to our Annual Report on Form 20-F for the Fiscal Year Ended December 31, 2016 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 28, 2017). 4.50Loan Agreement, dated as of November 2, 2016, among Particle Inc., Particle (HK) Limited, Beijing Particle Information TechnologyCo., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company (incorporated by reference Exhibit 4.47 to our Annual Reporton Form 20-F for the Fiscal Year Ended December 31, 2016 (File No. 001-35158), initially filed with the Securities and ExchangeCommission on April 28, 2017). 4.51Amendment No. 1 to Loan Agreement Dated as of November 2, 2016, dated as of January 20, 2017, among Particle Inc., Particle (HK)Limited, Beijing Particle Information Technology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company(incorporated by reference Exhibit 4.48 to our Annual Report on Form 20-F for the Fiscal Year Ended December 31, 2016 (File No. 001-35158), initially filed with the Securities and Exchange Commission on April 28, 2017). 4.52English Translation of the Loan Agreement, dated as of January 20, 2017, among Particle Inc., Particle (HK) Limited, Beijing ParticleInformation Technology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company (incorporated by referenceExhibit 4.49 to our Annual Report on Form 20-F for the Fiscal Year Ended December 31, 2016 (File No. 001-35158), initially filed withthe Securities and Exchange Commission on April 28, 2017). *4.53Amendment No. 2 to Loan Agreement Dated as of August 10, 2016, dated as of August 9, 2017, among Particle Inc., Particle (HK)Limited, Beijing Particle Information Technology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company. *4.54Amendment No. 3 to Loan Agreement Dated as of August 10, 2016, dated as of January 20, 2018, among Particle Inc., Particle (HK)Limited, Beijing Particle Information Technology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company. *4.55Amendment No. 1 to Loan Agreement Dated as of January 20, 2017, dated as of January 20, 2018, among Particle Inc., Particle (HK)Limited, Beijing Particle Information Technology Co., Ltd., Beijing Yidianwangju Technology Co., Ltd., and our company. 131Table of Contents ExhibitNumber Description of Exhibits *4.56Loan assignment agreement among the Registrant, Particle Inc. and its subsidiaries and consolidated affiliated entity, and Long DeCheng Zhang Culture Communication (Tianjin) Co., Ltd. dated April 2, 2018. *8.1List of Subsidiaries 11.1Code of Business conduct and Ethics of the Registrant (incorporated by reference Exhibit 99.1 to our Registration Statement on Form F-1 (File No. 333-173666), initially filed with the Securities and Exchange Commission on April 21, 2011). *12.1Certification of our Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *12.2Certification of our Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *13.1Certification of our Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *13.2Certification of our Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 *15.1Consent of Independent Registered Public Accounting Firm *15.2Consent of Zhong Lun Law Firm 101.INSXBRL Instance Document. * 101.SCHXBRL Taxonomy Extension Schema Document. * 101.CALXBRL Taxonomy Extension Calculation Linkbase Document. * 101.DEFXBRL Taxonomy Extension Definition Linkbase Document. * 101.LABXBRL Taxonomy Extension Labels Linkbase Document. * 101.PREXBRL Taxonomy Extension Presentation Linkbase Document. * * Filed herewith 132Table of Contents SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned tosign this annual report on its behalf. Phoenix New Media Limited By:/s/ Betty Yip HoName:Betty Yip HoTitle:Chief Financial Officer Date: April 26, 2018 133Table of Contents Phoenix New Media Limited INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ContentsPageReport of Independent Registered Public Accounting FirmF-2Consolidated Balance Sheets as of December 31, 2016 and 2017F-3Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2016 and 2017F-4Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2015, 2016 and 2017F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2016 and 2017F-6Notes to Consolidated Financial StatementsF-7 F-1Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Phoenix New Media Limited: Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Phoenix New Media Limited and its subsidiaries (the “Company”) as ofDecember 31, 2017 and 2016, and the related consolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the threeyears in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also haveaudited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company asof December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on InternalControl over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements andon the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public CompanyAccounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whethereffective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers Zhong Tian LLP Beijing, the People’s Republic of ChinaApril 26, 2018 We have served as the Company’s auditor since 2010. F-2Table of Contents Phoenix New Media LimitedConsolidated Balance Sheets(Amounts in thousands, except for number of shares and per share data) As of December 31,2016 2017 2017RMB RMB US$(Note 2d)ASSETSCurrent assets:Cash and cash equivalents202,694362,86255,771Term deposits and short term investments781,298737,657113,376Restricted cash354,602336,70051,750Accounts receivable, net405,033458,74470,508Amounts due from related parties156,260187,21428,774Prepayments and other current assets64,06957,4588,831Convertible loans due from a related party (Note 10)104,429102,63115,774Total current assets2,068,3852,243,266344,784Non-current assets:Property and equipment, net72,08764,4549,906Intangible assets, net9,4756,7121,032Available-for-sale investments939,4321,196,330183,873Equity investments, net8,80915,3422,358Deferred tax assets*54,30760,4609,293Other non-current assets16,04712,5441,927Total non-current assets1,100,1571,355,842208,389Total assets3,168,5423,599,108553,173LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities (including amounts of the consolidated VIEs, excludingintercompany amounts, without recourse to the Company of RMB437,969 andRMB326,272 (US$50,146) as of December 31, 2016 and 2017, respectively. Note 1):Short-term bank loans358,602330,00050,720Accounts payable260,902262,65740,371Amounts due to related parties18,72014,1402,173Advances from customers27,82565,19610,020Taxes payable75,65292,21414,173Salary and welfare payable130,329134,47120,668Accrued expenses and other current liabilities111,049173,25326,628Total current liabilities983,0791,071,931164,753Non-current liabilities (including amounts of the consolidated VIEs, excludingintercompany amounts, without recourse to the Company of RMB20,979 andRMB20,979 (US$3,224) as of December 31, 2016 and 2017, respectively. Note 1) :Deferred tax liabilities1,3121,312202Long-term liabilities21,72324,7143,798Total non-current liabilities23,03526,0264,000Total liabilities1,006,1141,097,957168,753Commitments and contingencies (Note 22)Shareholders’ equity:Phoenix New Media Limited shareholders’ equity:Class A ordinary shares (US$0.01 par value, 680,000,000 shares authorized;254,909,790 and 260,001,486 shares issued and outstanding as of December 31,2016 and 2017, respectively)16,84317,1802,641Class B ordinary shares (US$0.01 par value, 320,000,000 shares authorized;317,325,360 and 317,325,360 shares issued and outstanding as of December 31,2016 and 2017, respectively)22,05322,0533,389Additional paid-in capital1,555,5111,587,575244,006Statutory reserves77,94681,23712,486Retained earnings195,069229,25035,235Accumulated other comprehensive income298,346570,24487,645Total Phoenix New Media Limited shareholders’ equity2,165,7682,507,539385,402Noncontrolling interests(3,340)(6,388)(982)Total shareholders’ equity2,162,4282,501,151384,420Total liabilities and shareholders’ equity3,168,5423,599,108553,173 * In 2017, the Company adopted the guidance of ASU 2015-17 issued by FASB in November 2015, which requires entities to present deferred tax assets anddeferred tax liabilities as noncurrent in a classified balance sheet. Pursuant to the guidance, the Company retrospectively reclassified RMB54.3 million ofdeferred tax assets from current assets to noncurrent assets in the balance sheets as of December 31, 2016. The accompanying notes are an integral part of these consolidated financial statements. F-3Table of Contents Phoenix New Media LimitedConsolidated Statements of Comprehensive Income(Amounts in thousands, except for number of shares and per share (or ADS) data) For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Revenues (1) :Net advertising revenues1,226,5161,232,2101,353,480208,026Paid services revenues382,680212,697221,61234,061Total revenues1,609,1961,444,9071,575,092242,087Cost of revenues (1)(829,386)(726,807)(727,197)(111,768)Gross profit779,810718,100847,895130,319Operating expenses (1) :Sales and marketing expenses(346,133)(339,171)(493,664)(75,875)General and administrative expenses(183,989)(181,677)(146,923)(22,582)Technology and product development expenses(170,714)(161,880)(192,325)(29,560)Total operating expenses(700,836)(682,728)(832,912)(128,017)Income from operations78,97435,37214,9832,302Other income:Interest income30,23435,11354,2868,344Interest expense(2,328)(7,061)(22,221)(3,415)Foreign currency exchange (loss)/gain(1,054)9,608(23,560)(3,621)(Loss)/income from equity investments, includingimpairments(41,861)(1,776)6,296968Gain on disposal of an equity investment and acquisition ofavailable-for-sale investments4,643———Others, net29,29421,05319,4232,985Income before tax97,90292,30949,2077,563Income tax expense(25,517)(14,089)(14,783)(2,272)Net income72,38578,22034,4245,291Net loss attributable to noncontrolling interests1,1992,3913,048468Net income attributable to Phoenix New Media Limited73,58480,61137,4725,759Net income72,38578,22034,4245,291Other comprehensive income (net of nil tax for all years): fairvalue remeasurement for available-for-sale investments15,869247,336321,53849,419Other comprehensive income/(loss) (net of nil tax for allyears): foreign currency translation adjustment22,81327,669(49,640)(7,630)Comprehensive income111,067353,225306,32247,080Comprehensive loss attributable to noncontrolling interests1,1992,3913,048468Comprehensive income attributable to Phoenix New MediaLimited112,266355,616309,37047,548Net income attributable to Phoenix New Media Limited73,58480,61137,4725,759Net income per Class A and Class B ordinary share:Basic0.130.140.070.01Diluted0.130.140.060.01Net income per ADS (1 ADS represents 8 Class A ordinaryshares):Basic1.031.120.520.08Diluted1.011.120.510.08Weighted average number of Class A and Class B ordinaryshares used in computing net income per share:Basic571,247,723573,521,536574,786,887574,786,887Diluted580,785,256577,037,906590,433,907590,433,907 (1) Transactions with related parties included in revenues, cost of revenues and operating expenses are as follows (Note 23): Net advertising revenues71,04898,41367,39310,358Paid services revenues276,712122,844139,14921,387Cost of revenues(49,363)(29,057)(57,057)(8,770)Sales and marketing expenses(1,788)(1,277)(748)(115)General and administrative expenses(1,812)(260)(6,245)(960) The accompanying notes are an integral part of these consolidated financial statements. F-4Table of Contents Phoenix New Media LimitedConsolidated Statements of Shareholders’ Equity(Amounts in thousands, except for number of shares) Phoenix New Media Limited Shareholders’ Equity Accumulated Additional other Total Class A ordinary sharesClass B ordinary sharesTreasury stockpaid-inStatutoryRetainedcomprehensiveNoncontrollingshareholders’ SharesAmountSharesAmountSharesAmountcapitalreservesearnings(loss)/incomeinterestsequity RMBRMBRMBRMBRMBRMBRMBRMBRMBBalance as ofDecember 31,2014262,244,29817,278317,325,36022,053(2,039,656)(13,379)1,587,22765,96852,852(15,341)—1,716,658Share-basedcompensation——————34,354————34,354Issuance of ordinaryshares uponsettlement of share-based awards3,822,780240————8,534————8,774Repurchase ofordinary shares————(10,776,568)(65,910)—————(65,910)Cancellation ofrepurchasedordinary shares(12,816,224)(785)——12,816,22479,289(79,011)————(507)Appropriation tostatutory reserves———————4,343(4,343)———Fair value changes ofavailable-for-saleinvestments—————————15,869—15,869Foreign currencytranslationadjustment—————————22,813—22,813Capital contributionreceived fromnoncontrollingshareholders—————————250250Net income————————73,584—(1,199)72,385Balance as ofDecember 31,2015253,250,85416,733317,325,36022,053——1,551,10470,311122,09323,341(949)1,804,686Share-basedcompensation——————1,890————1,890Issuance of ordinaryshares uponsettlement of share-based awards1,658,936110————2,517————2,627Appropriation tostatutory reserves———————7,635(7,635)———Fair value changes ofavailable-for-saleinvestments—————————247,336—247,336Foreign currencytranslationadjustment—————————27,669—27,669Net income————————80,611—(2,391)78,220Balance as ofDecember 31,2016254,909,79016,843317,325,36022,053——1,555,51177,946195,069298,346(3,340)2,162,428Share-basedcompensation——————20,852————20,852Issuance of ordinaryshares uponsettlement of share-based awards5,091,696337————11,212————11,549Appropriation tostatutory reserves———————3,291(3,291)———Fair value changes ofavailable-for-saleinvestments—————————321,538—321,538Foreign currencytranslationadjustment—————————(49,640)—(49,640)Net income————————37,472—(3,048)34,424Balance as ofDecember 31,2017260,001,48617,180317,325,36022,053——1,587,57581,237229,250570,244(6,388)2,501,151Balance as ofDecember 31,2017 (in US$)2,6413,389—244,00612,48635,23587,645(982)384,420 The accompanying notes are an integral part of these consolidated financial statements. F-5Table of Contents Phoenix New Media LimitedConsolidated Statements of Cash Flows(Amounts in thousands) For the Years Ended December 31, 2015 2016 2017 2017 RMB RMB RMB US$ Cash flows from operating activities:Net income72,38578,22034,4245,291Adjustments to reconcile net income to net cash provided by operatingactivities:Share-based compensation34,3541,89020,8523,204Provision for allowance for doubtful accounts, including related partyamounts49,32048,1996,6321,019Depreciation and amortization expense45,47341,95235,6185,474Impairment of intangible assets3,82287——Loss/(income) from equity investments, including impairments41,8611,776(6,296)(968)Deferred income tax(11,398)(18,344)(6,153)(946)Loss/(gain) on disposal of property and equipment74955(1,279)(197)Loss on disposal of intangible assets——11818Gain on disposal of an equity investment and acquisition of available-for-sale investments(4,643)———Foreign currency exchange loss/(gain)1,054(9,608)23,5603,621Changes in operating assets and liabilities:Accounts receivable(59,772)55,308(44,575)(6,848)Prepayments and other current assets(18,254)(18,531)5,508847Amounts due from related parties41,3687,878(22,988)(3,533)Other non-current assets(4,404)1,6993,503538Accounts payable24,415(31,539)5,602861Advances from customers(2,348)12,58637,3715,744Salary and welfare payable8,95516,3014,142637Taxes payable4,182(17,468)16,5622,546Amounts due to related parties(3,980)(289)(4,580)(704)Accrued expenses and other current liabilities(3,828)30,15961,9689,524Long-term liabilities1,5013,3552,991460Net cash provided by operating activities220,812203,686172,98026,588Cash flows from investing activities:Purchase of property and equipment and intangible assets(43,457)(29,282)(27,800)(4,273)Placement of term deposits and short term investments(3,288,344)(3,199,923)(2,754,930)(423,425)Maturity of term deposits and short term investments2,562,5843,189,8032,797,282429,934Investments in available-for-sale investments(352,008)———Investments in equity investments(10,643)———Loans provided to a related party—(45,865)(74,000)(11,374)Issuance of convertible loans to a related party—(228,280)——Loans repaid by a related party——53,0588,155Net cash used in investing activities*(1,131,868)(313,547)(6,390)(983)Cash flows from financing activities:Proceeds from exercise of stock options6,9442,43612,3681,901Proceeds from short-term bank loans123,589214,712328,51150,491Repayment of short-term bank loans——(357,113)(54,887)Repurchase of ordinary shares(66,417)———Capital contribution received from noncontrolling shareholders250———Net cash provided by/(used in) financing activities64,366217,148(16,234)(2,495)Effect of exchange rate changes on cash, cash equivalents and restricted cash(3,488)14,340(8,090)(1,243)Net (decrease)/increase in cash, cash equivalents and restricted cash(850,178)121,627142,26621,867Cash, cash equivalents and restricted cash at the beginning of the year*1,285,847435,669557,29685,654Cash, cash equivalents and restricted cash at the end of the year*435,669557,296699,562107,521Supplemental disclosure of cash flow information:Cash paid during the period for income taxes36,04446,39219,4242,985Cash paid during the period for interest expenses7134,97622,7623,498Supplemental disclosure of non-cash investing activities:Investments in available-for-sale investments by conversion of convertibleloans issued to a related party—143,820—— * The Group has early adopted the guidance of ASU 2016-18 issued by FASB in November 2016, which requires that amounts for restricted cash should beincluded with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.Accordingly, the item “changes in restricted cash” previously included in investing activities for the years ended December 31, 2015 and 2016 with anamount of RMB125.0 million and RMB229.6 million, respectively, was retrospectively removed from cash flows from investing activities and included inbeginning and ending cash, cash equivalents and restricted cash balances (see Note 2(af)). The accompanying notes are an integral part of these consolidated financial statements. F-6Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 1. Organization and Principal Activities Phoenix New Media Limited (“PNM”, or the “Company”) was incorporated in the Cayman Islands on November 22, 2007 by Phoenix SatelliteTelevision (B.V.I.) Holding Limited (the “Parent”), a subsidiary of Phoenix Satellite Television Holdings Ltd. (the “Phoenix TV”). Phoenix TV, itssubsidiaries and variable interest entities (“VIEs”) are collectively referred to as the Phoenix TV Group. As of December 31, 2017, the Company had fourteensubsidiaries, four VIEs and eighteen subsidiaries of VIEs. The Company, its subsidiaries, VIEs and subsidiaries of the VIEs are hereinafter collectively referredto as the “Group”. The Group generates revenues from providing advertising services and paid services, which include digital entertainment and games andothers. While the VIEs hold certain licenses and approvals to operate Internet-related businesses in the People’s Republic of China (“China” or the “PRC”),they are also in the process of applying for licenses for the operations of their businesses, including an Internet audio-visual program transmission license andan Internet news license. The details of the subsidiaries, VIEs and the subsidiaries of the VIEs as of December 31, 2017 are set out below: Percentage of Direct or Indirect Place of Date of Economic PrincipalNameIncorporation Incorporation Ownership ActivityDirect subsidiaries:Phoenix Satellite Television Information LimitedBritish Virgin Islands(“BVI”)September 1, 1999100%Investment holdingPhoenix New Media (Hong Kong) Company LimitedHong KongFebruary 24, 2011100%AdvertisingPhoenix New Media (Hong Kong) Information Technology CompanyLimitedHong KongApril 22, 2014100%Investment holdingI Game LimitedCayman IslandMay 20, 2014100%Investment holdingConvergence Investment Co. Ltd.Cayman IslandJuly 17, 2015100%Investment holdingFengyu LimitedCayman IslandNovember 14, 2017100%Investment holdingIndirect subsidiaries:Fenghuang On-line (Beijing) Information Technology Co., Ltd.(“Fenghuang On-line”)PRCDecember 20, 2005100%Technical consultingBeijing Fenghuang Yutian Software Technology Co., Ltd. (“FenghuangYutian”)PRCJune 15, 2012100%Software developmentFenghuang Feiyang (Beijing) New Media Information TechnologyCo., Ltd. (“Fenghuang Feiyang”)PRCOctober 25, 2013100%AdvertisingI Game (Hong Kong) Company LimitedHong KongJune 10, 2014100%GameBeijing Fenghuang Borui Software Technology Co., Ltd. (“FenghuangBorui”)PRCOctober 13, 2014100%Software developmentQieyiyou (Beijing) Information Technology Co., Ltd. (“Qieyiyou”)PRCNovember 28, 2014100%GameTianjin Fengying Hongda Culture Communication Co., Ltd. (“FengyingHongda”)PRCMarch 13, 2017100%AdvertisingFengyu (Hong Kong) Information Technology Company LimitedHong KongDecember 14, 2017100%Investment holdingVIEs:Beijing Tianying Jiuzhou Network Technology Co., Ltd. (“TianyingJiuzhou”)PRCApril 18, 2000100%Advertising and paid servicesYifeng Lianhe (Beijing) Technology Co., Ltd. (“Yifeng Lianhe”)PRCJune 16, 2006100%Digital entertainmentBeijing Chenhuan Technology Co., Ltd. (“Chenhuan”)PRCJune 10, 2014100%GameShanghai Meowpaw Information Technology Co., Ltd. (“Meowpaw”)PRCJanuary 14, 201575%GameSubsidiaries of VIEs:Beijing Tianying Chuangzhi Advertising Co., Ltd. (“TianyingChuangzhi”)PRCFebruary 8, 2010100%AdvertisingBeijing Fengyu Network Technology Co., Ltd. (“Fengyu Network”) *PRCJune 1, 2012100%Digital entertainmentTianjin Fenghuang Mingdao Culture Communication Co., Ltd.(“Fenghuang Mingdao”)PRCMay 24, 2013100%AdvertisingBeijing Youjiuzhou Technology Co., Ltd. (“Youjiuzhou”)PRCJune 10, 2014100%GameBeijing Huanyou Tianxia Technology Co., Ltd. (“Huanyou Tianxia”)PRCJune 16, 2014100%GameChengdu Huanyou Tianxia Network Technology Co., Ltd. (“ChengduHuanyou”)PRCJanuary 20, 2015100%GameShanghai Yixi Network Technology Co., Ltd. (“Yixi Network”)PRCMarch 26, 2015100%Software developmentBeijing Fenghuang Convergence Investment Co., Ltd. (“FenghuangConvergence”)PRCSeptember 18, 2015100%Investment holdingBeijing Fenghuang Yunfu Information Technology Co., Ltd.(“Fenghuang Yunfu “)PRCApril 12, 2016100%Software developmentBeijing Kanpanbao Technology Co., Ltd. (“Kanpanbao”)PRCApril 15, 201670%Software developmentShanghai Fengyu Shixun Technology Co., Ltd. (“Fengyu Shixun”)PRCDecember 21, 2016100%Digital entertainmentBeijing Fengyue Culture Technology Co., Ltd. (“Fengyue Culture”)PRCJanuary 19, 2017100%Digital entertainmentBeijing Fengge Advertising Co., Ltd. (“Fengge Advertising”)PRCMarch 15, 2017100%AdvertisingTianjin Fengman Culture Media Co., Ltd. (“Fengman Culture”)PRCMarch 15, 2017100%Digital entertainmentBeijing Fengying Culture Technology Co., Ltd. (“Fengying Culture”)PRCApril 20, 2017100%Software developmentTianjin Fengxiaoman Culture Media Co., Ltd. (“Fengxiaoman”)PRCSeptember 21, 2017100%Digital entertainmentFengge Data (Tianjin) Co., Ltd. (“Fengge Data”)PRCOctober 25, 2017100%Digital entertainmentTianjin Nashi Technology Co., Ltd. (“Nashi Technology”)PRCOctober 25, 2017100%Digital entertainment *In April, 2017, the name of “Beijing Fenghuang Interactive Entertainment Network Technology Co., Ltd.” was changed to “Beijing Fengyu Network Technology Co., Ltd.”. F-7Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 1. Organization and Principal Activities (Continued) In order to comply with Chinese laws and regulations that prohibit or restrict foreign ownership of companies that operate Internet content,advertising and game businesses, a series of agreements (the “Contractual Agreements”) were entered into among Fenghuang On-line, Tianying Jiuzhou,Yifeng Lianhe and their legal shareholders in 2009, and among Qieyiyou, Chenhuan, and their legal shareholders in 2015. Through the aforementionedactivities, Tianying Jiuzhou, Yifeng Lianhe and Chenhuan, are considered as VIEs in accordance with accounting principles generally accepted in the UnitedStates (“U.S. GAAP”). Fenghuang On-line and Qieyiyou are entitled to substantially all the economic risks and rewards associated with the VIEs, and are theprimary beneficiaries of the VIEs, respectively. Voting Right Entrustment Agreements Pursuant to the voting right entrustment agreements among the VIEs, their legal shareholders and Fenghuang On-line or Qieyiyou, each legalshareholder of the VIEs agreed to grant a person designated by Fenghuang On-line or Qieyiyou the right to exercise their rights as shareholders, including allvoting rights, as well as rights to attend and propose the convening of shareholder meetings. Unless otherwise required by law, the voting right entrustmentagreements will remain in effect indefinitely unless both parties agree to terminate the agreement in writing, or unless the Fenghuang On-line or Qieyiyoudecide in their discretion to terminate the relevant agreements. Exclusive Equity Option Agreements Under the exclusive equity option agreements among the VIEs, their legal shareholders and Fenghuang On-line or Qieyiyou, legal shareholders of theVIEs irrevocably granted Fenghuang On-line or Qieyiyou or their designated person an irrevocable, unconditional and exclusive option to purchase, to theextent permitted by applicable PRC laws, all of the equity interest in the VIEs from the legal shareholders. The purchase price for the entire equity interest isto be calculated based on the paid-up amount of the relevant equity interest or the minimum price permitted by applicable PRC laws. The exclusive equityoption agreement will remain in effect until all of the equity interest in the VIEs has been duly transferred to Fenghuang On-line or Qieyiyou or theirdesignated representatives. Loan Agreements Pursuant to the loan agreements among Fenghuang On-line or Qieyiyou, and legal shareholders of their VIEs, Fenghuang On-line or Qieyiyou grantedinterest-free loans to the legal shareholders of the VIEs for an amount that is equal to their respective capital contribution in the VIEs. The loans can be repaidonly with proceeds from the sale of all of the respective shareholder’s equity interest in the applicable VIE to Fenghuang On-line or Qieyiyou, or theirdesignated representatives pursuant to the applicable exclusive equity option agreement. The term of each loan is ten years, and may be extended uponmutual agreement of the parties. Equity Pledge Agreements Under the equity pledge agreement among the VIEs, their legal shareholders and Fenghuang On-line or Qieyiyou, the legal shareholders of the VIEshave pledged their equity interests in the VIEs to Fenghuang On-line or Qieyiyou to secure the performance of the obligations of the VIEs and their legalshareholders under the applicable exclusive technical licensing and services agreement, voting right entrustment agreement, exclusive equity optionagreement and loan agreement. The equity pledge agreements will remain in effect until the secured obligations have been fully performed by the VIEs orreleased by Fenghuang On-line or Qieyiyou. F-8Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 1. Organization and Principal Activities (Continued) Exclusive Technical Licensing and Service Agreements Under the exclusive technical licensing and service agreements between Fenghuang On-line or Qieyiyou and each of the VIEs, Fenghuang On-line orQieyiyou has the exclusive right to provide technical and consulting services to their respective VIEs. The VIEs have agreed to pay a service fee toFenghuang On-line or Qieyiyou equal to a certain percentage of their respective annual revenues plus a special service fee for certain services rendered byFenghuang On-line or Qieyiyou at the request of the VIEs. The technical service agreements also transfer all of the economic benefit of intellectual propertycreated by the VIEs to Fenghuang On-line or Qieyiyou. Each exclusive technical services agreement will remain in effect indefinitely and can be terminatedonly by Fenghuang On-line or Qieyiyou unless otherwise required by law. The Group has evaluated the relationship among the Company, Fenghuang On-line or Qieyiyou and the VIEs in accordance with U.S. GAAP.Pursuant to the voting right entrustment agreements, the Company has obtained power, as granted to the legal shareholders by the applicable PRC law andunder the articles of association of the VIEs, to direct all significant activities of the VIEs, which include but are not limited to budgeting, financing, andmaking other strategic and operational decisions, and will significantly impact the VIEs’ economic performance. Pursuant to the exclusive technicallicensing and service agreements and other agreements, the Company has the right to receive benefits of the VIEs in the form of technical service fees, whichcould potentially be significant to the VIEs’ net income. In addition, the Company has the right to receive all the residual assets of the VIEs through exerciseof the exclusive equity option agreements. As a result, the Company, through Fenghuang On-line and Qieyiyou, is considered the primary beneficiary of theVIEs and therefore includes the VIEs’ assets, liabilities and operating results in its consolidated financial statements. In January 2015, in order to leverage the Group’s brand, content platform and large user base to expand into more entertainment related businesses,the Group established a new subsidiary Meowpaw with share capital of RMB1.0 million. Meowpaw is engaged in creating intellectual properties, relatedgames, books, movies and animations, etc. The Group held 75% of the shares, and the noncontrolling shareholder, who was an individual, held the rest of25%. Meowpaw’s share capital was not sufficient to support its operations. In addition to the capital injection, as of December 31, 2017, the Group hasprovided a long-term financing of RMB79.0 million (US$12.1 million) to support its operations. In accordance with ASC810-10, Variable Interest Entities,Meowpaw is thinly capitalized and consolidated as a variable interest entity. Meowpaw may not pay any dividend to shareholders until the accumulatedretained earnings are over RMB35.0 million. As the Group owns 75% equity interest of Meowpaw, it can absorb a majority of Meowpaw’s expected loss,owns the power to direct Meowpaw’s activities and most significantly impacted Meowpaw’s economic performance, therefore, the Group is the primarybeneficiary of Meowpaw and consolidated Meowpaw under VIE model. The Company has the power to direct the activities of all the VIEs, including the VIEs aforementioned in the Contractual Agreements and Meowpaw,and can freely have assets transferred out of all the VIEs without any restrictions. Only the registered capital and PRC statutory reserves of the consolidatedVIEs amounted to RMB29.7 million (US$4.6 million) as of December 31, 2017 can be used to solely settle obligations of the VIEs and subsidiaries of theVIEs. As all the VIEs and subsidiaries of the VIEs are incorporated as limited liability companies under the PRC Company Law, the creditors of the VIEs andsubsidiaries of the VIEs do not have recourse to the general credit of the Company. The amounts of the consolidated VIEs’ current liabilities without recourseto the Company disclosed on the face of the consolidated balance sheets have excluded the amounts due to inter-company entities. F-9Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 1. Organization and Principal Activities (Continued) The following tables set forth the summarized assets, liabilities, results of operations and cash flows of the consolidated VIEs (in thousands): As of December 31,2016 2017 2017RMB RMB US$Current assets965,552921,891141,692Non-current assets72,37971,43410,979Total assets1,037,931993,325152,671Short-term bank loans2,000——Accounts payable216,978153,09423,530Amounts due to related parties1,4476,255961Amounts due to inter-company entities386,969461,81970,980Advances from customers18,42028,4334,370Taxes payable51,85049,3907,591Salary and welfare payable60,01038,0295,845Accrued expenses and other current liabilities87,26451,0717,849Current liabilities824,938788,091121,126Non-current liabilities20,97920,9793,224Total liabilities845,917809,070124,350 For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Revenues1,504,3701,140,954769,943118,338Net income/(loss)22,329(30,641)(7,760)(1,193) For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Net cash (used in)/provided by operating activities(91,907)34,079(3,950)(607)Net cash (used in)/provided by investing activities(197,307)(124,610)65,60010,082Net cash provided by/(used in) financing activities2502,000(2,000)(307) As of December 31, 2017, the total assets for the consolidated VIEs mainly comprised of cash and cash equivalents, term deposits and short terminvestments, accounts receivable, prepayments and other current assets, amounts due from related parties and property and equipment. There was no pledgeor collateralization of these assets. Unrecognized revenue-producing assets that are held by the VIEs and subsidiaries of the VIEs comprise the InternetContent Provision License, the Online Culture Operating Permit, the Internet Publication License, the Permit for Production and Operation of Radio and TVPrograms, the Value-added Telecommunications Business Operating License, trademark, and domain name. Recognized revenue-producing assets that areheld by the VIEs and subsidiaries of the VIEs comprise property and equipment and operating rights for licensed games. As of December 31, 2017, the totalliabilities for the consolidated VIEs mainly comprised short-term bank loans, accounts payable, amounts due to related parties, amounts due to inter-company entities, advances from customers, salary and welfare payable, taxes payable, accrued expenses and other current liabilities and non-currentliabilities. After netting off the amount of inter-company transactions between the consolidated VIEs and other subsidiaries within the Group, the net fee paidor payable to other subsidiaries of the Group by the consolidated VIEs were RMB242.4 million, RMB54.8 million and RMB13.7 million (US$2.1 million)for the years ended December 31, 2015, 2016 and 2017, respectively. The balances and transactions of the consolidated VIEs were reflected in theCompany’s consolidated financial statements with inter-company transactions eliminated. F-10Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 1. Organization and Principal Activities (Continued) It is possible that the Group’s operation of certain of its operations and businesses through VIEs could be found by PRC authorities to be in violationof PRC law and regulations prohibiting or restricting foreign ownership of companies that engage in such operations and businesses. While the Group’smanagement considers the possibility of such a finding by PRC regulatory authorities under current law and regulations to be remote, on January 19, 2015,the Ministry of Commerce of the PRC, or (the “MOFCOM”) released on its Website for public comment a proposed PRC law (the “Draft FIE Law”) thatappears to include VIEs within the scope of entities that could be considered to be foreign invested enterprises (or “FIEs”) that would be subject torestrictions under existing PRC law on foreign investment in certain categories of industry. Specifically, the Draft FIE Law introduces the concept of “actualcontrol” for determining whether an entity is considered to be an FIE. In addition to control through direct or indirect ownership or equity, the Draft FIE Lawincludes control through Contractual Arrangements within the definition of “actual control”. If the Draft FIE Law is passed by the People’s Congress of thePRC and goes into effect in its current form, these provisions regarding control through Contractual Arrangements could be construed to reach the Group’sVIE arrangements, and as a result the Group’s VIEs could become explicitly subject to the current restrictions on foreign investment in certain categories ofindustry. The Draft FIE Law includes provisions that would exempt from the definition of foreign invested enterprises entities where the ultimate controllingshareholders are either entities organized under PRC law or individuals who are PRC citizens. The Draft FIE Law does not make clear how “control” would bedetermined for such purpose, and is silent as to what type of enforcement action might be taken against existing VIEs that operate in restricted industries andare not controlled by entities organized under PRC law or individuals who are PRC citizens. If a finding were made by PRC authorities, under existing lawand regulations or under the Draft FIE Law if it becomes effective, that the Group’s operation of certain of its operations and businesses through VIEs,regulatory authorities with jurisdiction over the licensing and operation of such operations and businesses would have broad discretion in dealing with sucha violation, including levying fines, confiscating the Group’s income, revoking the business or operating licenses of the affected businesses, requiring theGroup to restructure its ownership structure or operations, or requiring the Group to discontinue all or any portion of its operations. Any of these actionscould cause significant disruption to the Group’s business operations, and have a severe adverse impact on the Group’s cash flows, financial position andoperating performance. 2. Principal Accounting Policies (a) Basis of presentation, principles of consolidation, recognition of noncontrolling interests and cost allocations The consolidated financial statements include the financial statements of the Company, its subsidiaries, its VIEs and the subsidiaries of the VIEs. Theconsolidated financial statements have been prepared in accordance with U.S. GAAP and on a going concern basis. All significant transactions and balancesamong the Company, its subsidiaries, its VIEs and the subsidiaries of the VIEs have been eliminated upon consolidation. The Company consolidates theVIEs as required by Accounting Standards Codification (“ASC”) 810 Consolidation , because Fenghuang On-line and Qieyiyou hold all the variableinterests of the VIEs and have been determined to be the primary beneficiaries of the VIEs (see Note 1). The Group and Phoenix TV Group have engaged in various mutual cooperation activities in content, branding, promotions, technical support andcorporate management. The Group entered into a cooperation agreement (“Agreement”) with Phoenix TV which stipulates the costs and expenses charged tothe Group related to content and other services provided by Phoenix TV Group. Based on the Agreement, the Group paid to Phoenix TV Group 50% of theafter-tax revenues earned from sublicensing Phoenix TV Group’s video content to third parties, plus a fixed amount of payment to cover other servicesprovided by Phoenix TV Group. The fixed amount was RMB1.6 million for the first year of the Agreement, and increased by 25% annually. The Agreementwas effective as of January 1, 2010 and expired on May 27, 2016. The Group and Phoenix TV Group entered into a new set of agreements (“NewAgreements”), effective as of May 27, 2016 and will expire on May 26, 2019, to amend and replace the previous Agreement and provide the terms ofcontinued cooperation. The fees payable to Phoenix TV Group by the Group are RMB10.0 million for the first year of the New Agreements, which willincrementally increase by 15% for each subsequent year of the New Agreements. Unlike the Agreement, the New Agreements do not grant the Group the rightto sublicense Phoenix TV Group’s copyrighted content to third parties. As such, the Group does not incur such revenue sharing fee to Phoenix TV Groupaccordingly. The Group and Phoenix TV Group entered into new trademark license agreements in December 2017, which became effective on December 8,2017 and will expire on December 7, 2020. These agreements no longer allow the Group to use the double-phoenix logo of Phoenix TV Group on a stand-alone basis and have increased the annual license fee payable to Phoenix TV Group from a total of US$10,000 to the greater of 2% of the annual revenues ofTianying Jiuzhou and Yifeng Lianhe or US$100,000 for each company. Apart from the above cooperation agreements, Phoenix TV Group also paid certain expenses on behalf of the Group, such as data line usage and othergeneral and administrative expenses, which the Group needed to settle with Phoenix TV Group based on the actual amount, and were recorded in theconsolidated statements of comprehensive income. F-11Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (b) Use of estimates The preparation of the Group’s consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from such estimates. These estimatesand assumptions include, but are not limited to, the accounting for advertising and paid services revenues, the determination of estimated selling prices ofmultiple elements revenues contract, accounting for income taxes and uncertain tax positions, allowance for doubtful accounts, share-based compensation,consolidation, foreign currency translation, determination of the estimated useful lives of property and equipment and intangible assets, assessment ofimpairment of long-lived assets and equity investments, and determination of the fair value of financial instruments. (c) Foreign currency translation The Group uses Renminbi (“RMB”) as its reporting currency. The Company’s operations in the PRC and in international regions use their respectivecurrencies as their functional currencies. In the consolidated financial statements, the financial information of the Company and its subsidiaries, which useUS$ or HK$ as their functional currency, have been translated into RMB at the exchange rates quoted by the People’s Bank of China (the “PBOC”). Assetsand liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues,expenses, gains, and losses are translated using the average rate for the period. Translation adjustments arising from these are reported as foreign currencytranslation adjustments and have been shown as a component of other comprehensive loss or income in the consolidated statements of shareholders’ equityand the consolidated statements of comprehensive income. Foreign currency transactions denominated in currencies other than functional currency are translated into the functional currency using theexchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date areremeasured at the applicable rates of exchange in effect at that date. Foreign currency exchange gain or loss resulting from the settlement of such transactionsand from remeasurement at period-end is recognized in foreign currency exchange gain or loss in the consolidated statements of comprehensive income. (d) Convenience translation Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.5063 onDecember 29, 2017 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could havebeen, or could be, converted into US$ at such rate. F-12Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (e) Fair value of financial instruments U.S. GAAP establishes a three-tier hierarchy to prioritize the inputs used in the valuation methodologies in measuring the fair value of financialinstruments. This hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fairvalue. The three-tier fair value hierarchy is: Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2— Include other inputs that are directly or indirectly observable in the marketplace Level 3— Unobservable inputs which are supported by little or no market activity U.S. GAAP describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) costapproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets orliabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on thevalue indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required toreplace an asset. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are notavailable, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced marketparameters, such as interest rates and currency rates. All financial assets and liabilities are recognized or disclosed at fair value in the consolidated financialstatements on a recurring basis. The Group’s financial instruments include cash equivalents, term deposits, short term investments, restricted cash, accounts receivable, amounts duefrom related parties, prepayments and other current assets, convertible loans due from a related party, available-for-sale investments, accounts payable,amounts due to related parties, salary and welfare payable, accrued expense, short-term bank loans and other current liabilities and other non-current assets.Refer to Note 19 for details. (f) Cash and cash equivalents Cash and cash equivalents represent cash on hand, demand deposits, time deposits and highly liquid investments placed with banks or other financialinstitutions, which are unrestricted to withdrawal or use, and which have original maturities of three months or less. (g) Term deposits, short term investments Term deposits represent term deposits placed with banks with original maturities of more than three months and up to one year. Short term investments represent investments in financial instruments with a variable interest rate indexed to performance of underlying assets andinvestments that the Group has positive intent and ability to hold to maturity, all of which are with original maturity of less than 12 months. In accordance with ASC 825, for investments in financial instruments with a variable interest rate indexed to performance of underlying assets, theGroup elected the fair value method at the date of initial recognition and carried these investments at fair value. Fair value is estimated based on quotedprices of similar products provided by banks at the end of each period. The Group classifies the valuation techniques that use these inputs as Level 2 of fairvalue measurements. Please see Note 19 for additional information. (h) Restricted cash Restricted cash represents deposits placed as guarantee of banking facility which are restricted to withdrawal or usage. (i) Accounts receivable, net The carrying value of accounts receivable is reduced by an allowance that reflects the Group’s best estimate of the amounts that will not be collected.Many factors are considered in estimating the general allowance, including but not limited to reviewing accounts receivable balances, historical bad debtrates, aging analysis, customer credit worthiness and industry trend analysis. The Group also makes the specific allowance if there is evidence showing thatthe receivable is unlikely to be collected. Accounts receivable balances are written off against the allowance when they are determined to be uncollectible.Refer to Note 4 for details. F-13Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (j) Convertible loans due from a related party Convertible loans due from a related party represent short-term loans advanced to a related party of which the Group may at its option convert all or aportion into preferred shares. The Group has determined that the convertible loans are not within the scope ASC 320 Investment — debt and equity securitiesand it is accounted for under ASC 310 Receivables. The conversion features were considered as embedded derivatives that do not meet the criteria to bebifurcated under ASC 815-15-25-1 and were accounted for in a similar method as for the short-term loans advanced to a related party. The Group accounts forthe convertible loans due from a related party at an amortized cost basis after deduction of any other-than-temporary impairment loss and reviews forimpairment on a regular basis. (k) Property and equipment, net Property and equipment are stated at cost less accumulated depreciation and impairment. Property and equipment are depreciated over the followingestimated useful lives on a straight-line basis: Estimated Useful LivesComputers3 yearsEquipment, furniture and motor vehicles5 yearsLeasehold improvementsLesser of lease terms or the estimated useful lives of the assets Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property and equipment is the differencebetween the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of comprehensive income. (l) Intangible assets, net Intangible assets mainly consist of computer software purchased from unrelated third parties, operating rights for licensed games and an Internetdomain name. Intangible assets are stated at cost less impairment and accumulated amortization, which is computed using the straight-line method over theestimated useful lives of the assets. The estimated useful lives are 5 years for computer software, 10 years for Internet domain names, and the estimated lifecycle for licensed games. (m) Available-for-sale investments In accordance with ASC topic 320 Investments-Debt and Equity Securities, the Group classifies the investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, The securities that the Group has positive intent and ability to hold to maturity are classified as held-to-maturity securities. The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities.Investments not classified as trading or as held-to-maturity are classified as available-for-sale investments. Available-for-sale investments are reported at fairvalue, which is estimated by management after considering an independent appraisal performed by a reputable appraisal firm, with unrealized gains andlosses, if any, recorded in the accumulated other comprehensive loss or income in shareholder’s equity. Realized gains and losses are reflected in earningsduring the year in which the gains and losses are realized. An impairment loss on the available-for-sale investments would be recognized in the consolidatedstatements of comprehensive income when the decline in value is determined to be other-than-temporary. Investments with maturities of greater than 12months are recorded in non-current assets. (n) Equity investments Investments in entities in which the Group can exercise significant influence but does not own a majority equity interest or control are accounted forusing the equity method of accounting in accordance with ASC topic 323 Investments-Equity Method and Joint Ventures. The Group adjusts the carryingamount of equity method investment for its share of the income or losses of the investee and reports the recognized income or losses in the consolidatedstatements of comprehensive income. The Group’s share of the income or losses of an investee are based on the shares of common stock and in-substancecommon stock held by the Group. Investments in entities in which the Group does not have significant influence and which does not have readily determinable fair value are accountedfor using the cost method of accounting in accordance with ASC subtopic 325-20 Investments-Other-Cost Method Investments. An impairment loss on the equity investments is recognized in the consolidated statements of comprehensive income when the decline in value isdetermined to be other-than-temporary. F-14Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (o) Impairment of long-lived assets Long-lived assets such as property and equipment and intangible assets are reviewed for impairment whenever events or changes in the circumstancesindicate that the carrying value of an asset may not be recoverable. When these events occur, the Group assesses the recoverability of the long-lived assets bycomparing the carrying amount to the estimated future undiscounted cash flows associated from the use of the asset and its eventual disposition, andrecognize an impairment of long-lived assets when the carrying value of such assets exceeds the estimated future undiscounted cash flows such assets isexpected to generate. If the Group identifies an impairment, the Group reduces the carrying amount of the assets group to its estimated fair value based on adiscounted cash flow approach or, when available and appropriate, to comparable market values. (p) Revenue recognition Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, service is performed and thecollectability of the related fee is reasonably assured. In October 2009, the Financial Accounting Standards Board (the ‘‘FASB’’) issued AccountingStandards Update (“ASU”) 2009-13, Multiple Deliverable Revenue Arrangements, to address the accounting for multiple-deliverable arrangements. TheGroup has applied ASU 2009-13 to all revenue arrangements for all years presented in the financial statements. (i) Net advertising revenues Advertising revenues are derived principally from advertising arrangements where the advertisers pay to place their advertisements on the Group’sifeng.com, mobile Internet website i.ifeng.com and its mobile applications in different formats over a particular period of time. Such formats generallyinclude but are not limited to banners, news feed, text-links, videos, logos, buttons and rich media. The majority of the Group’s advertising revenue arrangements involve multiple element deliverables, including placements of differentadvertisement formats on the Group’s PC websites, mobile applications and mobile websites over different periods of time. The Group breaks down themultiple element arrangements into single units of accounting when possible, and allocates total consideration to each single unit of accounting using therelative selling price method. For most deliverables in its multiple element arrangements, the Group uses management’s best estimate of the selling price inthe allocation as the vendor-specific objective evidence or third-party evidence of selling price is not available for those deliverables. The best estimate ofthe selling price is determined based on the publicly published advertising rate card, times the relevant discount rates, which are taking into considerations ofthe historical trend, the pricing of advertising areas sold with similar popularities, advertisements with similar formats and quoted prices from competitors,and other relevant market conditions. The Group recognizes revenue on the elements delivered and defers the recognition of revenue for the estimated valueof the undelivered elements until the remaining obligations have been satisfied. When all of the elements within an arrangement are delivered uniformly overthe agreement period, the revenues are recognized on a straight-line basis over the contract period. Currently the advertising business has three main types of pricing models, consisting of the Fixed Price model, the Cost Per Impression (“CPM”)model, and the Cost Per Click (“CPC”) model. Fixed Price model Under the Fixed Price model, advertisements on the Group’s PC websites, mobile applications and mobile websites are generally charged on the basisof duration, and advertising contractual arrangements are entered to establish the fixed price and the advertising services to be provided. Where collectabilityis reasonably assured, advertising revenues from advertising contractual arrangements are recognized ratably over the contract period of display. CPM model The CPM model refers to advertising bought on the basis of impression. This is in contrast to the various types of pay-for-performance advertising,whereby payment is only triggered by a mutually agreed upon activity (i.e. click-through, lead, sale). F-15Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (p) Revenue recognition (continued) (i) Net advertising revenues (continued) CPC model Under the CPC model, there is no overall fixed price for advertising services stated in the contract with the advertiser. The Group charges advertiserson a per-click basis when the users click on the advertisements. The unit price for each click is auction-based. The revenue is recognized based on qualifiedclicks and the corresponding unit price. Agency service fees to third-party advertising agencies The Group provides cash incentives in the form of agency service fees to certain third-party advertising agencies based on sales performance, andaccounts for such incentives as a reduction item of revenues in accordance with ASC 605-50-25, Customer Payments and Incentives: Recognition. The Grouphas estimated and recorded RMB161.6 million, RMB169.6 million and RMB223.3 million (US$34.3 million) in agency service fees to third-partyadvertising agencies for the years ended December 31, 2015, 2016 and 2017, respectively. Barter transactions The Group enters into barter transactions involving advertising services and follows ASC 605-20, Revenue Recognition: Services. Revenues orexpenses from barter transactions are recognized at fair value during the period in which the advertisements are provided only if the fair value of theadvertising services surrendered in the transaction is determinable based on the entity’s own historical practice of receiving cash and cash equivalents,marketable securities, or other consideration that is readily convertible to a known amount of cash for similar advertising from buyers unrelated to thecounterparty in the barter transaction. The Group did not recognize revenue and expenses for advertising-for-advertising barter transactions since the fairvalue of the advertising services surrendered or received in the transaction is not determinable for the years ended December 31, 2015, 2016 and 2017.Except for advertising-for-advertising barter transactions, the Group recognized revenue from barter transactions involving exchanging advertising servicesfor content, technical, application pre-installation services and others amounted to RMB1.4 million, RMB2.8 million and RMB4.4 million (US$0.7 million)for the years ended December 31, 2015, 2016 and 2017, respectively. (ii) Paid services revenues The Group offers a wide variety of paid services primarily through mobile channel and operations with the telecom operators. Prior to 2016, theGroup’s paid service revenues mainly comprised of the revenues generated from (a) mobile value-added services through telecom operators’ platforms(“MVAS”) and (b) games and others. Digital reading was previously classified under “games and others”. In order to align with the Group’s overall strategies,in 2016, digital reading was re-classified from “Games and others”, and digital reading together with MVAS was determined as “Digital entertainment”. As such, effective in 2016, paid services revenues now 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 throughthe Group’s own platforms. F-16Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (p) Revenue recognition (continued) (ii) Paid services revenues (continued) Digital entertainment Digital Entertainment revenues mainly comprised revenues generated from MVAS and digital reading. MVAS MVAS revenues are derived from providing mobile phone users with mobile newspaper services, mobile game services delivered through the telecomoperators’ platforms, mobile video services, wireless value-added services (“WVAS”) through telecom operators’ platforms. WVAS include short messagingservices (“SMS”), multi-media messaging services (“MMS”), music services such as ring-back tone (“RBT”), interactive voice response (“IVR”) andanimation services. Revenues from MVAS are charged on a monthly or per-usage basis, and are recognized in the period in which the service is performed,provided that no significant obligation remains, collection of the receivables is reasonably assured and the amounts can be accurately estimated. The Group contracts with China Mobile Communication Corporation and its subsidiaries (“CMCC”), and to a lesser degree, with other mobileoperators, for billing, collection and transmission services related to the MVAS offered to its users. The determination of whether to record these revenuesusing the gross or net method is based on an assessment of various factors; the primary factors are whether the Group is acting as the principal in offeringservices to the customer or as an agent in the transaction, and the specific requirement of each contract. CMCC is a related party of the Group (see Note 23). Most revenues from mobile newspaper services, mobile video services and most WVAS are recorded on a net basis as the Group is acting as an agentof operators in these transactions. For most mobile game services delivered through telecom operators, the Group is responsible for providing desired servicesto the customers and has primary responsibility and broad discretion to establish price, therefore the Group is considered the primary obligor in thesetransactions, and revenues from these services are recorded on a gross basis. Due to the time lag between when the services are rendered and when the operators’ billing statements are received, most MVAS revenues areestimated based on the Group’s internal billing records and transmissions for the month, adjusting for prior periods’ confirmation rates with operators andprior periods’ discrepancies between internally estimated revenues and actual revenues confirmed by operators. There was no significant difference betweenthe Group’s estimates and the operators’ billing statements for all the years presented. The Group also contracts with CMCC to provide news content and other services to CMCC. News content and other services are charged for fixedfees respectively. The revenues attributable to the news content are recognized on a straight-line basis over the periods in which the news content is provided.Revenues attributable to other services are recognized when the services are delivered. F-17Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (p) Revenue recognition (continued) (ii) Paid services revenues (continued) Digital reading Digital reading revenues are derived from providing fee-based internet literatures from writers and digital format books licensed from third-partypublishers to customers on both of the Group’s PC and mobile platforms. Most revenues generated from digital reading are recorded on a gross basis andrecognized evenly over the subscription period, or in the period in which a pay-per-view service is provided, as the Group is responsible for providing thedesired services to the customers and has primary responsibility and broad discretion to establish price, therefore the Group is considered the primary obligorin these transactions. Games and others Games and others include web-based games, mobile games, content sales, and other online and mobile paid services through the Group’s ownplatforms. Revenues from these services are recognized over the periods in which the services are performed, provided that no significant obligations remain,collection of the receivables is reasonably assured and the amounts can be accurately estimated. For web-based game services, all of the web-based games provided on the Group’s platforms are developed by third-party game developers and can beaccessed and played by game players without downloading separate software. The Group primarily views the game developers to be its customers andconsiders its responsibility under its agreements with the game developers to be promotion of the game developers’ games. The Group collects paymentsfrom game players in connection with the sale of in-game virtual currencies and remits certain agreed-upon percentages of the proceeds to the gamedevelopers. Revenue from the sale of in-game virtual currency is recorded net of remittances to game developers and deferred until the estimatedconsumption date of the virtual items, which is within a short period of time, typically a few days, after purchase of the in-game virtual currency. The Group also provides video programming through its online subscription and pay-per-view services to the customers. Revenues from theseservices, which are recorded on a gross basis, are recognized evenly over the subscription period, or in the period in which a pay-per-view service is provided. The Group generates revenues from video content sales agreements for television programming mainly produced by Phoenix TV Group and contentpurchased from third parties. The video content sales agreements the Group enters into involve the transfer of non-exclusive broadcasting rights to otherthird-party websites or other Internet and mobile media companies for a definitive license period. In accordance with ASC 926-605, Entertainment-Films,Revenue Recognition, the Group recognizes revenues in respect of its video content sales arrangements when the following criteria are met: persuasiveevidence of a video content sales arrangement with a customer exists, the content has been delivered or is available for immediate and unconditionaldelivery, the sublicense period of the arrangement has begun and the customer can begin its exhibition, the arrangement fee is fixed or determinable, andcollection of the arrangement fee is reasonably assured. F-18Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (q) Cost of revenues The Group’s cost of revenues consists primarily of (i) revenue sharing fees, including service fees retained by mobile telecommunications operatorswhich are recognized as cost of revenues for revenues recorded on gross basis and revenue sharing fees paid to the Group’s channel and content partners,(ii) content and operational costs, including personnel-related cost associated with content production and certain advertisement sales support personnel,content procurement costs to third-party professional media companies and to Phoenix TV Group, direct costs related to in-house content production,channel testing costs, rental cost, depreciation and amortization and other miscellaneous costs, (iii) bandwidth costs, and (iv) sales taxes and surcharges,including value-added tax (“VAT”) and other surcharges. On May 1, 2016, the transition from the imposition of Business Tax to the imposition of VAT was expanded to all industries in China, and all ofGroup’s revenues have been subject to VAT since that date. The Group is also subject to a cultural development fee on the provision of advertising servicesin the PRC and the applicable tax rate is 3% of the net advertising revenues. The sales taxes and surcharges in cost of revenues for the years ended December 31, 2015, 2016 and 2017 were RMB122.5 million, RMB119.8million and RMB133.2 million (US$20.5 million), respectively. (r) Sales and marketing expenses Sales and marketing expenses comprise primarily of: (i) personnel-related expenses including sales commissions related to the sales and marketingpersonnel; (ii) advertising and promotion expenses including traffic acquisition expenses; and (iii) rental expense, depreciation and amortization expenses.The Group expenses advertising costs as incurred. Total advertising and promotion expenses including traffic acquisition expenses were RMB117.9 million,RMB160.1 million and RMB329.7 million (US$50.7 million), for the years ended December 31, 2015, 2016 and 2017, respectively. (s) Technology and product development expenses Technology and product development expenses mainly consist of: (i) personnel-related expenses associated with the development of, enhancementto, and maintenance of the Group’s PC websites, mobile applications and mobile websites; (ii) expenses associated with new technology and productdevelopment and enhancement; and (iii) rental expense and depreciation of servers. The Group expenses technology and product development expenses asincurred for all the years presented. (t) Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Payments madeunder operating leases are charged to the consolidated statements of comprehensive income on a straight-line basis over the lease term. The Group normalizesrental expense on operating leases that involve rent concessions. F-19Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (u) Share-based compensation The Company has incentive plans for the granting of share-based awards, including share options, restricted shares and restricted share units. TheCompany measures the cost of employee services received in exchange for share-based compensation at the grant date fair value of the award. The Companyrecognizes the share-based compensation as costs or expenses in the consolidated statements of comprehensive income, net of estimated forfeitures, on agraded-vesting basis over the vesting term of the awards. The share-based awards to nonemployees are accounted for based on the fair value of the consideration received or the fair value of the award issued,whichever is more reliably measurable. Share-based compensation expense for share options granted to non-employees is measured at fair value at the earlierof the performance commitment date or the date service is completed and recognized over the period during which the service is provided. The Companyapplies the guidance in ASC 505-50 to re-measure share options granted to non-employees based on the then-current fair value at each reporting date untilthe service has been provided and the performance targets have been met. Cancellation of an award accompanied by the grant of a replacement award is accounted for as a modification of the terms of the cancelled award(“modification awards”). The compensation costs associated with the modification awards are recognized if either the original vesting condition or the newvesting condition has been achieved. Such compensation costs cannot be less than the grant-date fair value of the original award. The incrementalcompensation cost is measured as the excess of the fair value of the replacement award over the fair value of the cancelled award at the cancellation date.Therefore, in relation to the modification awards, the Company recognizes share-based compensation over the vesting periods of the new awards, whichcomprises (i) the amortization of the incremental portion of share-based compensation over the remaining vesting term and (ii) any unrecognizedcompensation cost of original award, using either the original term or the new term, whichever is higher for each reporting period. The Company adopts the Black-Scholes option pricing model to determine the fair value of share options, and determines the fair value of restrictedshare and restricted share units based on the fair value of the underlying ordinary shares at the grant date considering the dilutive effect of restricted share andrestricted share units. Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. TheGroup uses historical data to estimate pre-vesting option and restricted share unit forfeitures and record share-based compensation only for those awards thatare expected to vest. Refer to Note 17 for further information regarding share-based compensation assumptions and expenses. (v) Income taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are notassessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are providedusing an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applyingenacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets andliabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose. The effect on deferred taxes of a change in taxrates is recognized in the consolidated statements of comprehensive income in the period of change. A valuation allowance is provided to reduce the amountof deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized. Uncertain tax positions In order to assess uncertain tax positions, the Group applies a more likely than not threshold and a two-step approach for the tax positionmeasurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining ifthe weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals orlitigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.The Group did not have significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognizedtax benefit as of and for the years ended December 31, 2015, 2016 and 2017. Refer to Note 15 for details of the Group’s tax positions. (w) Employee social security and welfare benefits The Company’s subsidiaries and consolidated VIEs in the PRC participate in a government-mandated multi-employer defined contribution planpursuant to which certain retirement, medical and other welfare benefits are provided to employees. The relevant labor regulations require the Company’ssubsidiaries and consolidated VIEs in the PRC to pay the local labor and social welfare authorities monthly contributions at a stated contribution rate basedon the monthly basic compensation of qualified employees. The relevant local labor and social welfare authorities are responsible for meeting all retirementbenefits obligations and the Company’s subsidiaries and consolidated VIEs in the PRC have no further commitments beyond their monthly contributions.The contributions to the plan are expensed as incurred. Employee social security and welfare benefits included as cost and expenses in the consolidatedstatements of comprehensive income were RMB75.6 million, RMB72.6 million and RMB79.4 million (US$12.2 million) for the years ended December 31,2015, 2016 and 2017, respectively. F-20Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (x) Other income — Others, net Other income —Others, net mainly represent government subsidies which primarily consist of financial subsidies received from provincial and localgovernments for operating a business in their jurisdictions. Such income has been recognized when the grants are received and no further conditions need tobe met. (y) Statutory reserves In accordance with the laws applicable to China’s Foreign Investment Enterprises, those of the Company’s China-based subsidiaries that areconsidered under PRC law to be a wholly foreign-owned enterprise are required to make appropriations from their after-tax profit (as determined under theAccounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”)) to non-distributable reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to thegeneral reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the generalreserve fund has reached 50% of the registered capital of the respective company. Appropriations to the other two reserve funds are at the respectivecompanies’ discretion. In accordance with the China Company Laws, those China-based subsidiaries of the Company that are considered under PRC law to be domesticallyfunded enterprises, as well as the Company’s VIEs are required to make appropriations from their after-tax profit (as determined under PRC GAAP) to non-distributable reserve funds including (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be atleast 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of theregistered capital of the respective company. Appropriation to the discretionary surplus fund is at the discretion of the respective company. General reserve fund and statutory surplus fund are restricted for set off against losses, expansion of production and operation or increase in theregistered capital of the respective company. The Group has made appropriations of RMB4.3 million, RMB7.6 million and RMB3.3 million (US$0.5 million)to these funds for the years ended December 31, 2015, 2016 and 2017, respectively. (z) Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence overthe other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significantinfluence, such as a family member or relative, shareholders, or a related corporation. (aa) Dividends Dividends are recognized when declared. No dividends were declared for the years ended December 31, 2015, 2016 and 2017, respectively. TheGroup does not have any present plan to pay dividends in the foreseeable future. The Group currently intends to retain the available funds and futureearnings to operate and expand its business. F-21Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (ab) Net income per share The Group computes net income per Class A and Class B ordinary share in accordance with ASC 260-10, Earnings Per Share: Overall, using the twoclass method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their participatingrights. Net losses are not allocated to other participating securities if based on their contractual terms they are not obligated to share in the losses. The liquidation and dividend rights of the holders of the Company’s Class A and Class B ordinary shares are identical, except with respect to voting.As the liquidation and dividend rights are identical, the net incomes are allocated on a proportionate basis. Basic net income per share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinaryshares and contingently issuable shares outstanding during the period except that it does not include unvested restricted shares or repurchased ordinaryshares subject to cancellation. Diluted net income per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effect of dilutive potentialordinary shares, if any, by the weighted average number of ordinary shares outstanding and dilutive potential ordinary shares during the period. Potentialordinary shares are excluded in the denominator of the diluted net income per share calculation if their effects would be anti-dilutive. (ac) Treasury stock The Company accounted for those shares repurchased as treasury stock at cost in accordance with ASC 505-30, Treasury Stock, and is shownseparately in the shareholders’ equity if the Company has not yet decided on the ultimate disposition of those shares acquired. When the Company decides tocancel the treasury stock, the difference between the original issuance price and the repurchase price is debited into additional paid-in capital. Refer to Note21 for details. (ad) Comprehensive income Comprehensive income is defined as the change in equity of the Group during a period arising from transactions and other events and circumstancesexcluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income is reported in the consolidatedstatements of comprehensive income. Accumulated other comprehensive loss or income, as presented on the Group’s consolidated balance sheets, includesthe foreign currency translation adjustment and fair value remeasurement for available-for-sale investments. (ae) Segment reporting The Group’s segments are business units that offer different services and are reviewed separately by the chief operating decision maker (the “CODM”)in deciding how to allocate resources and in assessing performance. The Group’s CODM has been identified as the Chief Executive Officer. As the Group’slong-lived assets and revenues are substantially located in and derived from the PRC, no geographical segments are presented. The Group’s organizational structure is based on a number of factors that the CODM uses to evaluate, view and run the Group’s business operations,which include, but are not limited to, customer base, homogeneity of products and technology. The Group’s operating segments are based on itsorganizational structure and information reviewed by the Group’s CODM to evaluate the operating segment results. F-22Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (af) Recent accounting pronouncements Revenue from Contracts with Customers. In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contractswith Customers (Topic 606). This guidance supersedes current guidance on revenue recognition in Topic 605: Revenue Recognition. The new revenuestandard is effective beginning on January 1, 2018, and early adoption is permitted. The guidance permits two methods of adoption: retrospectively to eachprior reporting period presented (full retrospective approach), or retrospectively with the cumulative effect of initially applying the guidance recognized atthe date of initial application (the modified retrospective approach). The Group will adopt the new standard effective January 1, 2018, using the modifiedretrospective method. The cumulative effect of initially applying the guidance that will be recognized at the date of initial application is not expected to bematerial and the financial statements of prior periods will not be retrospectively adjusted. The Group has substantially completed the assessment andimplementation work, and the main impact will be (1) the reclassification of sales taxes and surcharges from cost of revenues to a reduction of revenues,(2) revenues or expenses from some advertising barter transactions will be recognized beginning from January 1, 2018 in accordance with the new guidance,as the provision of Topic 605 exempting some advertising-for-advertising barter transactions, for which the fair value of the advertising services surrenderedor received was not determinable, from being reported at fair value has been superseded. If presented net of sales taxes and surcharges, revenues for the yearended December 31, 2017 would have been approximately 8.5% lower than currently presented. Total revenues from advertising-for-advertising bartertransactions not recognized in 2017 were RMB2.4 million (US$0.4 million), which would be recognized as revenues and increase the amount of revenuesunder Topic 606 beginning from January 1, 2018. Recognition and Measurement of Financial Assets and Financial Liabilities. On January 5, 2016, the FASB issued ASU 2016-01, Recognition andMeasurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure offinancial instruments. This amendment requires all equity investments to be measured at fair value, with changes in the fair value recognized through netincome (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). This standard is effective forfiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Group will apply the new standard beginningJanuary 1, 2018 and recognize the changes in fair value for all equity investments other than those accounted for under equity method of accountingmeasured at fair value through net income/(loss). For investments in equity securities lacking of readily determinable fair values, the Group will elect to usethe measurement alternative defined as cost, less impairments, adjusted by observable price changes. The Group anticipates that the adoption of ASU 2016-01 will increase the volatility of its other income/(expense), net, as a result of the remeasurement of its equity securities upon the occurrence of observableprice changes and impairments. Leases. On February 25, 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 specifies the accounting for leases. For operating leases, ASU2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balancesheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on agenerally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. ASU2016-02 is effective for public companies for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Earlyadoption is permitted. The Group is currently evaluating the impact of adopting this standard on its consolidated financial statements. Financial Instruments-Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requiresentities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonableand supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured atamortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early applicationwill be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Group is currentlyevaluating the impact that the standard will have on its consolidated financial statements and related disclosures. Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued ASU 2016-15, Statementof Cash Flows — Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts andcash payments in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017,and interim periods within those fiscal years. Early adoption is permitted. The Group does not expect this standard to have a material impact on itsconsolidated financial statements. F-23Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 2. Principal Accounting Policies (Continued) (af) Recent accounting pronouncements (continued) Statement of Cash Flows (Topic 230): Restricted Cash. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230):Restricted Cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amountsgenerally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalentsshould be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement ofcash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years and is appliedretrospectively. The Group has early adopted this guidance retrospectively. Accordingly, the item “changes in restricted cash” previously included ininvesting activities in the consolidated statements of cash flows for the years ended December 31, 2015 and 2016 with an amount of RMB125.0 million andRMB229.6 million, respectively, had been removed from cash flows from investing activities and included in beginning and ending cash, cash equivalentsand restricted cash balances retrospectively. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within thebalance sheet that sum to the total of the same such amounts shown in the statement of cash flows (in thousands). For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$ Cash and cash equivalents310,669202,694362,86255,771Restricted cash125,000354,602336,70051,750Total cash, cash equivalents, and restricted cash shown in thestatement of cash flows435,669557,296699,562107,521 Business Combinations (Topic 805): Clarifying the Definition of a Business. In January 2017, the FASB issued ASU 2017-01, BusinessCombinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assistentities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscalyears beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be appliedprospectively on or after the effective date. The Group is currently evaluating the impact of adopting this standard prospectively upon any transactions ofacquisitions or disposals of assets or businesses and does not expect this standard to have a material impact on its consolidated financial statements. Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the termsor conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance is effective for annual periods,and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period.The guidance should be applied prospectively to an award modified on or after the adoption date. The Group is currently evaluating the impact of adoptingthis standard on its consolidated financial statements and does not expect this standard to have a material impact on its consolidated financial statements. 3. Certain Risks and Concentration (a) Major customers A significant portion of the Group’s MVAS is generated through and from CMCC, which is also a related party as CMCC is a shareholder of PhoenixTV. CMCC is a major mobile network operator in the PRC. It provides billing, collection and transmission services related to the paid services offered bymost of the wireless service and content providers in the PRC. The revenues generated through and from CMCC for the years ended December 31, 2015, 2016and 2017 were RMB309.3 million, RMB154.6 million and RMB172.2 million (US$26.5 million), respectively, which accounted for 19.2%, 10.7% and10.9% of the respective years’ total revenues. The amounts due from CMCC as of December 31, 2016 and 2017 were RMB48.8 million and RMB63.2 million (US$9.7 million), respectively,which is included on the consolidated balance sheets as “Amounts due from related parties”. Except for CMCC and an advertising agent, there is no othercustomer with revenues or receivables over 10% of total revenues or total accounts receivable, net and due from related parties, respectively. F-24Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 3. Certain Risks and Concentration (Continued) (b) Credit risk The Group’s credit risk arises from cash and cash equivalents, term deposits, short term investments and restricted cash as well as credit exposures toreceivables due from its customers, related parties and other parties. The Group expects that there is no significant credit risk associated with cash and cash equivalents, term deposits, short term investments andrestricted cash for short-term bank loans which were held by reputable financial institutions in the jurisdictions where the Company, its subsidiaries, VIEs andthe subsidiaries of the VIEs are located. The Group believes that it is not exposed to unusual risks as these financial institutions have high credit quality. As of December 31, 2017, the Group had an unsecured short-term loan granted to Particle recorded as convertible loans due from a related party ofRMB102.6 million (US$15.8 million) and another unsecured short-term loan granted to Particle recorded in amounts due from related parties of RMB80.4million (US$12.4 million). The Group has no significant concentrations of credit risk with respect to its customers, related parties and other parties, except for CMCC, Particleand the advertising agent as discussed above. The Group assesses the credit quality of and sets credit limits on its customers by taking into account theirfinancial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. (c) Currency convertibility risk The Group’s operating transactions and its assets and liabilities are mainly denominated in RMB. RMB is not freely convertible into foreigncurrencies. The value of the RMB is subject to changes by the central government policies and to international economic and political developments. In thePRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by PBOC.Remittances in currencies other than RMB by the Group in the PRC must be processed through PBOC or other China foreign exchange regulatory bodieswhich require certain supporting documentation in order to affect the remittance. (d) PRC regulations The Group is exposed to certain macro-economic and regulatory risks and uncertainties in the Chinese market. These uncertainties affect the abilityof the Group to provide online advertising, mobile and Internet related services through Contractual Arrangements in the PRC since these industries remainshighly regulated. The Chinese government may issue from time to time new laws or new interpretations on existing laws to regulate these industries.Regulatory risk also encompasses the interpretation by the tax authorities of current tax laws, the status of properties leased for the Group’s operations andthe Group’s legal structure and scope of operations in the PRC, which could be subject to further restrictions resulting in limitations on the Group’s ability toconduct business in the PRC. The PRC government may also require the Group to restructure its operations entirely if it finds that its ContractualArrangements do not comply with applicable laws and regulations. It is unclear how a restructuring could impact the Group’s business and operating results,as the PRC government has not yet found any such Contractual Arrangements to be in noncompliance. However, any such restructuring may causesignificant disruption to the Group’s business operations. In addition, the Group is required to obtain certain licenses to operate the Internet information services. As of the date of the annual report, the Groupis in the process of applying for licenses for the certain operations of the businesses, including an Internet audio-visual program transmission license and anInternet news license. In 2017, approximately 92.6% of the Group’s total revenues were derived from business related to the above licenses. Without theselicenses, the PRC government may order the Group to cease its services, which may cause significant disruption to the Group’s business operations. (e) Investments risk The Group has made and may undertake in the future investments in subsidiaries, affiliates and other business alliance partners in various Internet-related businesses. It is uncertain whether the Group will receive the expected benefits from these investments, due to any adverse regulatory changes,worsening of economic conditions, increased competition or other factors that may negatively affect the related business activities. Some of the businessesthe Group has invested in are subject to intensive regulation. For example, one of the Group’s investees had suspended all of its online lottery ticketdistribution businesses and had not generated any revenue since March 2015 in response to the Notice related to Self-Inspection and Self-Remedy ofUnauthorized Online Lottery Sales, or the Self-Inspection Notice, which was jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs andthe General Administration of Sports of the People’s Republic of China. Any such adverse regulatory change may have a material adverse impact on thebusiness and financial performance of the subsidiaries, affiliates and other business alliance partners. Furthermore, unanticipated costs and liabilities may beincurred in connection with those business strategies, including liabilities from the claims related to the businesses prior to the business alliances, and costfrom actions by regulatory authorities. F-25Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 4. Accounts Receivable, Net The following table sets out the balance of accounts receivable as of December 31, 2016 and 2017 (in thousands): As of December 31,2016 2017 2017RMB RMB US$Accounts receivable, gross496,381524,19880,568Allowance for doubtful accounts(91,348)(65,454)(10,060)Accounts receivable, net405,033458,74470,508 The following table presents the movement of the allowance for doubtful accounts (in thousands): 2015 2016 2017 2017RMB RMB RMB US$Balance as of January 1,23,76758,84691,34814,040Additional provision/(reversal) charged to bad debt expenses,net46,99047,762(9,137)(1,402)Write-off of bad debt provision(11,911)(15,260)(16,757)(2,578)Balance as of December 31,58,84691,34865,45410,060 The negative RMB9.1 million (US$1.4 million) charged to bad debt expenses in 2017 were mainly caused by the collection of previously fully-reserved receivables of RMB25.4 million (US$3.9 million), and partially offset by the addition of new bad debt provision of RMB16.3 million (US$2.5million). 5. Prepayments and Other Current Assets The following is a summary of prepayments and other current assets (in thousands): As of December 31,2016 2017 2017RMB RMB US$Prepaid rental and deposits5,1763,339513Prepayments to suppliers and other business related expenses51,76747,3557,278Receivables related to exercise of employee options5,1264,405677Others2,0002,359363Total64,06957,4588,831 Prepayments to suppliers and other business related expenses mainly consist of business related staff advances, and the Group’s prepaid contentlicenses fee to third-party content suppliers for the rights to access and present on the Group’s website the content produced by these suppliers during acertain period. These content licenses generally have a license period of one to three years, and are amortized over the license period on a straight-line basis.The portion of the prepaid content license costs that relates to the license period for more than 12 months from the balance sheet date is classified as othernon-current assets. 6. Property and Equipment, Net The following is a summary of property and equipment, net (in thousands): As of December 31,2016 2017 2017RMB RMB US$Computers, equipment and furniture170,796173,53626,672Motor vehicles5,6375,618863Leasehold improvements40,75838,7675,958Total217,191217,92133,493Less: accumulated depreciation(145,104)(153,467)(23,587)Net book value72,08764,4549,906 Depreciation expenses for the years ended December 31, 2015, 2016 and 2017 were RMB38.1 million, RMB37.2 million and RMB32.2 million(US$4.9 million), respectively. F-26Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 7. Intangible Assets, Net The following table summarizes the Group’s intangible assets, net (in thousands): As of December 31,2016 2017 2017RMB RMB US$Software22,78622,7643,499Operating rights for licensed games10,9767,9561,223Domain name54548Total33,81630,7744,730Less: accumulated amortization(20,432)(21,759)(3,344) impairment(3,909)(2,303)(354)Net book value9,4756,7121,032 Amortization expenses for the years ended December 31, 2015, 2016 and 2017 were RMB7.4 million, RMB4.8 million and RMB3.4 million (US$0.5million), respectively. Based on the current amount of intangible assets subject to amortization, the estimated amortization expenses for each of the followingfive years are as follows: 2018: RMB2.7 million, 2019: RMB2.3 million, 2020: RMB1.4 million, 2021: RMB0.3 million and 2022: RMB0.04 million. In view of mobile games services through the Group’s own platforms below previous performance expectations, the Group performed an assessmenton the intangible assets related to mobile game business and recorded an impairment charge against operating rights for licensed games of RMB3.8 million,RMB0.1 million and nil for the years ended December 31, 2015, 2016 and 2017, respectively. 8. Available-for-sale Investments As of December 31, 2014, including the Series B convertible redeemable preferred shares and ordinary shares of Particle Inc. (“Particle”) (see Note 9),the Company owned approximately 18.42% equity interest of Particle on an as-if converted basis. In April 2015, the Company acquired Series C convertible redeemable preferred shares of Particle with a cash consideration of US$30.0 million(RMB183.5 million), and acquired additional ordinary shares and Class A ordinary shares from certain investors of Particle with a total cash consideration ofUS$27.6 million (RMB168.5 million). Following the transactions, also in April 2015, Particle repurchased all the ordinary shares and Class A ordinary sharesheld by the Company, including ordinary shares purchased by the Company in 2014, and issued to the Company one Series C convertible redeemablepreferred share for each purchased ordinary share or Class A ordinary share. The gain on disposal of ordinary shares and Class A ordinary shares andacquisition of Series C convertible redeemable preferred shares was RMB4.6 million for the year ended December 31, 2015. As of December 31, 2015, theCompany held Series B and Series C convertible redeemable preferred shares of Particle, which had been accounted for as available-for-sale investments,representing approximately 46.95% equity interest of Particle on an as-if converted basis. In August 2016, Particle completed Series D financing activity with an associate company of Guangdong OPPO Mobile Telecommunications Ltd.(“OPPO”), a leading manufacturer of smartphones and other electronic products in the PRC by issuing Series D convertible redeemable preferred shares toOPPO. The Company did not participate in the Series D financing activity and its equity interest of Particle was partly diluted. In December 2016, the Company acquired Series D1 convertible redeemable preferred shares of Particle through converting convertible loans duefrom Particle (see Note 10) with an aggregate amount of US$20.7 million (RMB143.8 million). In June 2017, Particle completed part of Series E financing activity with certain investors by issuing Series E convertible redeemable preferred sharesand warrants. The Company did not participate in the Series E financing activity and its equity interest of Particle was partly diluted. As of December 31, 2017, the Company held Series B, Series C and Series D1 convertible redeemable preferred shares, which had been accounted foras available-for-sale investments, representing approximately 41.8% equity interest of Particle on an as-if converted basis. F-27Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 8. Available-for-sale Investments (Continued) The Company has determined that its investments in Series B, Series C and Series D1 convertible redeemable preferred shares of Particle are notconsidered in-substance common stock but considered debt securities as the preferred shares of Particle are redeemable at the option of the Company and aretherefore not within the scope of ASC 323 Equity Method and Joint Ventures. The Company’s investments in Series B, Series C and Series D1 convertibleredeemable preferred shares of Particle are classified as available-for-sale investments and reported at fair value, which is estimated by management afterconsidering valuation reports prepared by a reputable and independent appraisal firm on a recurring basis. As the Company does not expect to sell or redeemthe Series B, Series C and Series D1 convertible redeemable preferred shares within one year, they are classified as long-term available-for-sale investments. Total unrealized gains on available-for-sale investments recorded in accumulated other comprehensive income were RMB303.5 million andRMB625.0 million (US$96.1 million) as of December 31, 2016 and 2017, respectively. The fair value of available-for-sale investments in Particle wereRMB939.4 million and RMB1,196.3 million (US$183.9 million) as of December 31, 2016 and 2017, respectively (see Note 19). 9. Equity Investments (a) Equity method investments As of December 31, 2017, the Group’s investments accounted for under the equity method totaled RMB15.1 million (US$2.3 million) which mainlyconsisted of the investment in Beijing Fenghuang Tianbo Network Technology Co., Ltd. (“Tianbo”). The Group applies the equity method of accounting toaccount for its equity investments in common stock or in-substance common stock, over which it has significant influence but does not own a majorityequity interest or otherwise control. As the Group has significant influence over financial and operating decision-making of Tianbo, the Group accounted for the 50% equity interests inTianbo by using the equity method of accounting. As of December 31, 2016 and 2017, the carrying value of equity investment in Tianbo was RMB8.2million and RMB15.1 million (US$2.3 million), respectively. Despite holding 100% ordinary shares of Phoenix FM Limited (“Phoenix FM”), the Company accounts for its investment in Phoenix FM as an equityinvestment since the Company did not control Phoenix FM due to substantive participating rights that have been provided to IDG-Accel China Growth FundIII L.P. and IDG-Accel China III Investors L.P., who invested in preferred shares of Phoenix FM. As of December 31, 2016 and 2017, the carrying values ofequity investment in Phoenix FM were nil and nil, respectively. In addition to the equity investment in Phoenix FM, there was a RMB15.2 million loanreceivable due from Phoenix FM which was impaired with an impairment amount of RMB9.0 million recorded in “Loss from equity investments, includingimpairments” for the year ended December 31, 2015. In 2016, Phoenix FM repaid RMB7.2 million and the impairment for loan receivable due from PhoenixFM of approximately RMB1.0 million recorded in 2015 had been recovered. In March 2016, Shenzhenshi Fenghuang Jingcai Network Technology Co., Ltd. (“Fenghuang Jingcai”) obtained additional capital injection from anindependent third party, and the Group’s equity interest in Fenghuang Jingcai decreased from 45.06% to 31.54%. Since March 2015, Fenghuang Jingcai hadsuspended all of its online lottery ticket distribution businesses, in response to the Notice related to Self-Inspection and Self-Remedy of Unauthorized OnlineLottery Sales, or the Self-Inspection Notice, which was jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs and the GeneralAdministration of Sports of the People’s Republic of China. As of December 31, 2017, there has been no change in the Self-Inspection Notice. Themanagement assessed that this regulatory change will continue to have negative impact to the cash flows of Fenghuang Jingcai in the future, and that thecarrying value of Fenghuang Jingcai may not be fully recoverable. For the year ended December 31, 2015, the impairment of the equity investment inFenghuang Jingcai recorded in the consolidated statements of comprehensive income was RMB3.2 million. As of December 31, 2016 and 2017, the carryingvalue of equity investment in Fenghuang Jingcai was nil. F-28Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 9. Equity Investments (Continued) (a) Equity method investments (continued) As of December 31, 2014, the Company held 9.08% of Particle’s ordinary shares and accounted for such equity investment in Particle under theequity method. In April 2015, all the ordinary shares and Class A ordinary shares the Company purchased were converted to Series C convertible redeemablepreferred shares and since then and as of December 31, 2016 and 2017, all the investments in Particle were in convertible redeemable preferred shares and hadbeen accounted for as available-for sale investments (see Note 8). In February 2015, the Group invested approximately RMB4.5 million in Hangzhou Qike Technology Co., Ltd. (“Hangzhou Qike”), a companyengaged in providing risk management and credit control assessment based on big data analysis to enterprises and eventually directly to individualcustomers, and held 45% equity interest of this company. Based on the other-than-temporary impairment assessment on equity investments, the Group hasmade impairment provisions to investment in Hangzhou Qike in 2017, and as of December 31, 2016 and 2017, the carrying values of equity investment inHangzhou Qike were RMB0.1 million and nil, respectively. The Group no longer records share of losses in Phoenix FM, Fenghuang Jingcai and Hangzhou Qike, as the carrying value of equity investments inthem had been reduced to zero. Meanwhile, the Group has no future obligations to fund Phoenix FM, Fenghuang Jingcai and Hangzhou Qike. The Group summaries the condensed financial information of the Group’s equity method investments as a group below in accordance with Rule 4-08of Regulation S-X (in thousands): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Operating data:Revenues67,752103,038171,33526,334Gross profit36,24563,135101,42415,589Net (loss)/income(69,290)(22,888)2,562394PNM’s share of net (loss)/income, including impairments(41,861)(1,776)6,7961,045 As of December 31,2016 2017 2017RMB RMB US$Balance sheet data:Current assets58,883161,29524,791Non-current assets17,47923,0663,545Current liabilities103,590204,69731,461 F-29Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 9. Equity Investments (Continued) (b) Cost method investments In January 2015, the Group acquired 5% equity interest of Beijing Phoenix Lilita Information Technology Co., Ltd. (“Lilita”), from a family memberof the chairman of Phoenix TV, for an aggregate purchase consideration of RMB0.5 million. Lilita is principally engaged in P2P lending and reward-basedcrowd-funding businesses. In July 2016, Lilita completed Round A financing activity and the Group’s percentage of equity interest in Lilita decreased to4.69%. Based on the other-than-temporary impairment assessment on equity investments, the Group has fully written down the whole investment in Lilita ofRMB0.5 million (US$0.08 million) in 2017. In April 2015, the Group acquired 0.3% equity interest of Lifeix Inc. (“Lifeix”) for an aggregate purchase consideration of US$1.0 million (RMB6.1million). Lifeix is the operator of the life station websites L99.com and Lifeix.com. In December 2015, in view of business performance and near-termbusiness outlook that were below management previous expectation, based on the other-than-temporary impairment assessment, the Group recorded theimpairment loss of US$1.0 million (RMB6.4 million) to fully write down the equity investment in Lifeix. In August 2017, the Group acquired 8% equity interest of Shenzhenshi Kuailai Technology Co., Ltd. (“Kuailai”) with a consideration of RMB0.2million (US$0.04 million). Kuailai operates Xunhutai, a life-style information application in China. 10. Convertible loans due from a related party In January and April 2016, the Company granted two twelve-month unsecured short-term loans to Particle with a principal amount of US$10.0million each at an interest rate of 4.35% per annum. In December 2016, the principals and the related accrued interests of the two loans with a total amount ofUS$20.7 million (RMB143.8 million) were converted into Series D1 convertible redeemable preferred shares of Particle at a conversion price ofUS$0.876847 per share. In August 2016, the Company granted a new unsecured short-term loan to Particle with a principal amount of US$14.8 million (RMB98.1 million) atan interest rate of 4.35% per annum and with a term of no more than six months (the “August 2016 Loan”). The Company has the right to convert, at theCompany’s option, all or a portion of the August 2016 Loan (including principal and interests) into Series D1 preferred shares to be issued by Particle on orbefore maturity date at a conversion price of US$1.071803 per share. In December 2016, the Company extended the terms of the August 2016 Loan from sixmonths to twelve months. In August 2017, the Company extended the term of the August 2016 Loan from twelve months to eighteen months. As ofDecember 31, 2017, the carrying value of the August 2016 Loan was RMB102.6 million (US$15.8 million). 11. Other Non-Current Assets The following is a summary of other non-current assets (in thousands): As of December 31,2016 2017 2017RMB RMB US$Rental deposits7,5997,7901,197Non-current portion of prepayments to suppliers and other business related expenses8,4484,754730Total16,04712,5441,927 12. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities are comprised of (in thousands): As of December 31,2016 2017 2017RMB RMB US$Deposits from advertising agencies and customers20,64414,3172,200Accrued professional fees7,4136,441990Advertising and promotion expenses payables and accruals24,91388,54513,609General operating expenses payables and accruals54,89263,3449,736Others3,18760693Total111,049173,25326,628 F-30Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 13. Short-term Bank Loans In April 2015, the Group entered into a loan facility agreement (the “First Heng Seng Facility”) with Hang Seng Bank in Hong Kong. According tothe First Heng Seng Facility, the Group was authorized certain amounts of loans with maturity of twelve months, and the loans were required to be secured byRMB deposits in an onshore branch of Hang Seng Bank. In April 2015, the Group obtained short-term bank loans of US$20.2 million (RMB123.6 million)from Hang Seng Bank under the First Heng Seng Facility. The loans were repayable within twelve months and bore interest rate of London Inter-Bank OfferedRate (“LIBOR”) plus 1.0%. In April 2016, the Group entered into a new loan facility agreement (the “Second Heng Seng Facility”) with Hang Seng Bank to replace the FirstFacility. According to the Second Heng Seng Facility, the authorized amounts was increased and the term of the short-term bank loans of US$20.2 millionborrowed in April 2015 under the First Heng Seng Facility was extended for another twelve months from the date of its maturity. Concurrent with theextension, the Group obtained additional US$10.0 million (RMB64.8 million) short-term bank loan with maturity of twelve months under the Second HengSeng Facility. In July 2016, the Group obtained another US$14.8 million (RMB99.2 million) short-term bank loan with maturity of twelve months under theSecond Heng Seng Facility. In November 2016, the Group entered into another loan facility (the “Third Heng Seng Facility”) with Hang Seng Bank and obtained US$6.9 million(RMB46.7 million) short-term bank loan with maturity of twelve months under the Third Heng Seng Facility with an interest rate of LIBOR plus 1.0%. Alsoin November 2016, the Group re-designated US$ denominated loans of US$51.9 million into RMB denominated loans of RMB354.6 million under theaforementioned facilities with Hang Seng Bank. The Group repaid all of the principal and interests of short-term bank loans from Hang Seng Bank in 2017. As of December 31, 2016 and 2017, the Group had total short-term bank loans of RMB354.6 million and nil from Heng Seng Bank, respectively, andthese short-term bank loans were secured by bank deposits of RMB354.6 million and nil, respectively. The pledged deposits were classified as restricted cashon the consolidated balance sheets. In April 2016, the Group entered into a loan facility agreement (the “First CMB Facility”) with China Merchants Bank with maturity of twelvemonths. In December 2016, the Group obtained unsecured short-term bank loans of RMB4.0 million with an interest rate of 4.35% per annum under the FirstCMB Facility. In March 2017, the Group entered into a new loan facility agreement (the “Second CMB Facility”) with China Merchants Bank and obtainedRMB208.0 million (US$32.0 million) short-term bank loan with an interest rate of 6.3% per annum under the Second CMB Facility with maturity of twelvemonths. In June 2017, the Group obtained RMB102.0 million (US$15.7 million) short-term bank loan with an interest rate of 5.7% per annum with maturityof twelve months under the Second CMB Facility. In October 2017, the Group obtained RMB50.0 million (US$7.7 million) short-term bank loan with aninterest rate of 5.5% per annum with maturity of twelve months under the Second CMB Facility. In November 2017, the Group repaid short-term bank loanfrom China Merchants Bank with a principal amount of RMB30.0 million (US$4.6 million). As of December 31, 2016 and 2017, the Group had total short-term bank loans of RMB4.0 million and RMB330.0 million (US$50.7 million) fromChina Merchants Bank, respectively, and these short-term bank loans were secured by bank deposits of nil and RMB336.7 million (US$51.8 million),respectively. The pledged deposits were classified as restricted cash on the consolidated balance sheets. 14. Cost of Revenues The cost of revenues is as follows (in thousands): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Revenue sharing fees216,97272,02772,61311,160Content and operational costs406,741470,813466,37971,681Bandwidth costs83,17164,20055,0508,461Sales taxes and surcharges122,502119,767133,15520,466Total829,386726,807727,197111,768 F-31 Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 15. Income Taxes Income Tax Expense and Effective Tax Rate The provisions for income tax expense are summarized as follows (in thousands): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Current tax expense36,91532,43320,9363,218Deferred tax benefit(11,398)(18,344)(6,153)(946)Income tax expense25,51714,08914,7832,272 The components of income before tax and income tax expense for PRC and non-PRC operations are as follows (in thousands): For the Years Ended December 31, 2015 2016 2017 2017 RMB RMB RMB US$ Income arising from PRC operations159,31886,599104,20816,016(Loss)/income arising from non-PRC operations(61,416)5,710(55,001)(8,453)Income before tax97,90292,30949,2077,563Income tax expense relating to PRC operations25,51013,80614,7392,265Income tax expense relating to non-PRC operations7283447Income tax expense25,51714,08914,7832,272Effective tax rate for PRC operations16.0%15.9%14.1%14.1% Cayman Islands (“Cayman”) Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Additionally, upon payments ofdividends to the shareholders, no Cayman Islands withholding tax will be imposed. British Virgin Islands (“BVI”) The Group is exempted from income tax on its foreign-derived income in the BVI. There are no withholding taxes in the BVI. Hong Kong Entities incorporated in Hong Kong are subject to the tax rate 16.5% on the estimated assessable profit arising in Hong Kong. PRC The PRC Corporate Income Taxes Law (“CIT Law”) generally applies an income tax rate of 25% to all enterprises, but grants preferential taxtreatment to High and New Technology Enterprises (“HNTEs”) and Software Enterprises. Under these preferential tax treatments, HNTEs are entitled to anincome tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years and Software Enterprises are entitled to an income taxexemption for two years beginning from its first profitable year and a 50% reduction to a rate of 12.5% for the subsequent three years. Fenghuang On-line had been qualified as an HNTE in November 2014 and August 2017, respectively, and was entitled to a preferential tax rate of 15%.Therefore, Fenghuang On-line was subject to a 15% income tax rate for the years from 2015 to 2017 and would be subject to a 15% income tax rate from2018 to 2019. Tianying Jiuzhou resubmitted applications for qualification and was approved as an HNTE in 2014 and 2017, respectively, and therefore, TianyingJiuzhou was subject to a 15% income tax rate from 2015 to 2017 and would be subject to a 15% income tax rate from 2018 to 2019. In 2012, Fenghuang Yutian was qualified as a Software Enterprise. As 2013 was the first year Fenghuang Yutian generated taxable profit, it wasexempted from income taxes for the years 2013 and 2014, and was subject to a 12.5% income tax rate from 2015 to 2017. In 2017, Fenghuang Yutian hadbeen qualified as an HNTE, and therefore Fenghuang Yutian would be subject to a 15% income tax rate from 2018 to 2019. F-32Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 15. Income Taxes (Continued) In 2016, Fenghuang Borui was qualified as a Software Enterprise. As 2016 was the first year Fenghuang Borui generated taxable profit, it wasexempted from income taxes for the years 2016 and 2017, and would be subject to a 12.5% income tax rate from 2018 to 2020. All other PRC incorporated entities of the Group were subject to a 25% income tax rate for all the years presented. The CIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” islocated in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for itsglobal income. On April 22, 2009, the State Administration of Taxation (“SAT”) issued a circular, known as Circular 82, which provides certain specificcriteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. UnderCircular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue ofhaving its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the followingconditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial andhuman resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting booksand records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members orsenior executives habitually reside in the PRC. The Company and its offshore subsidiaries had not ever been treated as resident enterprises for PRC taxpurposes. Withholding Tax on Undistributed Dividends The CIT Law imposes a 10% withholding income tax on dividends distributed by foreign invested enterprises in the PRC to their immediate holdingcompanies outside the PRC. A lower withholding tax rate may be applied if there is a tax treaty between the PRC and the jurisdiction of the foreign holdingcompany. A holding company in Hong Kong, for example, will be subject to a 5.0% withholding tax rate under an arrangement between the PRC and theHong Kong Special Administrative Region on the “Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income andCapital,” if such holding company is considered a non-PRC resident enterprise and holds at least 25.0% of the equity interests in the PRC foreign investedenterprise distributing the dividends, subject to approval of the PRC local tax authority. However, if the Hong Kong holding company is not considered to bethe beneficial owner of such dividends under applicable PRC tax regulations, such dividend will remain subject to a withholding tax rate of 10%. The PRC subsidiaries, VIEs and subsidiaries of VIEs have not paid dividends in the past and do not have any present plans to declare and pay anydividends on the Company’s ordinary shares or ADSs in the near future and the Group currently intends to retain most, if not all, of its available funds andany future earnings to operate and expand the business. Accordingly, the Company does not intend to have its PRC subsidiaries distribute any undistributedprofits of such subsidiaries to their direct overseas parent companies, but rather intends that such profits will be permanently reinvested in such subsidiariesto further expand their business in the PRC. As of December 31, 2017, the Company did not record any withholding tax on the retained earnings of its foreigninvested enterprises in the PRC. Aggregate undistributed earnings of the Group’s entities located in the PRC that were available for distribution to theCompany as of December 31, 2016 and 2017 were approximately RMB1,030.2 million and RMB1,119.4 million (US$172.0 million), respectively. Theamounts of the unrecognized deferred tax liability on the permanently reinvested earnings were RMB103.0 million and RMB111.9 million (US$17.2million) as of December 31, 2016 and 2017, respectively. Reconciliation of the Differences between Statutory Tax Rate and the Effective Tax Rate for PRC Operations Reconciliation of the differences between PRC statutory income tax rate and the Group’s effective income tax rate for PRC operations for the yearsended December 31, 2015, 2016 and 2017 is as follows (in thousands): For the Years Ended December 31,2015 2016 2017% % %Statutory income tax rate25.025.025.0Permanent differences(2.7)(9.3)(10.1)Change in valuation allowance(0.9)7.82.9Effect of preferential tax benefits(6.3)(11.4)(6.6)Uncertain tax positions0.93.82.9Effective income tax rate16.015.914.1 F-33Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 15. Income Taxes (Continued) The combined effects of the income tax exemption and other preferential tax benefits available to the Group are as follows (in thousands, except pershare data): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Preferential tax rate effect10,0739,8786,8361,051Basic net income per share effect0.020.020.010.002 Deferred Tax Assets and Liabilities The tax effects of temporary differences that give rise to the deferred tax assets and liabilities balances as of December 31, 2016 and 2017 are asfollows (in thousands): As of December 31,2016* 2017 2017RMB RMB US$Deferred tax assets - non-current:Provision of allowance for doubtful accounts21,91017,7172,724Accrued payroll and expenses and others27,17229,2254,492Net operating loss carryforward16,62727,7264,261Less: valuation allowance(11,402)(14,208)(2,184)Total non-current deferred tax assets, net*54,30760,4609,293 As of December 31,2016 2017 2017RMB RMB US$Deferred tax liabilities - non-current:Equity investments acquired in disposal of subsidiaries1,3121,312202 *In 2017, the Company adopted the guidance of ASU 2015-17 issued by FASB in November 2015, which requires entities to present deferred taxassets and deferred tax liabilities as noncurrent in a classified balance sheet. Pursuant to the guidance, the Company retrospectively reclassified RMB54.3million of deferred tax assets from current assets to noncurrent assets in the balance sheets as of December 31, 2016. As of December 31, 2017, the Group had net operating loss of approximately RMB140.9 million (US$21.7 million), which can be carried forward tooffset future taxable income. Net operating loss carry forward of RMB0.7 million, RMB4.9 million, RMB7.5 million, RMB52.5 million and RMB75.3million will expire in 2018, 2019, 2020, 2021 and 2022, respectively, if not utilized. Movement of Valuation Allowance Valuation allowance is provided against deferred tax assets when the Group determines that it is more likely than not that the deferred tax assets willnot be utilized in the future. In making such determination, the Group considered factors including future reversals of existing taxable temporary differences,future profitability, and tax planning strategies. Valuation allowance was provided for net operating loss carry forward because it was more likely than notthat such deferred tax assets will not be realized based on the Group’s estimate of its future taxable income. The following table sets forth the movement of the valuation allowance for deferred tax assets (in thousands): 2015 2016 2017 2017RMB RMB RMB US$Balance as of January 1,7,1014,67611,4021,753Additions2,1216,8386,164947Reversals(4,546)(112)(3,358)(516)Balance as of December 31,4,67611,40214,2082,184 F-34Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 15. Income Taxes (Continued) Uncertain Tax Positions A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions is as follows (in thousands): 2015 2016 2017 2017RMB RMB RMB US$Balance as of January 1,16,86718,36821,7233,339Increase related to current year tax positions1,5013,3552,991459Balance as of December 31,18,36821,72324,7143,798 The Group did not accrue any potential penalties and interest related to these uncertain tax positions for all years presented on the basis that thelikelihood of penalties and interest being charged is not considered to be probable. The amounts of uncertain tax positions listed above are based on the recognition and measurement criteria of ASC 740. However, due to the uncertainand complex application of tax regulations, it is possible that the ultimate resolution of uncertain tax positions may result in liabilities which could bematerially different from these estimates. In such an event, the Group will record additional tax expense or tax benefit in the period in which such resolutionoccurs. The Group does not expect changes in uncertain tax positions recognized as of December 31, 2017 to be material in the next twelve months. Inaccordance with PRC Tax Administration Law on the Levying and Collection of Taxes, the PRC tax authorities generally have up to five years to claw backunderpaid tax plus penalties and interest for PRC entities’ tax filings. In the case of tax evasion, which is not clearly defined in the law, there is no limitationon the tax years open for investigation. Accordingly, the PRC entities’ tax years from 2013 to 2017 remain subject to examination by tax authorities. Thereare no ongoing examinations by tax authorities as of December 31, 2017. 16. Ordinary Shares The Company has Class A ordinary shares and Class B ordinary shares which are all at par value of US$0.01 each. Holders of Class A ordinary sharesand Class B ordinary shares have the same rights except that holders of Class A ordinary shares are entitled to one vote per share, while holders of Class Bordinary shares are entitled to 1.3 votes per share. The Parent, which is wholly owned by Phoenix TV, holds Class B ordinary shares, each of which isconvertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares underany circumstances. As of December 31, 2016, there were 254,909,790 and 317,325,360 Class A and Class B ordinary shares issued and outstanding, respectively. As ofDecember 31, 2017, there were 260,001,486 and 317,325,360 Class A and Class B ordinary shares issued and outstanding, respectively. 17. Share-based Compensation Share-based compensation recognized in costs and expenses for the years ended December 31, 2015, 2016 and 2017 are as follows (in thousands): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Cost of revenues6,335(4,367)5,017771Sales and marketing expenses3,043(2,842)1,877288General and administrative expenses21,83611,02510,7961,659Technology and product development expenses3,140(1,926)3,162486Total34,3541,89020,8523,204 The Company recognized share-based compensation, net of estimated forfeitures, on a graded-vesting basis over the vesting term of the awards. In2016, the Company increased the forfeiture rate estimate for share-based awards based on the actual forfeiture rate. Due to the effects of changes to theforfeiture rate, share-based compensation for the year ended December 31, 2016 was reduced by RMB27.6 million. There was no income tax benefitrecognized in the consolidated statements of comprehensive income for share-based compensation and the Company did not capitalize any of the share-based compensation as part of the cost of any asset in the years ended December 31, 2015, 2016 and 2017. F-35Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 17. Share-based Compensation (Continued) Share Options In June 2008, the Company adopted the Share Option Scheme (the “June 2008 Scheme”) that provides for the granting of options to employees,directors and consultants to attract and retain the best available personnel and promote the success of the Group’s business. The June 2008 Scheme permitsthe grant of options to its eligible recipients for up to 10% of the ordinary shares in issue (the “Limit”) on the effective date of the June 2008 Scheme. Thetotal number of ordinary shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the June 2008 Schemeand any other share option schemes of the Company shall not exceed 30% of the ordinary shares in issue from time to time. The Company may seek approvalfrom its shareholders to refresh the Limit provided that the Limit as refreshed shall not exceed 10% of the ordinary shares of the Company in issue as at thedate of approval, and options previously granted will not be counted for the purpose of calculating the Limit as refreshed. Any outstanding option lapse inaccordance with the terms of the June 2008 Scheme will not be counted for the purpose of calculating the Limit. In August 2012, the Company’s shareholdersapproved to refresh the Limit, permitting the Company to grant no more than 31,410,107 additional options under the June 2008 Scheme. The June 2008 Scheme will terminate automatically 10 years after its adoption, unless terminated earlier with the Company’s shareholders’ approval.Option awards are granted with an exercise price determined by the board of directors. Those option awards vest over a period of four years and expire in tenyears. With the approvals of the board of directors and shareholders of the Company and Phoenix TV, the Company implemented an option exchangeprogram from October 21, 2016 to November 1, 2016, whereby the Company’s directors, employees and consultants exchanged options to purchase21,011,951 Class A ordinary shares of the Company granted under the Company’s June 2008 Scheme with various exercise prices greater than US$0.4823per share (or US$3.8587 per ADS) for new options granted by the Company under the same plan with a new exercise price of US$0.4823 per share and a newvesting schedule that generally adds 12 months to each original vesting date, and the new options would vest no sooner than May 1, 2017. The Companyaccounted for the option exchange program as option modification and recognized the total incremental share-based compensation of RMB12.1 million, ofwhich RMB2.7 million and RMB5.9 million (US$0.9 million) were recognized in the years ended December 31, 2016 and 2017, respectively. The Company granted 1,720,000 share options to one non-employee in September 2017 for the content related consulting services provided by him,which would vest over a period of four years and expire in ten years with a grant-date fair value of US$0.4648 per share. The share-based awards tononemployees are accounted for based on the fair value of the consideration received or the fair value of the award issued, whichever is more reliablymeasurable. The Company applies the guidance in ASC 505-50 to re-measure share options granted to non-employees based on the then-current fair value ateach reporting date until the service has been provided and the performance targets have been met. A summary of the Company’s share option activities for the years ended December 31, 2015, 2016 and 2017 is presented below: Weighted Average Number ofWeighted Average Remaining AggregateOptionsExercise Price Contractual Life Intrinsic ValueUS$ Years US$ in MillionOutstanding as of January 1, 201550,267,0070.798.217.6Granted8,020,0000.92Forfeited and expired(8,379,197)1.03Exercised(3,790,280)0.361.5Outstanding as of December 31, 201546,117,5300.817.57.6Granted9,991,9640.47Forfeited and expired(10,005,413)0.94Exercised(1,658,946)0.220.4Outstanding as of December 31, 201644,445,1350.437.11.8Granted7,255,0000.42Forfeited and expired(7,319,500)0.50Exercised(5,091,696)0.372.1Outstanding as of December 31, 201739,288,9390.426.715.3Exercisable as of December 31, 201720,643,9610.395.18.7Vested and expected to vest as of December 31, 201729,411,1100.416.011.8 The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest as of December 31, 2017 was calculated as thedifference between the Company’s closing stock price of US$6.49 per ADS, or US$0.8113 per share as of that date, and the exercise price of the underlyingoptions. The aggregate intrinsic value of options exercised was calculated as the difference between the market value on the date of exercise and the exerciseprice of the underlying options. F-36Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 17. Share-based Compensation (Continued) As disclosed in Note 2(t), the Company’s share-based compensation is measured at the value of the award as calculated under the Black-Scholesoption pricing model. The Company estimated the expected volatility at the date of grant based on average annualized standard deviation of the share priceof comparable listed companies. The Company has no history or expectation of paying dividends on its ordinary shares. The Company estimated theexpected term based on the vesting schedule and the exercise period of the options. Risk-free interest rates are based on the derived market yield of theUS$ denominated Chinese government bonds for the term approximating the expected life of award at the time of grant. The assumptions used indetermining the fair value of options granted during the years ended December 31, 2015, 2016 and 2017 are as follows: For the Years Ended December 31,2015 2016 2017Expected volatility rate54.23%-54.32%50.67%-55.65%48.84%-57.06%Expected dividend yield———Expected term (years)5.91-6.163.91-6.163.13-6.16Risk-free interest rate (per annum)1.90%-1.98%1.30%-1.55%0.90%-1.92% The weighted-average grant date fair value of options granted for the years ended December 31, 2015, 2016 and 2017 were US$0.46, US$0.23 andUS$0.48, respectively. During 2009, 2010 and 2011, some employees voluntarily left the Company and exercised their vested share options in exchange for futureentitlement of the Company’s shares issuable after completion of the Company’s IPO and upon the request of the former employees. The proceeds from theexercise of these options could not be refunded to the former employees in any event, even if the Company did not complete an IPO. Accordingly, these shareoptions are considered have been exercised and the proceeds have been included in the additional paid-in capital of the Company. The proceeds receivedfrom exercise of these options amounted to RMB1.5 million (US$0.2 million) as of December 31, 2017. The Company completed its IPO on May 17, 2011and 5,026,615 shares have been issued to the former employees after that. There were 1,692,526 and 1,685,776 contingently issuable shares to be issuedupon the former employees’ request as of December 31, 2016 and 2017, respectively. For the years ended December 31, 2015, 2016 and 2017, the Company recognized share-based compensation net of forfeitures for options ofRMB34.4 million, RMB1.9 million and RMB20.9 million (US$3.2 million), respectively. As of December 31, 2017, there was RMB16.2 million (US$2.5 million) of unrecognized share-based compensation for options, adjusted forestimated forfeitures. The unrecognized share-based compensation is expected to be recognized over a weighted-average period of 2.7 years. Restricted Share Units In March 2011, the Company adopted the 2011 restricted share and restricted share unit scheme. On March 17, 2011, the Company granted10,050,958 restricted share units to the employees. Those restricted share units vested over a period of four years and all had been vested by 2015. A summary of restricted share units activity for the year ended December 31, 2015 is presented below: Weighted-AverageRestricted Share Units Number of Units Grant-DateFair Value US$Unvested as of January 1, 201532,5001.07Granted——Vested(32,500)1.07Forfeited——Unvested as of December 31, 2015—— F-37Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 17. Share-based Compensation (Continued) For the years ended December 31, 2015, 2016 and 2017, total share-based compensation recognized for restricted share units were RMB1.0 million,nil and nil, respectively. As of December 31, 2016 and 2017, there was no unrecognized share-based compensation related to unvested restricted share units. The total fairvalue based on the respective vesting dates of the restricted share units vested were US$0.03 million, nil and nil during the years ended December 31, 2015,2016 and 2017, respectively. 18. Segments The Group currently operates in two principal operating segments: net advertising services and paid services. Information provided to the CODM is atthe gross margin level. The Group currently does not allocate operating expenses or assets to its segments, as its CODM does not use such information toallocate resources to or evaluate the performance of the operating segments. The following table presents summarized information by segments (in thousands): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$RevenuesNet advertising services1,226,5161,232,2101,353,480208,026Paid services382,680212,697221,61234,061Total revenues1,609,1961,444,9071,575,092242,087Cost of revenuesNet advertising services(557,421)(598,040)(602,945)(92,671)Paid services(271,965)(128,767)(124,252)(19,097)Total cost of revenues(829,386)(726,807)(727,197)(111,768)Gross profitNet advertising services669,095634,170750,535115,355Paid services110,71583,93097,36014,964Total gross profit779,810718,100847,895130,319 19. Fair Value Measurements The following table sets forth the financial instruments, measured at fair value, by level within the fair value hierarchy (in thousands): Fair Value Measurements at Reporting Date UsingCarryingValueon Balance SheetsQuote Prices inActive Market forIdentical Assets(Level 1) SignificantOtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3)RMBRMB RMB RMBAs of December 31, 2016:Assets:Term deposits and short term investments781,29822,198759,100—Restricted cash354,602354,602——Available-for-sale investments939,432——939,432As of December 31, 2017:Assets:Term deposits and short term investments737,65712,807724,850—Restricted cash336,700336,700——Available-for-sale investments1,196,330——1,196,330 F-38Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 19. Fair Value Measurements (Continued) The following table sets forth the reconciliation of the fair value measurements of available-for-sale investments using significant unobservableinputs (level 3) from January 1, 2016 to December 31, 2017 (in thousands): Fair Value Measurements UsingSignificant Unobservable Inputs(Level 3)RMB Beginning balance as of January 1, 2016513,994Additional investments obtained from conversion of convertible loans143,820Change in fair value247,336Currency translation adjustment34,282Ending balance as of December 31, 2016939,432Change in fair value321,538Currency translation adjustment(64,640)Ending balance as of December 31, 20171,196,330 Restricted cash The Group’s restricted cash represents guarantee of banking facility which is restricted to withdrawal or usage. The fair values ofrestricted cash are determined based on the pervasive interest rate in the market. The Group classifies the valuation techniques that use the pervasive interestrates input as Level 1 of fair value measurement. Term deposits The fair values of term deposits placed with banks with original maturity of more than three months and up to one year are determinedbased on the pervasive interest rates in market as stated in the contracts with the banks. The Group classifies the valuation techniques that use the interestrates input as Level 1 of fair value measurement. Short term investments Short term investments represent interest-bearing deposit placed with financial institutions which are restricted to withdrawaland use. The investments are issued by commercial bank in the PRC with a variable interest rate indexed to performance of underlying assets. To estimate fairvalue, the Group refers to the quoted rate of return provided by banks at the end of each period using the discounted cash flow method. The Group classifiesthe valuation techniques that use these inputs as Level 2 of fair value measurements. Available-for-sale investments Available-for-sale investments represent the investments of convertible redeemable preferred shares in Particle. Inaccordance with ASC 820, the Group measures available-for-sale investments at fair value on a recurring basis. The fair values of the Group’s available-for-sale investments are determined based on the discounted cash flow model using the discount curve of market interest rates. The Group classifies the valuationtechniques that use unobservable inputs as Level 3 of fair value measurements. The key inputs used in valuation of available-for-sale investments as of December 31, 2016 and 2017 were as follow: As of December 31, 2016 2017 Discount rate23.0%23.0%Lack of marketability discount (“DLOM”)25.0%25.0%Volatility47.0%45.3%Revenue growth rate10.0%-349.0%5.0%-93.8%Terminal growth rate3.0%3.0% F-39 Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 19. Fair Value Measurements (Continued) The following are other financial instruments not measured at fair value in the balance sheets but for which the fair value is estimated for disclosurepurposes. Short-term receivables and payables Accounts receivable, prepayment and other current assets, and amounts due from related parties are financialassets with carrying values that approximate fair value due to their short term nature. Accounts payable, amounts due to related parties, salary and welfarepayable, and accrued expenses and other current liabilities are financial liabilities with carrying values that approximate fair value due to their short termnature. Convertible loans due from a related party Convertible loans due from a related party represent short-term loans advanced to a related party of whichthe Group may at its option convert all or a portion into preferred shares. The fair value of the convertible loans due from a related party was based on thediscounted cash flow model. As of December 31, 2016 and 2017, the estimated fair value of convertible loans was US$15.8 million and US$17.3 million(RMB112.6 million), respectively. The Group classifies the valuation techniques that use unobservable inputs as Level 3 of fair value measurements. The keyinputs used in the valuation of convertible loans due from a related party were the same as the key inputs in the valuation of available-for-sale investments. Other non-current assets Other non-current assets are financial assets with carrying values that approximate fair value due to the change in fair valueafter considering the discount rate, being immaterial. The Group estimated fair values of other non-current assets using the discounted cash flow method. TheGroup classifies the valuation technique as Level 3 of fair value measurement, as it uses estimated cash flow input which is unobservable in the market. Short-term bank loans The carrying value of the short-term bank loans approximates its fair value due to its short term nature. The rate of interestunder the loan agreement with the lending bank was determined based on the prevailing interest rates in the market. The Group estimated the fair value of theshort-term bank loans using the discounted cash flow methodology. The Group classifies the valuation techniques that use these inputs as Level 2 of fairvalue measurements. 20. Net Income per Share The following table sets forth the computation of basic and diluted net income per share for the years indicated (amounts in thousands, except fornumber of shares (or ADSs) and per share (or ADS) data): For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Net income per Class A and Class B ordinary share - basic:Numerator:Net income attributable to Phoenix New Media Limited73,58480,61137,4725,759Denominator:Weighted average number of Class A and Class B ordinary sharesoutstanding569,058,424571,298,943573,096,266573,096,266Weighted average number of contingently issuable shares2,189,2992,222,5931,690,6211,690,621Denominator used in computing net income per share — basic571,247,723573,521,536574,786,887574,786,887Net income per Class A and Class B ordinary share — basic0.130.140.070.01Net income per Class A and Class B ordinary share - diluted:Numerator:Net income attributable to Phoenix New Media Limited73,58480,61137,4725,759Denominator:Denominator used in computing net income per share — basic571,247,723573,521,536574,786,887574,786,887Share-based awards9,537,5333,516,37015,647,02015,647,020Denominator used in computing net income per share — diluted580,785,256577,037,906590,433,907590,433,907Net income per Class A and Class B ordinary share — diluted0.130.140.060.01Net income per ADS (1 ADS represents 8 Class A ordinary shares):Denominator used in computing net income per ADS — basic71,405,96571,690,19271,848,36171,848,361Denominator used in computing net income per ADS — diluted72,598,15772,129,73873,804,23873,804,238Net income per ADS — basic1.031.120.520.08Net income per ADS — diluted1.011.120.510.08 F-40Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 20. Net Income per Share (Continued) The Company has included 2,189,299, 2,222,593 and 1,690,621 contingently issuable shares in the denominator used in computing basic anddiluted net income per share for the years ended December 31, 2015, 2016 and 2017, respectively. These shares are contingently issuable upon the holders’request without other substantive conditions and for no further consideration. There were 29,572,888, 30,953,329 and 2,223,005 options to purchaseordinary shares have been excluded from the computation of diluted net income per share for the years ended December 31, 2015, 2016 and 2017,respectively, as their effects would be anti-dilutive. 21. Treasury Stock In May 2014, the Company’s board of directors approved a new share repurchase program (“New Share Repurchases Program”), under which theCompany was authorized to repurchase up to US$50.0 million worth of its outstanding ADSs for a period not to exceed twelve months. As of December 31, 2015, the Company had completed the New Share Repurchases Program and repurchased 5,368,144 ADSs from the open marketfor a total consideration of US$50.0 million (RMB307.2 million). All treasury stocks repurchased were cancelled for an aggregate consideration of US$50.3million (RMB308.9 million) including cancellation fees of US$0.3 million (RMB1.7 million) in 2015. 22. Commitments and Contingencies (a) Commitments As of December 31, 2017, future minimum commitments under non-cancelable agreements were as follows (in thousands): Rental BandwidthPurchases CooperationwithPhoenix TVGroup ContentPurchases Property andEquipment,and IntangibleAssets Others Total RMB RMB RMB RMB RMB RMB RMB201837,2248,1329,01629,9009705,46990,711201932,6542,1916,81211,4207521,85055,679202030,9172,1911,301509—12535,043202131,9922,191—319——34,5022022 and thereafter17,1781,187—2,844——21,209Total149,96515,89217,12944,9921,7227,444237,144 The amounts of cooperation with Phoenix TV Group are calculated according to the New Agreements (see Note 2(a)). The rental expenses were approximately RMB41.1 million, RMB39.4 million and RMB37.0 million (US$5.7 million) during the years endedDecember 31, 2015, 2016 and 2017, respectively, and were charged to the consolidated statements of comprehensive income when incurred. The Group did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2016 and 2017. F-41Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 22. Commitments and Contingencies (Continued) (b) Litigation From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. The Group is currently a partyto certain legal proceedings and claims which in the opinion of the Company’s management, adequate provisions have been recorded to cover the probableloss of those that can be reasonably estimated, while other claims are considered would not have material adverse effect, individually or in the aggregate, onthe Group’s financial position, results of operations or cash flows. In relation to one of the claims in 2016 about the infringement of copyright and unauthorized selling on the Group’s website and mobile applicationsfor a piece of literature work, the related claim for damage was approximately RMB235.8 million, however, the actual income the Group generated from suchliterature work was less than RMB1,500. This claim was withdrawn by the plaintiffs in January 2018. In April 2018, the Group received notices from the localcourt that the plaintiffs have filed a lawsuit against it again for the same claim, with the related claim for damages reduced to approximately RMB99.8million. As of the date of this annual report, this case is still pending. As litigation is subject to inherent uncertainties and this case is at its preliminary stage,and based on the legal advice, the Group is currently unable to make an estimation of the amount of the reasonably possible loss or range of possible loss, ifany. However, the Group’s view of these matters may change in the future and will review the need for any such liability on a regular basis. Litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the future. There exists the possibility of a materialadverse impact on the Group’s financial position, results of operations or cash flows for the period in which the unfavorable outcome occurs, and potentiallyin future periods. (c) Long-term Liabilities for Uncertain Tax Positions As mentioned in Note 15, as of December 31, 2016 and 2017, the Group had recorded uncertain tax positions of RMB21.7 million and RMB24.7million (US$3.8 million), respectively. 23. Related Party Transactions The table below sets forth the major related parties and their relationships with the Group: Related Parties Relationships with the GroupEntities within the non US listed part of the Phoenix TV GroupUnder common control by Phoenix TVCMCCA shareholder of Phoenix TVBeijing Phoenix Lilita Information Technology Co., Ltd. (“Lilita”)Cost method investee, related party of Phoenix TV GroupParticle Inc. (“Particle”)Available-for-sale method investee, with a common director of the CompanyBeijing Fenghuang Tianbo Network Technology Co., Ltd. (“Tianbo”)Equity method investeePhoenix FM Limited (“Phoenix FM”)Equity method investeeShenzhenshi Fenghuang Jingcai Network Technology Co., Ltd. (“FenghuangJingcai”)Equity method investeeHangzhou Qike Technology Co., Ltd.Equity method investeeLifeix Inc.Cost method investeeShengzhen Kuailai Technology Co., Ltd. (“Kuailai”)Cost method investeeMr. Gao Ximin and Mr. Qiao HaiyanLegal shareholders of Tianying Jiuzhou and employees of the GroupMr. He YanshengLegal shareholder of Yifeng Lianhe and employee of the GroupMr. Wu Haipeng and Mr. He YanshengLegal shareholders of Chenhuan and employees of the Group F-42Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 23. Related Party Transactions (Continued) In addition to those disclosed elsewhere in the financial statements, the Group had the following significant related party transactions during the yearsended December 31, 2015, 2016 and 2017 (in thousands): Transactions with the Non US Listed Part of Phoenix TV Group: For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Content provided by Phoenix TV Group(4,730)(7,447)(12,090)(1,858)Data line services provided by Phoenix TV Group(180)———Advertising and promotion expenses charged by Phoenix TVGroup(1,788)(1,277)(23)(4)Corporate administrative expenses charged by Phoenix TVGroup(1,750)(195)(2,676)(411)Trademark license fees charged by Phoenix TV Group(62)(65)(3,569)(549)Project cost charged by Phoenix TV Group(55)—(1,217)(187)Revenues earned from Phoenix TV Group16,51010,3569,4541,453 Transactions with CMCC: For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Advertising revenues earned from CMCC35,78731,95633,4915,147Paid services revenues earned from and through CMCC273,510122,672138,71221,320Revenue sharing fees and bandwidth costs charged by CMCC(44,359)(20,941)(43,604)(6,702) Transactions with Investees: For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Loans provided to Phoenix FM8,000———Advances provided to/(repaid by) Phoenix FM71(102)——Loans repaid by Phoenix FM—(7,056)——Revenues earned through Phoenix FM——855131Advertising revenues earned from Tianbo4,38413,48213,8692,132Advances provided to/(repaid by) Tianbo1,177(1,177)294Advertising revenues earned from Lilita14,41442,61910,0001,537Brand license authorization revenues earned from Lilita3,15517216125Advertising resources provided by Tianbo(39)(670)——Advances provided to Fenghuang Jingcai40919——Loans provided to Particle and related interest income includingthe effect of foreign exchange—50,33787,51413,451Loans repaid by Particle——(48,747)(7,492)Issuance of convertible loans to Particle and related interestincome including the effect of foreign exchange—248,249(1,799)(277)Corporate administrative expenses charged by Particle——(725)(111)Sales of assets to Particle at carrying value——4,740729Revenue sharing fees charged by investees——(111)(17) F-43Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 23. Related Party Transactions (Continued) As of December 31, 2016 and 2017, the amounts due from and due to related parties were as follows (in thousands): As of December 31,2016 2017 2017RMB RMB US$Amounts due from related parties:Due from CMCC48,83163,2169,716Due from Phoenix TV Group31,50910,5201,617Due from Particle50,33789,32313,729Due from other investees, net25,58324,1553,712Total156,260187,21428,774Amounts due to related parties:Due to CMCC2494,043621Due to Phoenix TV Group17,7248,6571,331Due to Others7471,440221Total18,72014,1402,173 The amounts due from Phoenix TV Group represent accounts receivable from Phoenix TV Group for the advertising services provided to its customers,and the amounts due to Phoenix TV Group represent resources or services provided by Phoenix TV Group, expenses paid by Phoenix TV Group on behalf ofthe Group, and expenses charged by Phoenix TV Group under the cooperation agreements (see Note 2 (a)). Considering the doubts on the collection of receivable, the Group made bad debt provision to receivable from Tianbo with a total amount ofRMB14.7 million (US$2.3 million) and bad debt provision to receivable from Lilita with a total amount of RMB1.0 million (US$0.2 million) in 2017, whichwere reduced from amounts due from related parties. The Group granted a US$6.8 million (RMB45.9 million) loan to Particle in November 2016 at an interest rate of 9% per annum and with a term of sixmonths (the “November 2016 Loan”). In December 2016, the Group revised and extended the term of the November 2016 Loan from six months to twelvemonths. In January 2017, the Group granted another unsecured RMB74.0 million (US$10.8 million) loan to Particle at an interest rate of 9.0% per annum andwith maturity of twelve months (the “January 2017 Loan”). In November 2017, Particle repaid all of the principal and interests of the November 2016 Loan.As of December 31, 2016 and 2017, the carrying value of the loans granted to Particle recorded in amounts due from related parties was RMB47.8 millionand RMB80.4 million (US$12.4 million), respectively. For the years ended December 31, 2016 and 2017, total interest income arising from loans provided to Particle, convertible loans due from Particleand bank interest expenses incurred by the Company but borne by Particle was RMB9.1 million and RMB23.1 million (US$3.5 million), respectively. 24. Restricted Net Assets Relevant PRC laws and regulations permit payments of dividends by the Company’s subsidiaries, the VIEs and the subsidiaries of the VIEsincorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition,the Company’s subsidiaries, the VIEs and the subsidiaries of the VIEs incorporated in the PRC are required to annually appropriate 10% of their net after-taxincome to the general reserve fund or the statutory surplus fund prior to payment of any dividends, unless such reserve funds have reached 50% of theirrespective registered capital. As a result of these and other restrictions under PRC laws and regulations, and in accordance with Securities and ExchangeCommission Regulation S-X Rule 4-08 (e) (3), General Notes to Financial Statements , the Company’s subsidiaries, the VIEs and the subsidiaries of the VIEsincorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans oradvances, which the restricted portion amounted to approximately RMB551.8 million and RMB554.3 million (US$85.2 million) as of December 31, 2016and 2017, respectively. Even though the Company currently does not require any such dividends, loans or advances from the PRC entities for workingcapital and other funding purposes, the Company may in the future require additional cash resources from them due to changes in business conditions, tofund future acquisitions and development, or merely to declare and pay dividends or distributions to the Company’s shareholders. Except for the above, thereis no other restriction on use of proceeds generated by the Company’s subsidiaries, the VIEs and the subsidiaries of the VIEs to satisfy any obligations of theCompany. The Company performed a test on the restricted net assets of the Company’s subsidiaries, the VIEs and the subsidiaries of the VIEs in accordance withSecurities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), General Notes to Financial Statements and concluded that it was applicable for theCompany to disclose its condensed financial information for the year ended December 31, 2017. For the purposes of presenting the Company’s separatefinancial information, the Company records its investments in its subsidiaries and VIEs under the equity method of accounting. Such investments arepresented on the separate condensed balance sheets of the Company as “Investments using equity accounting” and “Share of profit of investments usingequity accounting, including impairments” in the condensed statements of comprehensive income. See Note 26 for the Company’s information. F-44Table of Contents Phoenix New Media LimitedNotes to Consolidated Financial Statements 25. Subsequent Events In January 2018, the Company’s board of directors authorized to extend the terms of two loans previously granted to Particle by six months, while theother terms and conditions would remain the same. One of the two loans was the August 2016 Loan (see Note 10), which will mature in August 2018 after theextension, and the other loan was the January 2017 Loan (see Note 23), which will mature in July 2018 after the extension. The expiration date of theCompany’s right to convert all or a portion of the August 2016 Loan (including principal and interests) into Series D1 preferred shares to be issued byParticle has also been extended to August 9, 2018. In April 2018, the Company announced a loan assignment agreement among the Company, Particle and Long De Cheng Zhang CultureCommunication (Tianjin) Co., Ltd. (“Long De”), pursuant to which the Company would assign to Long De or its designated affiliates the Company’s rightsunder the August 2016 Loan and Long De or its affiliates should pay the Company an assignment price of approximately US$17.0 million. 26. Additional Information - Condensed Financial Statements of the Company The condensed financial statements of Phoenix New Media Limited have been prepared in accordance with SEC Regulation S-X Rule 5-04 andRule 12-04. The Company records its investments in subsidiaries and VIEs under the equity method of accounting. Such investments are presented on the balancesheets as “Investments using equity accounting”, and the profit of subsidiaries and VIEs is presented as “Share of profit of investments using equityaccounting, including impairments” in the statement of comprehensive income. As of December 31, 2016 and 2017, there were no material contingencies, significant provisions for long-term obligations, or guarantees of theCompany, except for those, if any, which have been separately disclosed in the consolidated financial statements. F-45 Table of Contents 26. Additional Information - Condensed Financial Statements of the Company (Continued) Phoenix New Media LimitedCondensed Financial Information of the CompanyBalance Sheets(Amounts in thousands, except for number of shares and per share data) As of December 31,2016 2017 2017RMB RMB US$ASSETSCurrent assets:Cash and cash equivalents32,73141,2086,334Amounts due from related parties50,3438,7021,336Amounts due from subsidiaries and VIEs228,050215,01833,048Prepayments and other current assets1,565920141Convertible loans due from a related party104,429102,63115,774Total current assets417,118368,47956,633Non-current assets:Investments using equity accounting1,251,5781,314,191201,988Available-for-sale investments939,4321,196,330183,873Total non-current assets2,191,0102,510,521385,861Total assets2,608,1282,879,000442,494LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:Amounts due to related parties4,609——Amounts due to subsidiaries and VIEs435,724369,95556,861Accrued expenses and other current liabilities2,0271,506231Total current liabilities442,360371,46157,092Total liabilities442,360371,46157,092Shareholders’ equity:Class A ordinary shares (US$0.01 par value, 680,000,000 shares authorized;254,909,790 and 260,001,486 shares issued and outstanding as of December 31,2016 and 2017, respectively)16,84317,1802,641Class B ordinary shares (US$0.01 par value, 320,000,000 shares authorized;317,325,360 and 317,325,360 shares issued and outstanding as of December 31,2016 and 2017, respectively)22,05322,0533,389Additional paid-in capital1,555,5111,587,575244,006Statutory reserves77,94681,23712,486Retained earnings195,069229,25035,235Accumulated other comprehensive income298,346570,24487,645Total shareholders’ equity2,165,7682,507,539385,402Total liabilities and shareholders’ equity2,608,1282,879,000442,494 F-46Table of Contents 26. Additional Information - Condensed Financial Statements of the Company (Continued) Phoenix New Media LimitedCondensed Financial Information of the CompanyStatements of Comprehensive Income(Amounts in thousands) For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Operating expenses:General and administrative expenses(10,783)(8,649)(9,027)(1,387)Total operating expenses(10,783)(8,649)(9,027)(1,387)Loss from operations(10,783)(8,649)(9,027)(1,387)Other income:Interest income4,62510,01616,9532,606Foreign currency exchange (loss)/gain(4,948)2,512(746)(115)Gain on disposal of an equity investment and acquisition ofavailable-for-sale investments4,643———Others, net6,2422,4762,488382Share of profit of investments using equity accounting,including impairments73,80574,25627,8044,273Net income73,58480,61137,4725,759Other comprehensive income38,682275,005271,89841,789Comprehensive income112,266355,616309,37047,548 F-47Table of Contents 26. Additional Information - Condensed Financial Statements of the Company (Continued) Phoenix New Media LimitedCondensed Financial Information of the CompanyStatements of Cash Flows(Amounts in thousands) For the Years Ended December 31,2015 2016 2017 2017RMB RMB RMB US$Cash flows from operating activities:Net cash used in operating activities(8,754)(2,323)(8,078)(1,242)Cash flows from investing activities:Placement of term deposits and short term investments(83,854)—(93,970)(14,443)Maturity of term deposits and short term investments—83,85493,97014,443Investments in available-for-sale investments(352,008)———Issuance of convertible loans to a related party—(228,280)——Loans provided to a related party—(45,865)——Loans repaid by a related party——53,0588,155Investments in investments using equity accounting(35,757)(3,554)——Net cash (used in)/provided by investing activities(471,619)(193,845)53,0588,155Cash flows from financing activities:Borrowings from subsidiaries and VIEs212,435212,441——Payment to subsidiaries and VIEs——(48,871)(7,511)Proceeds from exercise of stock options6,9442,43612,3681,901Repurchase of ordinary shares(66,417)———Net cash provided by/(used in) financing activities152,962214,877(36,503)(5,610)Net (decrease)/increase in cash and cash equivalents(327,411)18,7098,4771,303Cash and cash equivalents at the beginning of the year341,43314,02232,7315,031Cash and cash equivalents at the end of the year14,02232,73141,2086,334 F-48 Exhibit 4.8A ENGLISH TRANSLATION FOR REFERENCE ONLY.THE ORIGINAL AGREEMENT EXECUTED IN CHINESE SHALL CONTROL.(English Translation) Exclusive Equity Option Agreement of Beijing Chenhuan Technology Co., Ltd. by and among Wu Haipeng He Yansheng Beijing Chenhuan Technology Co., Ltd. and Qieyiyou (Beijing) Information Technology Co., Ltd. January 13, 2014 1 Exclusive Equity Option Agreement This Exclusive Equity Option Agreement (the “Agreement”) is entered into by the following parties on January 13, 2014 in Beijing, the People’s Republic ofChina (“PRC” or “China”): 1. Wu Haipeng, a PRC citizen (ID No.: 110108196611071XXX) 2. He Yansheng, a PRC citizen (ID No.: 110105195806195XXX); (are referred to hereinafter individually as an “Existing Shareholder” and collectively as “Existing Shareholders”) 3. Qieyiyou (Beijing) Information Technology Co., Ltd. (“WFOE”) Registered Address: Room 08, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing 4. Beijing Chenhuan Technology Co., Ltd. (the “Domestic Company”) Registered Address: Room 05, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing (Each of the foregoing parties is referred to hereinafter individually as a “Party” and collectively as “Parties”.) WHEREAS: (1) Existing Shareholders are the shareholders on record of the Domestic Company and hold all the equity interests in it; and as of the date hereof, theamount of capital contributed and the percentage of shares held by each Existing Shareholder in the Domestic Company Registered Capital are as setforth in Exhibit 1 hereto; (2) Subject to the PRC Law, each Existing Shareholder intends to transfer to WFOE and/or any other entity or individual designated by WFOE, and WFOEintends to accept such transfer of, all the equity interests held by each Existing Shareholder in the Domestic Company; (3) In furtherance of the foregoing equity transfer, Existing Shareholders agree to jointly grant WFOE an irrevocable equity option (the “Equity Option”),pursuant to which and to the extent permitted by the PRC Law, Existing Shareholders shall transfer, at WFOE’s request, the Equity (as defined below) toWFOE and/or any other entity or individual designated by WFOE in accordance with this Agreement; and (4) The Domestic Company agrees to the grant of the Equity Option by Existing Shareholders to WFOE in accordance with this Agreement. 2thth NOW, THEREFORE, the Parties have agreed as follows upon friendly consultation: ARTICLE ONE DEFINITION 1.1 Unless otherwise interpreted pursuant to the context herein, each of the terms used herein shall have the meaning ascribed to it below: “Trustee”shall have the meaning ascribed to it in Section 3.7 hereof. “Business Licenses”shall mean all approvals, permits, filings and registrations required by the Domestic Company inconducting the internet information service business and all other businesses legally and efficientlyintended to be conducted by it, including but not limited to the Enterprise Legal Person BusinessLicense, the Tax Registration Certificate, Value-added Telecom Business License and other relevantpermits and licenses then required by the PRC Law. “Confidential Information”shall have the meaning ascribed to it in Section 8.1 hereof. “Default Party”shall have the meaning ascribed to it in Section 11.1 hereof. “Event of Default”shall have the meaning ascribed to it in Section 11.1 hereof. “Registered Capital of the DomesticCompany”shall mean the registered capital of the Domestic Company in the amount of RMB1.5 Million as of thedate hereof, as the same may be increased by any additional capital contribution during the term hereof. “Assets of the Domestic Compay”shall mean all tangible and intangible assets which the Domestic Company owns or has the right to useduring the term hereof, including but not limited to any moveable property, immoveable property, andintellectual properties such as trademarks, copyrights, patents, know-how, domain names and softwareuse rights. “Exercise Notice”shall have the meaning ascribed to it in Section 3.5 3 “Loan Contract”shall mean the Loan Contract entered into by and between WFOE and the Existing Shareholders on [ ]. “Material Agreement”shall mean any agreement to which the Domestic Company is a party and which has material impact onthe Domestic Company’s business or assets, including but not limited to the Exclusive TechnicalConsulting and Service Agreement by and between the Domestic Company and WFOE and otheragreements in relation to the Domestic Company’s business. “Non-default Party”shall have the meaning ascribed to it in Section 11.1 hereof. “Equity”shall mean, with respect to each Existing Shareholder, all the equity interests held by such Shareholderin the Registered Capital of the Domestic Company; and with respect to all Existing Shareholders,100% of the equity interests in the Registered Capital of the Domestic Company. “PRC Law”shall mean the then current PRC laws, regulations, rules, local stipulations, interpretations and othernormative documents with binding force. “Power of Attorney”shall have the meaning ascribed to it in Section 3.7 hereof. “Rights”shall have the meaning ascribed to it in Section 12.5 hereof. “Cap”shall have the meaning ascribed to it in Section 3.2 hereof. “Subject Equity”shall mean the equity interests in the Domestic Company for which WFOE, when exercising its EquityOption (the “Exercise”), has the right to request transfer by either or both Existing Shareholders toWFOE or any other entity or individual designated by WFOE pursuant to Section 3.2 hereof, theamount of which may be the whole or a part of the Equity, as determined by WFOE in its owndiscretion in accordance with the then current PRC Law and out of its own business considerations. 4 “Transfer Price”shall mean all consideration payable by WFOE or any other entity or individual designated by WFOEto the Existing Shareholders for the Subject Equity to be obtained at each Exercise pursuant toArticle Four hereof. 1.2 Any reference herein to any PRC Law shall be deemed: (1) to include amendments, revisions, additions and updates to such PRC Law, whether enacted prior to or after the execution of this Agreement;and (2) to include other decisions, notices and rules promulgated or enacted in accordance with the provisions of such PRC Law. 1.3 Unless otherwise stated herein, references to articles, sections, subsections and paragraphs herein shall mean Articles, Sections, Subsections andParagraphs of this Agreement. ARTICLE TWO GRANT OF THE EQUITY OPTION 2.1 Existing Shareholders hereby agree, jointly and severally, to grant WFOE, and WFOE also agrees to accept, an irrevocable, unconditional andexclusive Equity Option, pursuant to which WFOE shall have the right to request, to the extent permitted by the PRC Law, transfer of the Equity inthe manner prescribed herein by Existing Shareholders to WFOE or any other entity or individual designated by WFOE. 2.2 The Domestic Company hereby agrees to the grant of the Equity Option by Existing Shareholders to WFOE in accordance with Section 2.1 above andother provisions herein. 2.3 The Existing Shareholders shall not grant any option for the purchase of the Equity Option held by it in relation to the Domestic Company in anyform to anyone other than to WFOE or those entities or individuals designated by WFOE. ARTICLE THREE METHOD OF EXERCISE 3.1 To the extent permitted by the PRC Law, WFOE shall have the absolute discretion to determine the specific time, manner and frequency of itsExercise. 3.2 If WFOE and/or any other entity or individual designated by WFOE is permitted by the then current PRC Law to hold all the equity interests in theDomestic Company, then WFOE shall have the right to exercise all its Equity Options in one lump sum or by installment, and WFOE and/or any otherentity or individual designated by WFOE shall be assigned all the Equity by Existing Shareholders in one lump sum or by installment. If WFOEand/or any other entity or individual designated by WFOE is permitted by the then current PRC Law to hold only a portion of the equity interests inthe Domestic Company, then WFOE shall have the right to determine the amount of the Subject Equity within the equity holding cap (the “Cap”)prescribed by the then current PRC Law, and WFOE and/or any other entity or individual designated by WFOE shall be assigned by ExistingShareholders such amount of the Subject Equity as determined. In the latter case, WFOE shall have the right to exercise its Equity Option byinstallment along with the gradual opening up of the Cap under the PRC Law, until all the Equity is obtained by WFOE eventually. 5 3.3 At each Exercise, WFOE shall have the right to determine at its own discretion the amount of the Subject Equity to be transferred by ExistingShareholders at such Exercise to WFOE and/or any other entity or individual designated by WFOE, and Existing Shareholders shall each transfer itsSubject Equity to WFOE and/or any other entity or individual designated by WFOE in the amount determined by WFOE. WFOE and/or any otherentity or individual designated by WFOE shall pay the Transfer Price for the Subject Equity assigned at such Exercise to the transferring ExistingShareholder and WFOE and/or the other entity or individual designated by WFOE shall have the right to offset the Transfer Price against theliabilities (including but not limited to borrowings) owing by the relevant Existing Shareholder to WFOE and/or such other entity or individualdesignated by WFOE. 3.4 At each Exercise, the Subject Equity may be transferred to WFOE or any third party designated by WFOE, in whole or in part. 3.5 Each time WFOE elects to exercise its Equity Option, it shall send a notice regarding such Exercise in form attached hereto as Exhibit 2 (the“Exercise Notice”) to Existing Shareholders, who, upon receipt of such Exercise Notice, shall promptly transfer in one lump sum all the SubjectEquity to WFOE and/or any other entity or individual designated by WFOE in the manner prescribe in Section 3.3 hereof. 3.6 Existing Shareholders hereby undertake and warrant, jointly and severally, that once an Exercise Notice is sent to them by WFOE, (1) they will promptly convene a shareholders meeting (at which a resolution of such shareholder meeting on the waiver of the right of firstrefusal shall pass) and take all other necessary action to endorse the transfer of all the Subject Equity to WFOE and/or any other entity orindividual designated by WFOE at the Transfer Price; (2) they will promptly enter into an equity transfer agreement with WFOE and/or any other entity or individual designated by WFOE so as toeffectuate the transfer of all the Subject Equity to WFOE and/or any other entity or individual designated by WFOE at the Transfer Price; and 6 (3) they will provide necessary support required by WFOE and relevant laws and regulations, including delivering and signing all relevant legaldocuments, handling all relevant government approval and registration procedures, and assuming all relevant obligations, to enable WFOEand/or any other entity or individual designated by WFOE to obtain all the Subject Equity flawlessly. 3.7 Existing Shareholders agree that concurrently with the execution of this Agreement, they shall each sign a power of attorney in form attached heretoas Exhibit 3 (the “Power of Attorney”), whereby any individual appointed by WFOE (“Trustee”) will be entrusted in writing to sign on behalf ofsuch Existing Shareholder any and all legal documents required hereunder to ensure that WFOE and/or any other entity or individual designated byWFOE will obtain all the Subject Equity flawlessly. Such Power of Attorney shall be kept by WFOE, which may request, whenever necessary, thatmore copies of such Power of Attorney be signed by the Existing Shareholders and submitted to the relevant government. Upon and only uponnotification in writing from WFOE to Existing Shareholders regarding the replacement of Trustee, Existing Shareholders shall forthwith cancel theirauthorization to the existing Trustee and authorize such other Trustee then appointed by WFOE to sign on behalf of Existing Shareholders any andall legal documents required hereunder. The new Power of Attorney, once made, shall replace the original one immediately. In no other circumstancesmay Existing Shareholders cancel their Power of Attorney to the Trustee. ARTICLE FOUR TRANSER PRICE 4.1 At each Exercise, all the Transfer Price payable by WFOE or any entity or individual designated by WFOE to each Existing Shareholder shall equalthe capital amount actually contributed by such Existing Shareholder in respect of the equity interests transferred at such Exercise. If there is anymandatory requirements in the PRC Law on the Transfer Price then, WFOE or any entity or individual designated by WFOE shall have the right to setthe Transfer Price at the minimum price permitted by the PRC Law. 4.2 The means of payment of the Transfer Price shall be jointly determined by WFOE and the Existing Shareholders in accordance with the then effectiveapplicable laws. The Existing Shareholders hereby undertake that, upon their receipt of the Transfer Price for Exercise of the Equity Option paid byWFOE under this Agreement, they shall immediately repay the corresponding principal and interest of the borrowings to WFOE under the LoanContract between them and WFOE on January 13, 2015. 7 ARTICLE FIVE REPRESENTATIONS AND WARRANTIES 5.1 Existing Shareholders hereby, jointly and severally, represent and warrant as follows, which representations and warrants shall continue in force andeffect as though they were made at the time the Equity is transferred, 5.1.1 Each of them is a PRC citizen with full capacity, has full and independent legal status and capacity to sign, deliver and perform thisAgreement, and may act as an independent litigation subject; 5.1.2 The Domestic Company is a limited liability company duly registered and validly existing under the PRC Laws, with independent legalperson status, has full and independent legal status and capacity to sign, deliver and perform this Agreement, and may act as an independentlitigation subject; 5.1.3 Each of them has full power and authorization to sign and deliver this Agreement as well as all other documents to be signed by each inconnection with the transaction anticipated herein and to consummate such transaction. The execution or performance of this Agreementshall not breach or violate the following in any material aspect: (1) any agreement, arrangement or obligation to which it is a party; or (ii) anycurrently effective applicable laws, regulations, rules or policies to which it is subject to, or contradict with any of them. 5.1.4 This Agreement is duly and appropriately signed and delivered by Existing Shareholders and constitutes their legal, valid and bindingobligations, enforceable against them in accordance with its terms; 5.1.5 Existing Shareholders are the legal and registered owners of the Equity at the time this Agreement becomes effective; other than the rightscreated under this Agreement, the Equity Pledge Agreement between Existing Shareholders and WFOE, and the Voting Right EntrustAgreement among Existing Shareholders, WFOE and the Domestic Company, there is no lien, pledge, recourse and other security interest orthird party rights on the Equity; and following the Exercise pursuant to this Agreement, WFOE and/or any other entity or individualdesignated by WFOE will obtain good title to the Subject Equity, free from any lien, pledge, recourse and other security interest or third partyrights. 5.1.6 The Domestic Company owns good and marketable titles to all its assets which are free of any encumbrances. 5.1.7 The Domestic Company does not have any external liabilities other than those (i) incurred in its normal business operations; and (ii) whichhave been disclosed to WFOE in writing. 5.1.8 As of the date of this Agreement, there are no pending or threatened litigation, arbitration or administrative investigation against theDomestic Company with respect to its equity, asset or itself. 8 5.2 The Domestic Company hereby represents and warrants that: 5.2.1 it is a limited liability company duly registered and validly existing under the PRC Laws, with independent legal person status, has full andindependent legal status and capacity to sign, deliver and perform this Agreement, and may act as an independent litigation subject; 5.2.2 It has full power and authorization to sign and deliver this Agreement as well as all other documents to be signed by each in connection withthe transaction anticipated herein and to consummate such transaction. The execution or performance of this Agreement shall not breach orviolate the following in any material aspect: (1) its articles of association or similar charter documents; (ii) any agreement, arrangement orobligation to which it is a party; or (ii) any currently effective applicable laws, regulations, rules or policies to which it is subject to, orcontradict with any of them. 5.2.3 this Agreement is duly and appropriately signed and delivered by it and constitutes its legal, valid and binding obligations, enforceableagainst it in accordance with its terms; 5.2.4 Existing Shareholders are all the legal shareholders on record of the Domestic Company at the time this Agreement becomes effective, andfollowing the Exercise pursuant to this Agreement, WFOE and/or any other entity or individual designated by WFOE will obtain good title tothe Subject Equity, free from any lien, pledge, recourse and other security interest or third party rights; and 5.2.5 The Domestic Company owns good and marketable titles to all its assets which are free of any encumbrances. 5.2.6 The Domestic Company does not have any external liabilities other than those (i) incurred in its normal business operations; and (ii) whichhave been disclosed to WFOE in writing. 5.2.7 As of the date of this Agreement, there are no pending or threatened litigation, arbitration or administrative investigation against theDomestic Company with respect to its equity, asset or itself. 5.3 WFOE hereby represents and warrants that: 5.3.1 WFOE is a wholly foreign-owned limited liability company duly registered and validly existing under the PRC Laws, with independent legalperson status. WFOE has full and independent legal status and legal capacity to sign, deliver and perform this Agreement, and may act as anindependent party to litigation. 9 5.3.2 WFOE has full power and authorization to sign and deliver this Agreement as well as all other documents to be signed by it in connectionwith the transactions contemplated herein and to consummate such transactions. 5.3.3 This Agreement has been legally and properly signed and delivered by WFOE, which constitutes legal and binding obligations of WFOE. ARTICLE SIX EXISTING SHAREHOLDERS’ UNDERTAKING Each Existing Shareholders hereby undertakes severally that, 6.1 During the term of hereof, it shall exert its best reasonable efforts to obtain all business licenses required by the Domestic Company in conducting thebusiness to be conducted by the Domestic Company and shall cause such business licenses to remain valid at any time. 6.2 During the term hereof, it will not, without WFOE’s prior consent in writing, 6.2.1 transfer or otherwise dispose of any Equity or place thereon any security interest or third party rights; 6.2.2 increase or decrease the registered capital of the Domestic Company or change in any way the share structure of the domestic companies setforth in Exhibit 1 hereto; 6.2.3 transfer, pledge or dispose of in any form or cause the management of the Domestic Company to transfer, pledge or dispose of in any form anyasset, legal income or interest of the Domestic Company (other than in the course of normal business operations); 6.2.4 appoint or remove any director or supervisor of the Domestic Company or any other management member of the Domestic Company whoshall be appointed or removed by Existing Shareholders; 6.2.5 cause or endorse the declaration or actual distribution of any distributable profit, bonus, dividends or interests by the Domestic Company; 6.2.6 cause or agree to the amendment to the articles of association of the Domestic Company; 6.2.7 vote for the aforesaid matters at shareholders’ meetings or sign any shareholders’ written resolution on approval of the aforesaid matters. 6.3 During the term hereof, the Existing Shareholders must take all necessary measures to ensure that the Domestic Company appoints directors,supervisors or other members of the management of the Domestic Company whom shall be appointed by the Existing Shareholders following theinstructions of WFOE. 10 6.4 During the term hereof, Existing Shareholders shall promptly notify WFOE of any potential or pending litigation, arbitration and administrativeprocedures relating to the assets, operations and revenues of the Domestic Company. 6.5 During the term hereof, if WFOE agrees to distribute dividends or profits to Existing Shareholders, Existing Shareholders shall ensure that all profitsand other distributions received of the Domestic Company be paid to WFOE in full. 6.6 During the term hereof, Existing Shareholders shall exert their best efforts and take all necessary measures, including, but not limited to, signing allnecessary documents, bringing all necessary actions and taking all necessary means of defence, etc., in order to maintain its equity interests andbenefits in the Domestic Company. 6.7 Existing Shareholders shall strictly abide by this Agreement and other agreements signed between them with the Domestic Company and WFOE andperform their corresponding obligations under such agreements, and shall refrain from taking any actions or omissions which may affect the validityand enforcement of such agreements. ARTICLE SEVEN Undertakings of the Domestic Company and Existing Shareholders 7.1 In the event that the execution and performance of this Agreement or the grant of the Equity Option hereunder requires any consent, permit, waiver orauthorization by any third party; any approval, permit or exemption by any government authority; or any filing or registration with any governmentauthority (where the same is required by law), the Domestic Company will make its best effort to assist in satisfying all such conditions. 7.2 Without the prior written consent of WOFE, the Domestic Company shall not and Existing Shareholders shall cause the Domestic Company not totake any of the following actions: 7.2.1 amend its articles of association, increase or decrease the Registered Capital of the Domestic Company or change the existing equity structureof the Domestic Companies set forth in Exhibit 1 hereto in any way; 7.2.2 assist or allow Existing Shareholders to transfer or otherwise dispose of any Equity Option or create any security interest or other third partyright on any Equity Option. 7.2.3 terminate any Material Agreement entered into by any domestic company or enter into any other agreement that conflicts with the existingMaterial Agreements; 11 7.2.4 conduct any transaction involving any amount of not less than (or equivalent to) RMB [ ] a time, or an aggregated amount of not less than (orequivalent to) RMB [ ]; 7.2.5 merge with any third party, purchase the assets, equity of any third party or otherwise invest in any third party; 7.2.6 lend or borrow loans, provide guarantee or make securities of other, or undertake any material obligations out of the course of normal businessactivities; 7.3 The Domestic Company undertakes, and Existing Shareholders shall ensure that the Domestic Company shall not take or permit any acts or actionsthat may adversely affect the interests of WFOE under this Agreement. 7.4 During the term hereof, the Domestic Company shall exert its best reasonable efforts to maintain the corporate structure of the Domestic Companyand obtain all business licenses required to conduct the business intended to be conducted by it, and shall cause such business licenses to remainvalid at all times. At the same time, the Domestic Company undertakes to exert its best efforts and take all necessary measures to develop its business,and undertakes not to do any actions or omissions which may damage the assets or goodwill of the Domestic Company. 7.5 During the term hereof, the Domestic Company shall provide WFOE with all its operation and financial information at the request of WFOE. 7.6 Without the prior written consent of WFOE, the Domestic Company shall not distribute dividends or profits to Existing Shareholders, provided thatas soon as so requested by WFOE in writing, it should distribute all distributable profits to Existing Shareholders as soon as possible. 7.7 Within the term hereof, the Domestic Company shall promptly notify WFOE of any potential or pending litigation, arbitration and administrativeproceedings related to the assets, business and revenues of the Domestic Company. 7.8 The Domestic Company shall strictly abide by this Agreement and any other agreements signed between it with Existing Shareholders and WFOEand perform its corresponding obligations under such agreements, and shall refrain from taking any actions or omissions which may affect the validityand enforcement of such agreements. ARTICLE EITHT Undertakings of WFOE 8.1 During the term hereof, in case the Domestic Company needs any loan or other financial support, WFOE shall, to the extent deemed reasonable andacceptable by WFOE, provide loans or other financial support to the Domestic Company. 12 8.2 If the Domestic Company is unable to pay any mature debt to WFOE due to poor business management, and able to provide evidence to thereasonable satisfaction of WFOE to prove its operation situations, then WFOE should unconditionally exempt the Domestic Company of any maturedebt. ARTICLE NINE CONFIDENTIALITY OBLIGATION 9.1 Notwithstanding the termination of this Agreement, Existing Shareholders shall be obligated to keep in confidence the information listed below (the“Confidential Information”): (i) the execution and performance of this Agreement as well as the content hereof; (ii) WFOE’s business secrets, proprietary information, and clients’ information of which Existing Shareholders may become aware or to whichthey have access in connection with the execution and performance of this Agreement; and (iii) the Domestic Company’s business secrets, proprietary information, clients’ information, and other relevant information of which ExistingShareholders may become aware or to which they have access as shareholders of the Domestic Company. Existing Shareholders may use such Confidential Information only for the purpose of performing their obligations hereunder and may not disclosesuch Confidential Information to any third party without WFOE’s prior consent in writing, otherwise Existing Shareholders shall be held liable forbreaching and responsible for all losses thereof. 9.2 After the termination of this Agreement, each Existing Shareholder shall, at WFOE’s request, return, destruct, or otherwise dispose of any and alldocuments, materials or software containing Confidential Information and stop using such Confidential Information. 9.3 Notwithstanding any other provisions herein, the provisions of this Article Nine shall survive the suspension or termination of this Agreement. ARTICLE TEN TERM 10.1 This Agreement shall become effective as of the date hereof and remain in effect till all Equity are duly transferred to WFOE and/or any other entity orindividual designated by WFOE in accordance with this Agreement. 10.2 If any Existing Shareholder has transferred all of its equity interest in the Domestic Company in accordance with the provisions of this Agreement atthe request of WFOE, such party shall cease to be a party to this Agreement, provided that the obligations and undertakings of other parties under thisAgreement shall not be adversely affected thereby. 13 ARTICLE ELEVEN NOTICE 11.1 Any and all notices, requests, instructions or other communications required to be made hereof or made pursuant to this Agreement by one Party tothe other hereunder shall be made in writing. 11.2 The foregoing notice or other communication shall be deemed duly given upon its delivery by fax or telex or personal delivery or five (5) daysfollowing its delivery by mail. ARTICLE TWELVE LIABILITIES FOR BREACHING 12.1 Both Parties agree and acknowledge that a substantial breach of any covenant or failure to substantially perform any obligation hereunder by anyParty (the “Default Party”) shall constitute an event of default hereunder (the “Event of Default”), and the non-default Party (the “Non-defaultParty”) shall have the right to demand rectification or remedy by the Default Party within a reasonable period of time. If the Default Party fails torectify the Event of Default or to take remedial measures within such reasonable period of time or ten (10) days following the Non-default Party’swritten notice and demand for rectification thereof, then, in the case of any Event of Default by Existing Shareholders or the Domestic Company, theNon-default Party may, at its own discretion, (i) terminate this Agreement and demand indemnification by the Default Party for all damages, or(ii) require the Default Party to continue performing its obligations hereunder and indemnify the Non-default Party for all its damages; or, in the caseof any Event of Default by WFOE, the Non-default Party may require the Default Party to continue performing its obligations hereunder andindemnify the Non-default Party for all its damages. 12.2 Both Parties agree and acknowledge that under no circumstances may Existing Shareholders or the Domestic Company terminate this Agreement onany ground. 12.3 The rights and remedies provided for herein are cumulative and not exclusive of any other rights or remedies available under law. 12.4 Notwithstanding any other provisions herein, the provisions of this Article Eleven shall survive the suspension or termination of this Agreement. ARTICLE TREETHEEN MISCELLANEOUS 13.1 This Agreement is made in Chinese in four (4) original copies, with each Party hereto holding one (1) copy. 13.2 The execution, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the PRC Law. 13.3 Any dispute arising out of or in connection with this Agreement shall be resolved by the Parties through negotiation. In the event that the Partiescannot reach an agreement within thirty (30) days following the occurrence of such dispute, the dispute shall be submitted to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules of such commission then in effect. Thearbitration shall be conducted in Beijing and the arbitral award shall be final and binding upon both Parties. 14 13.4 The rights, power and remedies provided for either Party herein shall not exclude any other rights, power or remedies to which such Party is entitledunder law, regulations, and other provisions herein, and the exercise by one Party of its right, power, or remedies shall not hinder its exercise of anyother right, power, or remedies. 13.5 Failure to exercise or delay in exercising any right, power, or remedies under this Agreement or law (collectively, the “Rights”) shall not be deemed awaiver of such Rights, and waiver of any single or partial exercise of the Rights shall not exclude the exercise of the Rights in any other manner or theexercise of any other Rights. 13.6 Headings herein are inserted for ease of reference only. In no event may such headings be used to interpret or affect the interpretation of theprovisions herein. 13.7 All provisions herein are separable and independent of any other provisions. If one or more provisions hereof are held invalid, illegal orunenforceable at any time, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affectedthereby. 13.8 Once executed, this Agreement shall supersede any and all other legal documents by and among the Parties with respect to the same subject matter.Amendment or addition to this Agreement shall be made in writing and may not become effective unless and until duly executed by all the Partieshereto. 13.9 Neither Existing Shareholders nor the Domestic Company may transfer their or its rights and/or obligations hereunder to any third party withoutWFOE’s prior consent in writing. Upon notifying Existing Shareholders and the Domestic Company, WFOE may transfer any of its rights and/orobligations hereunder to any third party appointed by WFOE. 13.10 This Agreement shall be binding on the legal assigns of the Parties hereto. [Remainder of the page left blank intentionally] 15 [Signature Page] IN WITNESS HEREOF, the Parties have signed this Exclusive Equity Option Agreement as of the date and in the place first written above. Wu HaipengBy:/s/ He YanshengBy:/s/ Beijing Chenhuan Technology Co., Ltd.(seal) Qieyiyou (Beijing) Information Technology Co., Ltd.(seal) 16 EXHIBIT 1: Basic Information of Beijing Chenhuan Technology Co., Ltd. Background Information of Name:Beijing Chenhuan Technology Co., Ltd. Registered Address:Room 05, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing Registered Capital:RMB1.5 Million Legal Representative:Wu Haipeng Equity Structure: Existing ShareholderName Amount of RegisteredCapital Owned Percentage of CapitalContribution Wu Haipeng765,000RMB51%He Yansheng735,000RMB49% Fiscal Year:from January 1 to December 31 of each calendar year 17th EXHIBIT 2: Form of Exercise Notice To: [Name of Existing Shareholder] Reference is hereby made to the Exclusive Equity Option Agreement dated [ ][ ] , 2014 by and among Qieyiyou (Beijing) Information Technology Co., Ltd.(the “Company”), you, and Beijing Chenhuan Technology Co., Ltd.(the “Domestic Company”), pursuant to which it is agreed that, subject to the PRC Lawand at the request of the Company, you shall transfer the equity interests you hold or your company holds in the Domestic Company to the Company or anythird party appointed by the Company. Therefore, the Company hereby informs you as follows: The Company hereby requests to exercise the Equity Options under the Exclusive Equity Option Agreement and it/[name of company/individual] appointedby the Company shall accept % of the equity interests which you hold in the Domestic Company(the “Subject Equity”). Please transfer immediately allthe Subject Equity to the Company/[name of company/individual] appointed by the Company in accordance with the Exclusive Equity Option Agreement. Sincerely Yours, Qieyiyou (Beijing) Information Technology Co., Ltd. (seal) Authorized Representative: Date: 18 EXHIBIT 3: Power of Attorney I, hereby irrevocably authorize (ID No.: ) to act as my trustee, who in such capacity may sign the equity transfer agreement by andamong I, Beijing Chenhuan Technology Co., Ltd. and Qieyiyou (Beijing) Information Technology Co., Ltd. with respect to the transfer of the equity interestswhich I and/or other shareholders hold in Beijing Chenhuan Technology Co., Ltd and all other relevant legal documents, and handle all registrationprocedures required by the equity transfer hereunder with the relevant administration for industry and commerce. By: (signed) Date: 19Exhibit 4.10A ENGLISH TRANSLATION FOR REFERENCE ONLY.THE ORIGINAL AGREEMENT EXECUTED IN CHINESE SHALL CONTROL.(English Translation) Equity Pledge Agreement Of Beijing Chenhuan Technology Co., Ltd. by and among Wu Haipeng He Yansheng and Qieyiyou (Beijing) Information Technology Co., Ltd. January 13 , 2014 1 Equity Pledge Agreement This Equity Pledge Agreement (the “Agreement”) is entered into by the following parties on January 13, 2014 in Beijing, the People’s Republic of China(“PRC” or “China”): (1) Wu Haipeng ID No.: 110108196611071XXX; (2) He Yansheng ID No.: 10105195806195XXX: (The aforesaid individuals are referred to severally as a “Pledger”or collectively “Pledgers” in this Agreement) and (3) Qieyiyou (Beijing) Information Technology Co., Ltd.(“Pledgee”) Registered Address: Room 08, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing Legal Representative: Li Daoxin Each of the foregoing parties is referred to hereinafter individually as a “Party” and collectively as “Parties”. WHEREAS: (1) The Pledgers are the registered shareholders of Beijing Chenhuan Technology Co., Ltd. (with registered address at Room 05, 8 Floor, Building No.2,Yard No.4, Qiyang Road, Chaoyang District, Beijing and Wu Haipeng as its legal representative, the “Company”), namely Wu Haipeng and HeYansheng, who hold 51% and 49% equity interests in the Company (the “Company Equity”). As of the date hereof, the capital amounts andshareholding ratios of them in the Company are set forth in Exhibit 1 to this Agreement. (2) Pursuant to the Loan Agreement dated January 13, 2015 by and between Pledgee and Pledgers (the “Loan Agreement”), Pledgee advanced a loan inthe aggregate amount of RMB1.5 million to Pledgers; (3) Pursuant to the Exclusive Equity Option Agreement dated January 13, 2014 by and among Pledgers, Pledgee and the Company (the “Equity OptionAgreement”), Pledgers shall at Pledgee’s request transfer their equity interests in the Company, in whole or in part, to Pledgee and/or its designatedentity or individual to the extent permitted by the PRC Law; (4) Pursuant to the Voting Right Entrust Agreement dated January 13, 2014 by and among Pledgee, the Company and Pledgers (the “Voting Right EntrustAgreement”), certain individuals designated by Pledgee have been fully entrusted by Pledgers to exercise on their behalf all the voting rights Pledgersenjoy as shareholders of the Company; 2thth (5) Pursuant to the Exclusive Technical Consulting and Service Agreement dated January 13, 2014 by and between Pledgee and the Company (the“Service Agreement”), Pledgee has been engaged by the Company exclusively to provide the Company with relevant technical license and technicalsupport services, for which the Company will pay Pledgee corresponding license and services fees; and (6) Pursuant to the Business Management Agreement dated January 13, 2014 by and between Pledgee, the Company and Pledgers (the “ManagementAgreement”), the Company agrees to accept the guidance and arrangement made by Pledgee with respect to the business and personnel managementetc. of the Company. (7) As the collateral for the performance of the Contractual Obligations (as defined below) by Pledgers and the Company as well as for the repayment of theSecured Liabilities (as defined below), Wu Haipeng, a Pledger agrees to pledge 51% of the Company Equity to Pledgee to secure the creditor’s rights inthe amount of RMB 765,000 and to grant the Pledgee the first priority repayment right; He Yansheng, another Pledger agrees to pledge 49% of theCompany Equity to Pledgee to secure the creditor’s rights in the amount of RMB 735,000 and to grant the Pledgee the first priority repayment right. NOW, THEREFORE, the Parties have agreed as follows upon friendly consultation: ARTICLE ONE DEFINITION 1.1 Unless otherwise interpreted pursuant to the terms or context herein, each of the terms used herein shall have the meaning ascribed to it below: “Contractual Obligations” shall mean all contractual obligations of Pledgers under the Equity Option Agreement, the Voting Right EntrustAgreement, the Loan Agreement, the Management Agreement, and this Agreement as well as all contractualobligations of the Company under the Equity Option Agreement, the Voting Right Entrust Agreement, and the ServiceAgreement. “Event of Default” shall mean any of the following events: (i) any breach by any Pledger of any of its Contractual Obligations under the Equity Option Agreement, theLoan Agreement, the Voting Right Entrust Agreement, the Management Agreement or this Agreement orfailure to fully perform any Secured Liabilities on time; 3 (ii) any breach by the Company of any of its Contractual Obligations under the Equity Option Agreement, theVoting Right Entrust Agreement, the Management Agreement, the Service Agreement and this Agreement orfailure to fully perform any Secured Liabilities on time; or (iii) any statement or warranty made by Pledgers in this Agreement being false, fraudulent, misleading ormistaken: (iv) breach of any undertakings under Article 8 of this Agreement by Pledgers; (v) breach of any other articles of this Agreement by Pledgers; (vi) any loan, guarantee, indemnity, undertaking or other repayment liability of Pledgers (x) being demanded tobe repaid or performed in advance, or (y) becoming due but not being repaid or fulfilled on time, whichmakes Pledgee reasonably believe that the ability of Pledgers to fulfil their obligations under this Agreementhas been materially and adversely affected; (vii) any of the Equity Option Agreement, the Loan Agreement, the Voting Right Entrust Agreement, theManagement Agreement, the Service Agreement or this Agreement being rendered invalid or unenforceableon account of change(s) to any PRC Law or the promulgation of new PRC Law(s) or otherwise and noalternative arrangement being found by Pledgee for the realization of its purposes under the TransactionDocuments. 4 (viii) material adverse changes taking place to the properties owned by Pledgers, which makes Pledgee reasonablybelieve that the ability of Pledgers to fulfil their obligations under this Agreement has been materially andadversely affected; (ix) the successors or administrators of Pledgers being unable to fully perform or refusing to perform anyobligation under the Transaction Documents; (x) Pledgers withdrawing the Equity Pledge or selling or transferring any Pledged Equity to a third party withoutthe prior consent of Pledgee; (xi) the Company losing the ability to repay its debts. “Equity Pledge” shall have the meaning ascribed to it in Section 2.2 hereof. “Secured Liabilities” shall mean any and all direct, indirect, incidental losses and loss of foreseeable profit of Pledgee as a result of anyEvent of Default of Pledger(s) and/or the Company, the amount of which may to be determined by Pledgee in itsabsolute discretion to the extent permitted by the PRC Laws and to which Pledger(s) shall be subject, as well as allcosts and expenses incurred by Pledgee in enforcing the Contractual Obligations of Pledger(s) and/or the Company. “Collateral” shall mean all the Company Equity which Pledgers legally hold as of the date hereof and will pledge to Pledgeepursuant to this Agreement as a collateral security for the performance of the Contractual Obligations by Pledgers andthe Company (the specific equity interests of each Pledger to be so pledged are set forth in Exhibit 1 thereto), as wellas additional capital contributions made and dividends distributed pursuant to Sections 2.6 and 2.7 hereof. “PRC Law” shall mean the then current PRC laws, regulations, rules, local stipulations, interpretations and other normativedocuments with binding force. 5 “Power of Attorney” shall have the meaning ascribed to it in Section 12.12 hereof. “Rights” shall have the meaning ascribed to it in Section “Transaction Documents” shall mean the Equity Option Agreement, the Loan Agreement, the Voting Right Entrust Agreement, the ManagementAgreement, and the Service Agreement. 1.2 Any reference herein to any PRC Law shall be deemed: (1) to include amendments, revisions, additions and updates to such PRC Law, whether enacted prior to or after the execution of this Agreement;and (2) to include other decisions, notices and rules promulgated or enacted in accordance with the provisions of such PRC Law. 1.3 Unless otherwise stated herein, references to articles, sections, subsections and paragraphs herein shall mean Articles, Sections, Subsections andParagraphs of this Agreement. ARTICLE TWO EQUITY PLEDGE 2.1 Pledgers hereby agree to pledge to Pledgee the Collateral which Pledgers legally own and of which Pledgers have the right to dispose pursuant to thisAgreement as a collateral security for the performance of the Contractual Obligations and the discharge of the Secured Liabilities. 2.2 Pledgers shall cause entry of the pledge arrangement of the equity interest hereunder (the “Equity Pledge”) onto the shareholder register of theCompany on the date hereof, provide the aforesaid entry document thereof and the certification recording its capital contribution to the Company toPledgee in the form satisfactory to Pledgee, and provide Pledgee the evidencing documents issued by the relevant administration for industry andcommerce evidencing the relevant Equity Pledge within thirty (30) days following the execution of this Agreement. 2.3 Pledgee shall not be held responsible for any depreciation of value of the Collateral during the term hereof and Pledgers shall not have any right ofrecourse or claim against Pledgee, unless such value depreciation arises out of Pledgee’s willful misconduct, or out of Pledgee’s gross negligencewhich constitutes the immediate cause of such depreciation. 2.4 Subject to the provisions of Section 2.3 above, in the event that Pledgee’s interests is fully exposed to any possible material depreciation of value ofthe Collateral, Pledgee may at any time sell off or auction the Collateral on behalf of Pledgers and, upon mutual agreement with Pledgers, theproceeds thereof may be applied to earlier discharge of the Secured Liabilities or placed in escrow with the public notary of the area where Pledgee islocated at Pledgers’ own expense. 6 2.5 In the event of any Event of Default, Pledgee shall have the right to dispose of the Collateral pursuant to Article Four hereof. 2.6 Pledgers may increase their contribution to the registered capital of the Company only upon Pledgee’s prior consent. Any such additional capitalcontribution of Pledgers shall also be deemed part of Collateral. 2.7 Pledgers are entitled to receive dividend or interest in respect of the Collateral only upon Pledgee’s prior consent. Such dividend or interest shall bedeposited into an escrow account designated and supervised by Pledgee, and be applied to the discharge of the Secured Liabilities in the first priority. 2.8 In the event of occurrence of any Event of Default, Pledgee shall have the right to dispose of any Collateral pursuant to the provisions hereof. ARTICLE THREE RELEASE OF PLEDGE Upon the full and complete fulfillment of the Contractual Obligations and discharge of the Secured Liabilities by Pledgers and the Company, Pledgee shall,upon Pledgers’ request, release the pledge hereunder and assist Pledgers in deregistering the Equity Pledge with the relevant administration for industry andcommerce, and reasonable expenses arising out of such deregistration shall be borne by Pledgee. ARTICLE FOUR DISPOSITION OF COLLATERAL 4.1 Pledgers shall immediately notify Pledgee in writing in case they are aware or should be aware of the occurrence of any Event of Default or any eventwhich may lead to an Event of Default. 4.2 Pledgers and Pledgee hereby agree that following the occurrence of any Event of Default, Pledgee, upon notifying Pledgers in writing, shall have theright to exercise all remedies and power available to Pledgee under the PRC Law, the Transaction Documents, and the terms and conditions of thisAgreement, including but not limited to setting off the debt with the Collateral at a discounted price or selling off or auctioning the Collateral so as tosatisfy its first priority right of compensation, and Pledgee will not be responsible for any losses arising out of its reasonable exercise of such remediesand power. 4.3 Pledgee shall have the right to designate in writing its counsel or other attorney to exercise any or all of the foregoing remedies and power on behalfof Pledgee and Pledgers may not raise any objection to such designation. 7 4.4 All reasonable costs and expenses incurred by Pledgee in exercising any or all of the foregoing remedies and power shall be borne by Pledgers andPledgee shall have the right to deduct such costs and expenses from the proceeds generated by such exercise. 4.5 Any and all proceeds obtained by Pledgee from exercising any or all of the foregoing remedies and power shall be applied in the following order: (a) to the payment of any and all costs and expenses of the disposition of the Collateral and the exercise of the remedies and power by Pledgee,including without limitation the court fees and Pledgee’s counsel and attorney fees; (b) to the payment of taxes payable in connection with the disposition of the Collateral; and (c) to the repayment of the Secured Liabilities to Pledgee. Any surplus then remaining from such proceeds shall be handed over by Pledgee to Pledgers or any other person who is entitled to such proceedspursuant to law and regulation, or placed in escrow, at Pledgers’ costs and expenses, with the public notary of the area where Pledgee is located. 4.6 Pledgee shall have the option to exercise its remedies concurrently or otherwise and will not be obligated to exercise any other remedies beforeexercising its right to sell off or auction the Collateral hereunder. ARTICLE FIVE COSTS AND EXPENSES All actual costs and expenses arising out of the creation of the Equity Pledge hereunder, including without limitation stamp tax, any other taxes and all legalexpenses, shall be borne by Pledger. ARTICLE SIX CONTINUITY; NO WAIVER The Equity Pledge created hereunder shall constitute a continuous security, the validity of which shall continue until the Contractual Obligations are fullyperformed or the Secured Liabilities fully discharged. No waiver or excuse by Pledgee of any Event of Default by Pledgers and no delay in exercising byPledgee of any of its rights under the Transaction Documents and this Agreement shall impair Pledgee’s right under this Agreement, the relevant PRC Lawand the Transaction Documents to require at any time hereafter for the strict compliance with the Transaction Documents and this Agreement by Pledgers orany other right Pledgee may have as a result of any breach by Pledgers of their obligations under the Transaction Documents and/or this Agreement. 8 ARTICLE SEVEN REPRESENTATIONS AND WARRANTIES Each Pledger hereby, jointly and severally, represents and warrants to Pledgee that 7.1 each of them is a PRC citizen with full capacity, has full and independent legal status and capacity, has obtained appropriate authorization to sign,deliver and perform this Agreement, and may act as an independent litigation subject; 7.2 each of them has full power and authorization to sign and deliver this Agreement as well as all other documents to be signed by each in connectionwith the transaction anticipated herein and to consummate such transaction. The shareholders’ meeting of the Company has adopted resolutions inaccordance with the Articles of Association of the Company to approve the Equity Pledge by Pledgers pursuant to this Agreement; 7.3 all reports, documents and information provided by Pledgers to Pledgee prior to the coming into effect of this Agreement in connection with Pledgersand matters required hereunder are true, correct, and valid in all material aspects at the time the same were provided; 7.4 all reports, documents and information provided by Pledgers to Pledgee following the coming into effect of this Agreement in connection withPledgers and matters required hereunder are true, correct, and valid in all material aspects at the time the same were provided; 7.5 at the time this Agreement becomes effective, Pledgers are the only legal owner of the Collateral with full power to dispose of the Collateral or anypart thereof, and there is no existing dispute over the ownership of the Collateral; 7.6 apart from the security interests placed on the Collateral pursuant to this Agreement or the rights created under the Transaction Documents, there is noother security interests or third party right over the Collateral; 7.7 the Collateral is pledgeable and assignable under law and Pledgers have full rights and power to pledge the Collateral to Pledgee in accordance withthe provisions hereof; 7.8 this Agreement is duly signed by Pledgers and constitutes their legal, valid and binding obligations; 7.9 any third party consent, permission, waiver, authorization, or any government approval, license, exemption, or any registration or filing procedureswith any government agency in connection with the execution and performance of this Agreement and the creation of the Equity Pledge hereunder(except for the registration formalities with respect to the Equity Pledge), has been obtained or processed (to the extent legally required) and willremain fully valid during the term hereof; 7.10 the execution and performance by Pledgers of this Agreement will not violate or conflict with all laws applicable to Pledgers, or any agreement,judgment, arbitral award, administrative decision to which they are a party or by which any of their assets are bound; 9 7.11 the pledge hereunder shall constitute the first priority security on the Collateral; 7.12 there is no pending, or to the best knowledge of Pledgers, threatened litigation, legal proceeding or claim against Pledgers, their assets, or theCollateral before any court or arbitration tribunal, and there is no pending, or to the best knowledge of Pledgers, threatened litigation, legalproceeding or claim against Pledgers, their assets, or the Collateral at any government or any administrative organization, which may have material oradverse effect on the financial status of Pledgers or their ability to fulfill their obligations and responsibilities hereunder; and 7.13 the foregoing representations and warranties is true and correct at any time and in any circumstances and be fully abided by the Pledgers until all theContractual Obligations are performed or all the Secured Liabilities are discharged. ARTICLE EIGHT PLEDGERS’ UNDERTAKING Each Pledger hereby, jointly and severally, undertakes to Pledgee that 8.1 In order to achieve the purposes of this Agreement, Pledgers shall file applications with the relevant industrial and commercial registration authorityfor the registration of Equity Pledge in accordance with Article 2.2 of this Agreement, and complete the registration of Equity Pledge within areasonable time permitted by relevant laws and policies, as well as complete any other formalities required by laws and regulations for the realizationof the arrangements under this Agreement. 8.2 without Pledgee’s prior consent in writing, Pledgers may not create or permit to be created any new pledge or any other security interests on theCollateral, and any and all pledges or any other security interests placed on the Collateral, in whole or in part, without Pledgee’s prior consent inwriting shall be null and void; 8.3 Pledgers may not transfer the Collateral without first notifying Pledgee in writing and obtaining its prior consent in writing, and any and allattempted transfers of the Collateral by Pledgers shall be null and void; proceeds from Pledgers’ transfer of the Collateral shall be first applied to theearlier discharge of the Secured Liabilities or placed in escrow with the third party agreed to by Pledgee; and transfer by any Pledger of the Collateralin its possession upon Pledgee’s consent shall not affect the Collateral under possession of the other Pledger, which shall continue to be bound bythis Agreement; 8.4 in the event of any litigation, legal proceeding or claim which may have any adverse effect on the interest of Pledgers or Pledgee under theTransaction Documents and this Agreement or the Collateral, Pledgers shall promptly notify Pledgee in writing and. at Pledgee’s reasonable request,take all necessary actions to safeguard Pledgee’s interests in the Collateral; 10 8.5 Pledgers shall not use or permit others to use the pledged equity to engage in any act or event contrary to laws or this Agreement; 8.6 Pledgers further agree that the rights acquired by the Pledgee pursuant to this Agreement shall not be interrupted or prejudiced by the proceedingsinitiated by any successor, trustee of Pledgers or Pledgers or any other person: 8.7 Pledgers will not take or permit to be taken any action which may have any adverse effect on Pledgee’s interests under the Transaction Documentsand this Agreement or the Collateral; 8.8 Pledgers hereby undertake to comply with and perform any warranties, undertakings, agreements, representations and conditions under theTransaction Documents. In case any Pledger does not perform or fully perform any such warranties, undertakings, agreements, representations orconditions, he shall indemnify Pledgee for all the losses suffered therefrom; 8.9 Pledgers undertake they shall, and undertake to ensure that other interested parties in connection with Equity Pledge shall, at the reasonable requestof Pledgee, take all necessary measures and sign all necessary documents (including, but not limited to any supplementary agreements to thisAgreement, any title certificate or deed) and facilitate the exercise of the rights and authorizations granted to Pledgee under this Agreement, so as toensure the equity interest of Pledgee in the pledged equity as well as the exercise and realization of the same. 8.10 in the event of any transfer of the Collateral as a result of the exercise of the pledge right hereunder, Pledgers shall take all necessary measures toeffectuate such transfer. ARTICLE NINE CHANGE OF CIRCUMSTANCES In addition to but not in contradiction with the other terms and conditions of the Transaction Documents and this Agreement, if at any time due to thepromulgation or change of any PRC Law, or any change to the interpretation or application thereof, or any change to the relevant registration procedures,maintaining the validity of this Agreement and/or disposing of the Collateral in the manner described herein is deemed by Pledgee to be invalid orcontradictory to such PRC Law, Pledgers shall forthwith take any action and/or sign any document or other instrument according to the written instructionsand reasonable request of Pledgee, so as to (1) keep this Agreement valid; (2) facilitate the disposition of the Collateral in the manner described herein; and (3) maintain or realize the purposes of this Agreement or the security interests created hereunder. 11 ARTICLE TEN EFFECTIVENESS AND TERM 10.1 This Agreement shall take effect after all the following conditions have been satisfied: (1) this Agreement has been properly executed by all Parties; (2) The Equity Pledge under this Agreement has been recorded in the shareholders’ register of the Company according to law. Pledgers shall provide the registration certificate for the aforesaid Equity Pledge on the shareholders’ register in a form to the satisfaction of Pledgee. 10.2 The term of this Agreement shall continue until the Contractual Obligations are fully performed or the Secured Liabilities are fully discharged. ARTICLE ELEVEN NOTICE 11.1 Any and all notices, requests, instructions or other communications required to be made hereof or made pursuant to this Agreement by one Party tothe other hereunder shall be made in writing. 11.2 The foregoing notice or other communication shall be deemed duly given upon its delivery by fax or telex or personal delivery or five (5) daysfollowing its delivery by mail. ARTICLE TWELVE MISCELLANEOUS 12.1 Upon notifying Pledgers, Pledgee may transfer its rights and/or obligations hereunder to any third party without Pledgers consent, but Pledgers maynot transfer their rights, obligations or liabilities hereunder to any third party without Pledgee’s prior consent in writing. The successors or permittedassigns of Pledgers (if any) shall continue to perform Pledgers’ obligations under this Agreement. 12.2 The amount of the Secured Liabilities determined by Pledgee at its own discretion when exercising its right of pledge to the Collateral pursuant tothis Agreement shall be conclusive evidence of the Secured Liabilities hereunder. 12.3 A force majeure event shall mean any event which is beyond the reasonable control of one Party and unavoidable even if the affected Party has takenreasonable care and reasonable measures, which includes but is not limited to government action, fire, explosion, geographic changes, typhoon,flood, earthquake, tide, lightening and war, etc., provided that credit, fund or financing insufficiency etc. shall not be regarded as a force majeureevent. The Party affected by a force majeure event which seeks exemption of performing any obligation under this Agreement or any article of thisAgreement shall immediately notify the other Parties of such event and the measures needed to be taken by it for such performance. In case theperformance of this Agreement is delayed or deferred by the aforesaid force majeure event, the Party affected by such event does not need to bear anyliability under this Agreement therefor, but only to the extent that the Party affected has taken all reasonable efforts to perform this agreement ormitigate the effects of such event and that such exemption is only limited to the part being delayed or deferred. Once the causes for such exemptionhave been corrected or rectified, all Parties agree to make the utmost effort to resume the performance of this Agreement. 12 12.4 This Agreement is made in Chinese in three (3) original copies, with each Party hereto holding one (1) copy, provided that more duly signed copies ofthis Agreement may be added for registration or filing purposes (where necessary). 12.5 The execution, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the PRC Law. 12.6 Any dispute arising out of or in connection with this Agreement shall be resolved by the Parties through negotiation. In the event that the Partiescannot reach an agreement within thirty (30) days following the occurrence of such dispute, the dispute shall be submitted to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules of such commission then in effect. Thearbitration shall be conducted in Beijing and the arbitral award shall be final and binding upon both Parties. 12.7 The rights, power and remedies provided for either Party herein shall not exclude any other rights, power or remedies to which such Party is entitledunder law, regulations, and other provisions herein, and the exercise by one Party of its right, power, or remedies shall not hinder its exercise of anyother right, power, or remedies. 12.8 Failure to exercise or delay in exercising any right, power, or remedies under this Agreement or law (collectively, the “Rights”) shall not be deemed awaiver of such Rights, and waiver of any single or partial exercise of the Rights shall not exclude the exercise of the Rights in any other manner or theexercise of any other Rights. 12.9 Headings herein are inserted for ease of reference only. In no event may such headings be used to interpret or affect the interpretation of theprovisions herein. 12.10 All provisions herein are separable and independent of any other provisions. If one or more provisions hereof are held invalid, illegal orunenforceable at any time, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affectedthereby. 12.11 Amendment or addition to this Agreement shall be made in writing and may not become effective unless and until duly executed by the Parties,Pledgee’s transfer of its rights hereunder pursuant to Section 12.1 hereof excepted. 13 12.12 Subject to Section 12.1 above, this Agreement shall be binding on the legal assigns of the Parties hereto. 12.13 Pledgers agree to authorize any individual (“Trustee”) appointed by Pledgee to sign on their behalf any and all legal documents required by Pledgeein exercising its rights hereunder. Concurrently herewith, Pledgers shall each sign a power of attorney in form attached hereto as Exhibit 2 (“Power ofAttorney”) and place such Power of Attorney as duly signed by them under the custody of Pledgee, who may submit such Power of Attorney to therelevant government whenever necessary. Upon and only upon notification in writing from Pledgee to Pledgers regarding the replacement of Trustee,Pledgers shall forthwith cancel their authorization to the existing Trustee and authorize such other Trustee appointed by Pledgee then to sign on theirbehalf any and all legal documents required by Pledgee in exercising its rights hereunder. The new Power of Attorney, once made, shall replace theoriginal one. In no other circumstances may Pledgers cancel their Power of Attorney to the Trustee. [Remainder of the page left blank intentionally] 14 [Signature Page] IN WITNESS HEREOF, the Parties have signed this Equity Pledge Agreement as of the date and in the place first written above. Wu HaipengBy:/s/ He YanshengBy:/s/ Qieyiyou (Beijing) Information Technology Co., Ltd.(seal) 15 EXHIBIT 1: Background Information of the Company Name:Beijing Chenhuan Technology Co., Ltd. Registered Address:Room 05, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing Registered Capital:RMB1.5 Million Legal Representative:Wu Haipeng Equity Structure: Shareholder Name Amount of Registered CapitalOwned Percentage of CapitalContribution Wu HaipengRMB765,00051%He YanshengRMB735,00049%TotalRMB1.5 Million100% Fiscal Year: from January 1 to December 31 of each calendar year 16th EXHIBIT 2: Form of Power of Attorney I, , hereby irrevocably authorize (ID No.: ) to act as my trustee, who in such capacity may sign any and all legal documentsrequired or desirable by WFOE in exercising its rights under the Equity Pledge Agreement by and among WOFE, myself and other relevant parties theretoand handle all relevant registration procedures for the Equity Pledge hereunder with the relevant administration for industry and commerce. By: (signed) Date: 17Exhibit 4.12A ENGLISH TRANSLATION FOR REFERENCE ONLY.THE ORIGINAL AGREEMENT EXECUTED IN CHINESE SHALL CONTROL.(English Translation) Exclusive Technical Consulting and Service Agreement by and between Qieyiyou(Beijing) Information Technology Co., Ltd. and Beijing Chenhuan Technology Co., Ltd. January 13, 2014 1 Exclusive Technical Consulting and Service Agreement This Exclusive Technical Consulting and Service Agreement (the “Agreement”) is entered into by the following two Parties on January 13, 2014 in Beijing,the People’s Republic of China (“China”): (1) Beijing Chenhuan Technology Co., Ltd. (“Party A”) Registered Address: Room 05, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang Ditrict, Beijjing Legal Representative: Wu HaiPeng and (2) Qieyiyou (Beijing) Information Technology Co., Ltd. (“Party B”) Registered Address: Room08, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang Ditrict, Beijjing Legal Representative: Li Daoxin Party A and Party B are referred to herein individually as a “Party” and collectively as “Parties”. Recital WHEREAS, Party A is a limited liability company duly registered on June 10, 2014 and validly existing in Beijing, China, its main business being theprovision of internet information services; WHEREAS, Party B is a wholly foreign-owned enterprise duly registered on November 28, 2014 and validly existing in Beijing, China, its main businessbeing technology development and technical services with respect to internet; WHEREAS, Party A decides to engage Party B, as the exclusive technical license and service provider of Party A, to provide relevant technical license,service and assistance to Party A, and Party B agrees to provide relevant technical services to Party A subject to the terms and conditions hereof. NOW, THEREFORE, the Parties have agreed as follows upon friendly consultation: ARTICLE ONE DEFINITION 1.1 Unless otherwise interpreted pursuant to the terms or context herein, each of the terms used herein shall have the meaning ascribed to it below: “Annual Business Plan” shall mean Party A’s business development plan and budget for the immediate succeeding calendar year asprepared by Party A hereunder with Party B’s assistance prior to November 30 each year. 2thth “Business-related Technology” shall mean any and all software and technology that relate to Party A’s Business developed by Party A on the basisof the services provided by Party B hereunder. “Relevant Information” shall have the meaning ascribed to it in Section 6.1 hereof. “Confidential Information” shall have the meaning ascribed to it in Section 6.2 hereof. “Default Party” shall have the meaning ascribed to it in Section 11.1 hereof. “Breach” shall have the meaning ascribed to it in Section 11.1 hereof. “Equipment” shall mean any and all equipment owned or purchased by Party B from time to time for the purpose of providingthe Service hereof. “Non-default Party” shall have the meaning ascribed to it in Section 11.1 hereof. “Party A’s Business” shall mean all internet service businesses that are and will be conducted and developed by Party A at any timeduring the term of this Agreement. “Receiving Party” shall have the meaning ascribed to it in Section 6.2 hereof. “Rights” shall have the meaning ascribed to it in Section 13.5 hereof. “Services” shall mean the services set forth in Exhibit 1 hereto, which will be provided by Party B to Party A exclusively. “Service Fee” shall mean all fees payable by Party A to Party B in connection with the software license granted and other servicesprovided by Party B in accordance with Article Three hereof. 3 1.2 Any reference herein to any law and regulation (collectively, “Law(s)”) shall be deemed: (1) to include amendments, revisions, additions and updates to such Law, whether enacted prior to or after the execution of this Agreement; and (2) to include other decisions, notices and rules promulgated or enacted in accordance with the provisions of such Law. 1.3 Unless otherwise stated herein, references to articles, sections, subsections and paragraphs herein shall mean Articles, Sections, Subsections andParagraphs of this Agreement. ARTICLE TWO EXCLUSIVE SERVICE 2.1 In furtherance of Party A’s Business, Party A intends to engage Party B to provide, and Party B agrees to provide, the Services. In connectiontherewith, Party A appoints Party B as Party A’s exclusive service provider and Party B agrees to accept such appointment. 2.2 Party B shall provide the Services to Party A in accordance with the terms and conditions of this Agreement and Party A shall use its best effort tofacilitate Party B’s Services. 2.3 Any and all Services required by Party A in its business operations shall be provided exclusively by Party B, in its capacity as the exclusivetechnology license and service provider of Party A, unless otherwise agreed to by the Parties herein. Without Party B’s prior consent in writing, PartyA may not seek any third party other than Party B for the provision of the Services by any means hereunder. 2.4 Party A agrees that in the event that Party B is objectively unable to provide certain Services to Party A, Party B may appoint at its own discretion athird party to provide such Services to Party A in accordance with the terms and conditions of this Agreement. Party A further agrees that at all timesParty B shall have the right to entrust, with or without cause, the Services which should have been provided by Party B to Party A pursuant to thisAgreement to a qualified third party in lieu of Party B and Party A will accept the Services provided by such third party entrusted by Party B. 2.5 Party A may at its own discretion seek the Services from any third party if: 2.5.1 Party B voluntarily abandons its right as the exclusive service provider and agrees in writing to the provision of the Services by a third partyto Party A; 2.5.2 Party B is objectively unable to provide certain Services to Party A and fails to appoint an appropriate third party to provide such Services toParty A; or 2.5.3 Party B decides not to provide certain Services to Party A and not to appoint an appropriate third party to provide such Services to Party A. 4 ARTICLE THREE SERVICE FEE 3.1 In consideration of the Services provided by Party B pursuant to Article Two hereof, Party A agrees to pay Party B the Service Fee described inSection 3.2 hereof, which shall include: (1) an amount equaling a certain percentage of the annual gross revenue of Party A, the percentage of which shall be provided by Party B in awritten notice, and (2) a fee otherwise agreed by the Parties for certain specific technology license and service provided by Party B from time to time at Party A’srequest. 3.2 Both Parties agree that the Service Fee shall be paid as follows: (1) The Service Fee shall be paid by Party A to Party B on a monthly basis. Party A shall pay the Service Fee described in Section 3.1 (i) to PartyB prior to the Tenth (10) business day of each month. (2) Following the end of each fiscal year of Party A, both Parties shall conduct an overall examination and verification of the Service Fee actuallypaid by Party A on the basis of the annual gross revenue of Party A for the immediately preceding year as confirmed by the audit report issuedby the PRC registered accountant accepted by both Parties and make appropriate adjustments within Fifteen (15) business days following theissuance of such audit report, so that any overcharge will be refunded or any deficiency will be compensated for. Party A warrants to Party Bthat it will provide all necessary materials and assistance to the relevant PRC registered accountant and cause the preparation and issuance toboth Parties of the foregoing audit report by such accountant within Thirty (30) business days following the end of each fiscal year. 3.3 Party A shall transmit timely all the Service Fee pursuant to this Article Three to the bank account designated by Party B. In the event of any changeto such bank account, Party B shall give Party A a Seven (7)-business day prior notice in writing. 3.4 Notwithstanding the provisions of this Section 3.1, the actual amount of the Service Fee described therein may be adjusted upon mutual agreement ofthe Parties. ARTICLE FOUR PARTY A’S OBLIGATIONS 4.1 Party B’s Services hereunder shall be exclusive. During the term hereof, Party A may not, without Party B’s prior consent in writing, enter into anyagreement with any third party in an attempt to engage such third party for services identical to or similar with the Services provided by Party Bhereunder. 5th 4.2 Prior to the 30 day of November of each year, Party A shall submit its final annual business plan for the immediately succeeding year to Party B, sothat a corresponding service plan can be developed and necessary software, equipment and technical force be prepared by Party B. If Party A requiresad hoc that any new equipment be replenished by Party B, Party A shall negotiate with Party B fifteen (15) days in advance and the Parties shallendeavor to reach an agreement in connection therewith. 4.3 To facilitate the Services to be provided by Party B, Party A shall make available to Party B, timely and correctly, all relevant materials required byParty B. 4.4 Party A shall pay the Service Fee to Party B pursuant to Article Three hereof in a timely and sufficient manner. 4.5 Party A shall safeguard its business reputation, develop its business diligently and aim at maximum returns. ARTICLE FIVE INTELLECTUAL PROPERTY 5.1 Any and all intellectual property rights in the work product created by Party B during the course of provision of the Services shall be vested in PartyB. 5.2 In light of the reliance of Party A’s Business on the Services to be provided by Party B hereunder, Party A agrees that, with respect to any business-related technologies developed by Party A on the basis of such Services (the “Business-related Technology”), (1) the ownership and patent application right therein shall be vested in Party B if such Business-related Technology is obtained by Party Athrough any further development upon entrustment by Party B, or through joint development with Party B. (2) the ownership therein shall be vested in Party A if such Business-related Technology is obtained by Party A through its independentdevelopment, provided, however, that (A) Party A shall promptly inform Party B of the details of such Business-related Technology andprovide Party B with the relevant materials per its request; (B) in the event that Party A intends to license or transfer such Business-relatedTechnology, Party A shall give Party B top priority to be transferred or granted the exclusive license to use, to the extent permitted by themandatory laws of China, such Business-related Technology, and Party B shall have the right (but not the obligation) to use such Business-related Technology to the extent transferred or granted by Party A; Party A may license or transfer such Business-related Technology to athird party on conditions (including but not limited to transfer price or license fee) less favorable than that offered to Party B only when PartyB waives its pre-emptive right or exclusive use right with respect to such Business-related Technology and Party A shall warrant that suchthird party will perform all Party A’s liabilities and obligations hereunder; and (C) notwithstanding the provisions of clause (B) above, PartyB may propose to purchase the Business-related Technology at One Renminbi (RMB1) or the minimum purchase price permitted by the thenapplicable law at any time during the term set forth in Section 8.1 hereof, and Party A shall agree to Party B’s proposal to the extent permittedby the mandatory laws of China. 6th 5.3 In the event that Party B is granted the exclusive license to use the Business-related Technology pursuant to Section 5.2 (ii) above, such license shallbe handled as follows: (1) Such license shall have a term of no less than five (5) years (as of the date on which the relevant license agreement becomes effective); (2) The right as defined under such license shall be maximum to the extent possible; (3) During the license term and within the licensed territory, no party other than Party B (including Party A) may use or license the use of theBusiness-related Technology in any manner; and (4) Upon the expiration of the license term, Party B may request for a renewal of the license agreement, to which request Party A shall agree, andthe terms and conditions of the renewed license agreement shall remain unchanged, except to the extent accepted by Party B. 5.4 Notwithstanding the provisions set forth in Section 5.2 (ii) above, patent application in respect of any Business-related Technology described inSection 5.2 (ii) above shall be handled as follows: (1) Party A shall obtain Party B’s prior consent in writing if Party A intends to apply for patent in respect of any Business-related Technologydescribed in Section 5.2 (ii) above. (2) Party A may apply for patent in respect of any Business-related Technology or transfer the application right thereto to a third party only afterParty B has waived its right of purchasing such application right. To the extent that Party A transfers such application right to any third party,Party A shall ensure that such third party will perform all Party A’s liabilities and obligations hereunder and that the terms and conditions(including but not limited to the transfer price) of such transfer shall not be more favorable than that offered to Party B pursuant to Section 5.4(iii) below. (3) At any time during the term hereof, Party B may request that application(s) for the patent in respect of any Business-related Technology befiled by Party A. In addition, Party B may, at its own discretion, determine whether it will purchase the right to such application. Upon PartyB’s request, Party A shall, to the extent permitted by the mandatory laws of China, transfer the right to such application to Party B at OneRenminbi (RMB1) or the minimum purchase price permitted by the then applicable law. If Party B is granted any patent upon its exercise ofsuch application right, Party B shall be the lawful owner of such patent. 7 5.5 Each of Party A and Party B hereby warrants to the other that it will indemnify the other Party for any and all economic losses arising out of itsviolation of any intellectual property right of any third party (including copyright, trademark right, patent right and other proprietary rights). ARTICLE SIX CONFIDENTIALITY OBLIGATION 6.1 All information and other relevant materials in connection with Party A’s Business and the Services provided by Party B hereunder during the termhereof (the “Relevant Information”) shall be owned jointly by both Parties. 6.2 Notwithstanding the termination of this Agreement, both Party A and Party B shall keep in confidence the business secrets and proprietaryinformation of the other Party, the Relevant Information and other relevant materials owned jointly by both Parties, as well as any other informationnot made known to the general public (collectively, “Confidential Information”) to which either Party may have access during the performance ofthis Agreement. Without the prior consent in writing of the other Party or unless disclosure of such Confidential Information to any third party isrequired by applicable law or Listing Rules, the Party receiving such Confidential Information (the “Receiving Party”) may not disclose suchConfidential Information, in whole or in part, to any third party, nor may the Receiving Party use directly or indirectly such Confidential Information,in whole or in part, except to the extent required by the performance of this Agreement. 6.3 Confidential Information does not include any information which (a) is already known by the Receiving Party as indicated by written evidence; (b) has entered into public domain through no fault of the Receiving Party or become known by the general public for any other reasons; or (c) is hereafter lawfully obtained by the Receiving Party through other channels. 6.4 The Receiving Party may disclose Confidential Information to its employees, agents or professional personnel engaged by the Receiving Party,provided, however, that such individuals shall also be bound by this Agreement, keep the secrecy of the Confidential Information, and use theConfidential Information solely for the purpose of the performance hereunder. 8 ARTICLE SEVEN REPRESENTATIONS AND WARRANTIES 7.1 Party A hereby represents and warrants that 7.1.1 it is a limited liability company duly registered and validly existing under the laws of the jurisdiction in which it is registered, hasindependent legal person qualification and the complete and independent legal status and capacity required to sign, deliver and perform thisAgreement, and may act as an independent litigation subject; 7.1.2 it has full internal corporate power and authorization to sign and deliver this Agreement as well as all other documents to be signed by it inconnection with the transaction anticipated herein and it has full power and authorization to consummate the transaction anticipated herein;this Agreement is duly and appropriately signed and delivered by it and constitutes its lawful, valid and binding obligations, enforceable inaccordance with its terms; 7.1.3 it will exert its best reasonable efforts to obtain complete business licenses required to conduct the internet information services within Chinaas well as other Party A’s Business it currently intends to engage in; 7.1.4 it will submit to Party B a quarterly financial statement for the then current quarter and budget for the immediately succeeding quarter withinten (10) business days following the end of each quarter and an annual financial statement for the then current year and budget for theimmediately succeeding year within thirty (30) business days following the end of each year; 7.1.5 it will promptly advise Party B of any lawsuit in which it is involved and other adverse conditions and make its best effort to mitigate losses;and 7.1.6 it will not dispose of any of its material assets or change its existing equity structure in any manner without Party B’s consent in writing. 7.2 Party B represents and warrants that 7.2.1 it is a limited liability company duly registered and validly existing under the PRC laws, has independent legal person qualification and thecomplete and independent legal status and capacity required to sign, deliver and perform this Agreement, and may act as an independentlitigation subject; and 7.2.2 it has full internal corporate power and authorization to sign and deliver this Agreement as well as all other documents to be signed by it inconnection with the transaction anticipated herein and it has full power and authorization to consummate the transaction anticipated herein;this Agreement is duly and appropriately signed and delivered by it and constitutes its lawful, valid and binding obligations, enforceable inaccordance with its terms. 9 ARTICLE EIGHT TERM OF THIS AGREEMENT 8.1 Both Parties hereby acknowledge that this Agreement shall become effective on the date on which it is duly signed by the Parties and shall continuebeing effective unless renewed or terminated in advance by Party B upon notifying Party A in writing. 8.2 Upon the termination of this Agreement, both Party A and Party B shall continue to perform their obligations under Articles Three and Six hereof. ARTICLE NINE INDEMNIFICATION Party A shall indemnify Party B and hold it free and harmless against all losses which Party B suffers or may suffer in rendering the Services hereunder,including but not limited to any and all losses arising out of any lawsuit, recovery, arbitration or claim brought forth by any third party or any administrativeinvestigation or penalty, except where such losses are caused by Party B’s willful misconduct or gross default. ARTICLE TEN NOTICE 10.1 Any and all notices, requests, instructions or other communications required to be made hereof or made pursuant to this Agreement by one Party tothe other hereunder shall be made in writing. 10.2 The foregoing notice or other communication shall be deemed duly given upon its delivery by fax or telex or personal delivery or five (5) daysfollowing its delivery by mail. ARTICLE ELEVEN LIABILITIES FOR BREACHING 11.1 Both Parties agree and acknowledge that a substantial breach of any covenant or failure to substantially perform any obligation hereunder by anyParty (the “Default Party”) shall constitute a breach of this Agreement (“Breach”), and the non-default Party (the “Non-default Party”) shall havethe right to demand rectification or remedy by the Default Party within a reasonable period of time. If the Default Party fails to rectify the Breach or totake remedial measures within such reasonable period of time or ten (10) days following the Non-default Party’s written notice and demand forrectification thereof, then, in the case of any Breach by Party A, the Non-default Party may, at its own discretion, (i) terminate this Agreement anddemand indemnification by the Default Party for all damages, or (ii) ask the Default Party to continue performing its obligations hereunder andindemnify the Non-default Party for all its damages; or, in the case of any Breach by Party B, the Non-default Party may ask the Default Party tocontinue performing its obligations hereunder and indemnify the Non-default Party for all its damages. 10 11.2 Both Parties agree and acknowledge that under no circumstances may Party A terminate this Agreement on any ground, unless otherwise provided forby law or this Agreement. 11.3 Notwithstanding any other provisions herein, the provisions of this Article Eleven shall survive the suspension or termination of this Agreement. ARTICLE TWELVE FORCE MAJEURE In the event that a Party’s performance of this Agreement or any other covenants of the Parties is directly affected by an earthquake, typhoon, flood, fire, war,computer virus, design loophole in any software tool, hacker attack on the internet, amendment to law or policy or any other event of force majeure which isnot foreseeable or the result of which is not to be prevented or avoided, such Party shall immediately give the other Party a notice by fax of such event andwithin thirty days (30) thereafter provide a detailed report thereof as well as a certification document explaining the cause for the non-performance or delayedperformance of this Agreement, which certification document shall be issued by the public notary of the region in which the event of force majeure occurred.The Parties shall decide through consultation whether performance of this Agreement, in whole or in part, shall be relieved or delayed to the extent affectedby such event. With respect to economic losses sustained by either Party as a result of such event, neither Party shall be liable. ARTICLE THIRTEEN MISCELLANEOUS 13.1 This Agreement is made in Chinese in two (2) original copies, with each Party hereto holding one (1) copy. 13.2 The execution, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the laws of thePeople’s Republic of China. 13.3 Any dispute arising out of or in connection with this Agreement shall be resolved by the Parties through negotiation. In the event that the Partiescannot reach an agreement within thirty (30) days following the occurrence of such dispute, the dispute shall be submitted to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules of such commission then in effect. Thearbitration shall be conducted in Beijing and the arbitral award shall be final and binding upon both Parties. 13.4 The rights, power and remedies provided for either Party herein shall not exclude any other rights, power or remedies to which such Party is entitledunder law, regulations, and other provisions herein, and the exercise by one Party of its right, power, or remedies shall not hinder its exercise of anyother right, power, or remedies. 11 13.5 Failure to exercise or delay in exercising any right, power, or remedies under this Agreement or law (collectively, the “Rights”) shall not be deemed awaiver of such Rights, and any waiver of single or partial exercise of the Rights shall not exclude the exercise of the Rights in any other manner or theexercise of any other Rights. 13.6 Headings herein are inserted for ease of reference only. In no event may such headings be used to interpret or affect the interpretation of theprovisions herein. 13.7 This Agreement shall supersede all other agreements, written or oral, of the Parties regarding the subject matter of this Agreement and constitute theentire agreement of the Parties concerning such subject matter. 13.8 All provisions herein are separable and independent of any other provisions. If one or more provisions hereof are held invalid, illegal orunenforceable at any time, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affectedthereby. 13.9 Amendment or addition to this Agreement shall be made in writing and may not become effective unless and until duly executed by the Parties. 13.10 No Party may assign any of its rights and/or obligations hereunder to any third party without the prior consent of the other Party in writing. 13.11 This Agreement shall be binding upon the legal assigns of both Parties. 13.12 Both Parties warrant that they will report and pay their respective taxes arising out of the transaction anticipated herein in accordance with law. [Remainder of the page left blank intentionally] 12 [Signature Page] IN WITNESS HEREOF, the Parties have signed this Exclusive Technical Consulting and Service Agreement as of the date and in the place first written above. Party A: Beijing Chenhuan Technology Co., Ltd.(seal) Party B: Qieyiyou(Beijing) Information Technology Co., Ltd.(seal) 13 EXHIBIT 1: LIST OF TECHNICAL LICENSE AND SERVICES Technical Support with Respect to Mobile Network Value-added Telecommunication Business As the technical service provider of Party A and subject to the terms and conditions hereof, Party B hereby agrees to provide to Party A technical servicesrequired by the mobile network value-added telecommunication business, which services include but not limited to: (1) development, updating and upgrading of user-end software; (2) development, updating and upgrading of network server-end software; (3) technological development and maintenance of databank; (4) development of system technology; (5) master system design plan; (6) system installation and debugging; (7) system commissioning and testing; (8) installation and debugging of system expansion; (9) examination and maintenance of operational hardware; (10) daily maintenance of system software; (11) transformation and upgrading of system software. Technical Support with Respect to Internet Information Service Party B hereby agrees to provide to Party A technical services relating to website operations, which services include but not limited to: (1) development, updating and upgrading of network user-end software; (2) development, updating and upgrading of network server-end software; (3) technological development and maintenance of databank; (4) development of website system technology; (5) master website system design plan; (6) website system installation and debugging; (7) website system commissioning and testing; (8) installation and debugging of website system expansion; (9) examination and maintenance of website operational hardware; 14 (10) daily maintenance of website system software; (11) transformation and upgrading of website system software; (12) with respect to various information to be employed by Party A in its internet information services, including but not limited to information pertainingto news, finance, science and technology, sports, entertainment, games, fashion, education, medical care, culture, and professionals resources, providecompilation, statistics, integration, databank programming, and technical platform design services, assist in determining the content framework andchannel structure design for the foregoing, and provide content updating services at the technical level; (13) provide webpage design and technical support to Party A and assist Party A in providing light and friendly interfaces for news browse, purchase,medical care, chat, entertainment, inquire and register services; (14) with respect to system software which is provided by Party B to Party A for its website operation, Party B shall also provide Party A with systemdocumentation such as user guide and manual in relation to such website operation system software; (15) where Party B’s assistance is required by Party A in its endeavor to modify its website system environment, including the operation system anddatabank environment, Party B shall provide relevant solutions; and (16) assist Party A in resolving issues arising out of the installation and operation of the website operational equipments. Technical Support with Respect to Network Advertisement Business Party B hereby agrees to provide to Party A technical services relating to its network advertisement business, which services include but not limited to: (1) development, updating and upgrading of network advertisement release software; (2) installation and commissioning of network advertisement release software; (3) technical maintenance of network advertisement release software; and (4) design and production of network advertisements. Technical Training Party B hereby agrees to provide the following training to Party A and its employees: (1) technical training with respect to the installation and operation of equipment and devices; (2) training on appropriate customer service, technology and etc; and (3) training on the use of the network editing software. 15 Technical Consulting Service (1) provide consulting services with respect to the purchase of equipments, software and hardware required by Party A in its network operations, includingbut not limited to technical suggestions with respect to the selection of various tool software, application software and technical platform, theinstallation and commissioning of systems, and the purchase, model and performance of various hardware equipment and devices; (2) provide technical consulting services such as technical demonstration, technical projection, special technical investigation, analysis and assessmentwith respect to the technical project designated by Party A; (3) provide technical consulting services with respect to network software, hardware, equipment, and system network editing software application whichare set up or will be set up by Party A; (4) provide Party A with the following information with respect to international, domestic and Party A’s network services: trends of special networkservices, investigations on technology, expenses and income, and analysis and assessment reports; (5) Party A may consult Party B’s technical supporting engineers for solutions to specific technical issues through email, telephone and fax, and Party B’sengineers will respond and assist clients in resolving such issues; (6) in the event of any emergency which cannot be handled by Party A, Party B’s engineers will logon remotely upon Party A’s consent, examine thesystem status and resolve the problem. (7) Party B will satisfy other technical consulting requirements of Party A to the extent of Party B’s capacity. 16Exhibit 4.12B ENGLISH TRANSLATION FOR REFERENCE ONLY.THE ORIGINAL AGREEMENT EXECUTED IN CHINESE SHALL CONTROL.(English Translation) Business Management Agreement Between Wu Haipeng He Yansheng Beijing Chenhuan Technology Co., Ltd. And Qieyiyou (Beijing) Information Technology Co., Ltd. January 13, 2014 Business Management Agreement This Business Management Agreement (the “Agreement”) is entered into by and between the following parites in Beijing, the People’s Republic of China(“China”, for the purpose of this Agreement, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan) onJanuary 13, 2014. 1. Wu Haipeng, a PRC citizen (ID No.: 110108196611071XXX) 2. He Yansheng, a PRC citizen (ID No.: 110105195806195XXX) (the aforesaid individuals are referred to in this Agreement as “Existing Shareholder” respectively and “Existing Shareholders” collectively) 3. Qieyiyou (Beijing) Information Technology Co., Ltd. (“WFOE”) Registered Address: Room 08, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing 4. Beijing Chenhuan Technology Co., Ltd. (the “Domestic Company”) Registered Address: Room 05, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing (Each of the foregoing parties is referred to hereinafter individually as a “Party” and collectively as “Parties”.) WHEREAS: 1. Existing Shareholders are all the registered shareholders of the Domestic Company, where Wu Haipeng and He Yansheng hold 51% and 49% equityinterest in the Domestic Company respectively; 2. WOFE and the Domestic Company have entered into the Exclusive Technical Consulting and Service Agreement (the “Service Agreement”) , underwhich the Domestic Company shall pay certain amount of service fee to WFOE; 3. The service fee payable to WFOE under the Service Agreement has not yet been paid actually and the daily operation of the Domestic Company hasmaterial effect on the ability of the Domestic Company to pay such service fee. Now therefore, the parties have reached the following agreement after amicable discussions: 1. Subject to the full performance of the obligations by the Domestic Company under this Agreement, WFOE agrees to provide guarantee for theobligations of the Domestic Company to such third parties under the contracts, agreements or other transactions entered into between the DomesticCompany and such third parties at the request of the third party, and to enter into security agreements separately at the time. The Domestic Companyagrees to provide counter guarantee to WFOE using its account receivables and all its other assets with respect to the aforesaid guarantees. TheDomestic Company and Existing Shareholders shall take all necessary measures (including without limitation signing relevant documents andcompleting relevant registrations) to realize the counter guarantee to WFOE. thth 2. As a condition precedent of WOFE’s provision of guarantee to the Domestic Company, as well as for the purpose of ensuring the performance of theService Agreement (for example, the payment of service fee to WFOE by the Domestic Company), the Domestic Company and Existing Shareholdershereby agree that without the prior written consent of WFOE, the Domestic Company will not engage in any transactions or actions which maysubstantially affect its assets, liabilities, rights or business management (except for transactions and actions in the course of normal businessoperations), including without limitations the following: 2.1 to reduce or damage the value of any assets held by the Domestic Company; 2.2 to borrow any loans from any third party or incur liabilities for the benefit of any third party; 2.3 to engage in the sale, rent, lending, transfer, assign, grant, remortgage, escrow, investment with any third party with respect to any assets orinterests or otherwise dispose of the assets or interests of the Domestic Company ( including without limitation any intellectual property right); 2.4 to provide guarantee for third parties by creating encumbrances on the assets or intellectual property rights of the Domestic Company; 2.5 to transfer any agreement related to the business of the Domestic Company to any third party, or cease conducting all or part of its business, orsubstantially change the nature or scope of its business. 3. The Domestic Company and Existing Shareholders hereby agree to accept the company policies and guidance with respect to the employment anddismissal of employees, day-to-day operations and financial management systems of the Domestic Company provided by WFOE from time to time. 4. The Domestic Company and Existing Shareholders hereby agree: 4.1 that WFOE owns the exclusive right to nominate the candidates of directors of the Domestic Company, and that the Domestic Company andExisting Shareholders will appoint the candidates nominated by WFOE as the directors of the Domestic Company and will ensure that themembers of the board and the rights of directors keep the same with those of WFOE; 4.2 that WFOE owns the exclusive right to nominate the candidates of the general manager and other senior management of the DomesticCompany, and that the Domestic Company will appoint the candidates nominated by WFOE as the general manager and other seniormanagement of the Domestic Company; 4.3 in case the aforesaid candidates nominated by WFOE are no longer employed by WFOE (either due to voluntary resignation or dismissal byWFOE), the Domestic Company and Existing Shareholders will replace such candidates in accordance with the relevant procedures provided forin the articles of association of the Domestic Company and appoint other persons nominated by WFOE to hold the corresponding positions. 5. The Domestic Company and Existing Shareholders hereby agree and confirm that, other than in accordance with the relevant provisions underArticle 1 of this Agreement, in case the Domestic Company needs any performance guarantee or operating capital loan guarantee during the term ofoperation, it shall first request WFOE to provide such guarantee, in which case WFOE shall have the right but no obligation to provide appropriateguarantee for the Domestic Company. If WFOE does not provide such guarantee, WFOE should immediately notify the Domestic Company in writingso that the Domestic Company may request a guarantee from a third party. Where WFOE is willing to provide such guarantee, WFOE will sign separateguarantee agreements separately with other parties to the contracts or agreements signed by the Domestic Company. The commitments made by WFOEunder this Agreement does not constitute an obligation for WFOE to be the guarantor under any guarantee agreement which has not been signed byWFOE. 6. After the expiration or termination of any agreement between WFOE and the Domestic Company, WFOE shall have the right but no obligation toterminate the agreements between WFOE and the Domestic Company, including without limitation the Service Agreement. 7. Any exhibit, amendment and supplement to this Agreement shall be in writing and signed by the parties, which shall constitute an integral part of thisAgreement and have the same legal effect. 8. Any and all notices, requests, instructions or other communications required to be made hereof or made pursuant to this Agreement by one Party to theother hereunder shall be made in writing.The foregoing notice or other communication shall be deemed duly given upon its delivery by fax or telex orpersonal delivery or five (5) days following its delivery by mail. 9. This Agreement is made in Chinese in four (4) original copies, with each Party hereto holding one (1) copy. 10. The execution, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the laws of the People’sRepublic of China. 11. Any dispute arising out of or in connection with this Agreement shall be resolved by the Parties through negotiation. In the event that the Partiescannot reach an agreement within thirty (30) days following the occurrence of such dispute, the dispute shall be submitted to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules of such commission then in effect. The arbitrationshall be conducted in Beijing and the arbitral award shall be final and binding upon both Parties. 12. The rights, power and remedies provided for either Party herein shall not exclude any other rights, power or remedies to which such Party is entitledunder law, regulations, and other provisions herein, and the exercise by one Party of its right, power, or remedies shall not hinder its exercise of anyother right, power, or remedies. 13. Failure to exercise or delay in exercising any right, power, or remedies under this Agreement or law (collectively, the “Rights”) shall not be deemed awaiver of such Rights, and any waiver of single or partial exercise of the Rights shall not exclude the exercise of the Rights in any other manner or theexercise of any other Rights. 14. Headings herein are inserted for ease of reference only. In no event may such headings be used to interpret or affect the interpretation of the provisionsherein. 15. All provisions herein are separable and independent of any other provisions. If one or more provisions hereof are held invalid, illegal or unenforceableat any time, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affected thereby. 16. Once executed, this Agreement shall supersede any and all other legal documents by and among the Parties with respect to the same subject matter.Amendment or addition to this Agreement shall be made in writing and may not become effective unless and until duly executed by all the Partieshereto. [Remainder of the page left blank intentionally] [signature page] IN WITNESS HEREOF, the Parties have signed this Exclusive Equity Option Agreement as of the date and in the place first written above. Wu Haipeng By:/s/ He Yansheng By:/s/ Qieyiyou (Beijing) Information Technology Co., Ltd.(seal) Beijing Chenhuan Technology Co., Ltd.(seal) Exhibit 4.14A ENGLISH TRANSLATION FOR REFERENCE ONLY.THE ORIGINAL AGREEMENT EXECUTED IN CHINESE SHALL CONTROL.(English Translation) Loan Agreement by and among Wu Haipeng He Yansheng and Qieyiyou (Beijing) Information Technology Co., Ltd. January 13, 2015 1 Loan Agreement This Loan Agreement (the “Agreement”) is entered into by the following parties on January 13, 2015 in Beijing: (1) Wu Haipeng, a PRC citizen (ID No.:110108196611071XXX); (2) He Yansheng, a PRC citizen (ID No.:110105195806195XXX); Wu Haipeng and He Yansheng are referred to hereinafter individually as a “Borrower” and collectively as “Borrowers”; and (3) Qieyiyou (Beijing) Information Technology Co., Ltd. (“Lender”), a wholly foreign-owned enterprise established under the PRC laws, with itsregistered address at Room 08, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing Each of the foregoing parties is referred to hereinafter individually as a “Party” and collectively as “Parties”. WHEREAS: 1. Wu Haipeng and He Yansheng intend to jointly establish a limited liability company to engage in internet information services (the “DomesticCompany”) with a registered capital of RMB 1.5 million. 2. Lender intends to provide the fund to Wu Haipeng and He Yansheng for the establishment of the Domestic Company and Wu Haipeng and HeYansheng agree to accept such funding support; 3. In order to provide for the rights and obligations of both Borrowers and Lender under the relevant loan arrangement, the Parties have agreed as follows: ARTICLE ONE DEFINITION 1.1 As used herein, “Liability” shall mean the outstanding amount under the Loan; “Effective Date” shall mean the date on which this Agreement is duly executed by the Parties hereto; “Loan” shall mean the Renminbi loan advanced by Lender to Borrowers; “PRC” shall mean the People’s Republic of China, and for the purpose of this Agreement, does not include Hong Kong, Macao and Taiwan; “Repayment Notice” shall have the meaning set forth in Section 3.1; “Repayment Application” shall have the meaning set forth in Section 3.2; 2th “Rights” shall have the meaning set forth in Section 10.5. 1.2 Any reference herein to: any “article”, “section” or “subsection” herein shall mean Articles, Sections, and Subsections of this Agreement, unless otherwise provided by thecontext herein; any “taxes and fees” herein shall be interpreted as including any tax, fee, duty or other charge of a similar nature (including but not limited to anypenalty or interest in connection with the non-payment or delayed payment of such tax); and “Borrower” and “Lender” herein shall be interpreted as including their successors and assigns respectively permitted by each Party based on its owninterest. 1.3 Unless otherwise stated herein, references to this Agreement, any other agreement or any other document, as the case may be, shall be interpreted asalso referring to the amendments, revisions, additions and updates which have been made or may be made from time to time to this Agreement, anyother agreement or any other document. 1.4 Headings are inserted for ease of reference only. 1.5 Unless otherwise required by the context, plural forms shall include singular and vice versa. ARTICLE TWO LOAN AMOUNT AND INTEREST RATE 2.1 The Parties hereby confirm that the total principal amount of the Loan advanced by Lender to Borrower shall be 1.5 Million Renminbi(RMB1,500,000), including: a principal amount of seven Hundred and sixty-five Thousand Renminbi (RMB765,000) advanced to Wu Haipeng a principal amount of seven Hundred and thirty-five Thousand Renminbi (RMB735,000) advanced to He Yansheng.. 2.2 Unless provided for otherwise in this Agreement, the Loan advanced hereunder shall bear an interest at the rate of zero percent (0%), i.e. no interestwill accrue for the Loan hereunder. 3 ARTICLE THREE REPAYMENT 3.1 The term of Loan shall be ten (10) years as of the date of execution of this Agreement, and may be extended upon agreements by the Parties inwriting. During the term or extended term of the Loan, Lender may at any time request at its own absolute discretion that the Liability be discharged,in whole or in part, by Borrower or Borrowers, upon a 30-day prior repayment notice to such Borrower or Borrowers (“Repayment Notice”). In theevent that Lender requires repayment by any Borrower pursuant to the preceding sentence, Lender shall have the right to purchase or designate a thirdparty to purchase the equity interest held by such Borrower in the Domestic Company at such a price as equaling the amount of the Liability to bedischarged by such Borrower, provided, however, that the ratio of the equity interest to be so purchased to the equity interest held by such Borrowerin the Domestic Company shall be equivalent to that of the Liability required to be discharged to the principal amount of the Loan borrowed by suchBorrower hereunder. The amount of the Liability required to be repaid shall be offset against that of the equity transfer price. 3.2 Any Borrower may at any time apply for the discharge of the Liability, in whole or in part, by sending Lender a 30-day prior notice of application(“Repayment Application”). In such case, Borrower may discharge its Liability only by transferring the equity interest held by such Borrower in theDomestic Company, in whole or in part, to Lender or a third party designated by Lender, and the equity transfer price shall be offset against theamount of the Liability applied for discharge by such Borrower. The ratio of the equity interest, which is to be so transferred, to the equity interestheld by such Borrower in the Domestic Company shall be equivalent to that of the Liability for which discharge is applied, to the principal amount ofthe Loan borrowed by such Borrower hereunder. 3.3 Upon the expiration of the 30-day period set forth in the Repayment Notice or the Repayment Application, as the case may be, Borrower who appliesfor the repayment of or who is required to repay the Loan shall discharge the Liability in accordance with Section 3.1 or 3.2 respectively. 3.4 When Borrower discharges the Liability pursuant to the above provisions of this Article Three, the Parties shall concurrently consummate the equitytransfer as prescribed in Section 3.1 or 3.2 above, to ensure that upon the discharge of the Liability, the corresponding equity interest in the DomesticCompany shall have been transferred, legally and completely, to Lender or the third party designated by Lender, pursuant to Section 3.1 or 3.2 above,and such equity interest shall be free and clear of any lien or any other encumbrance of any kind. 3.5 During the term or extended term of the Loan, each Borrower shall immediately repay the Loan in full in accordance with Section 3.1 if suchBorrower 3.5.1 is dead, incapable of civil action, or has limited capacity for civil action; 3.5.2 engages or is involved in any criminal offence; or 3.5.3 is no longer an employee of Lender or its affiliated company due to whatever reason. 4 3.5.4 any Borrower is claimed for any mature debt exceeding RMB 150,000. 3.6 The parties hereby agree and confirm that, if by reason of legal restrictions or other reasons, the transfer price of the Equity in the Domestic Companyheld by them to Lender or its designated entities or individuals is higher than the principal amount of the Loan under this Agreement (on a pro ratabasis), then to the extent permitted by laws, the portion of the transfer price in excess of the principal amount of the Loan shall be deemed to be theinterest or the cost of the use of such Loan and shall be paid together with the principal amount of the Loan to Lender, otherwise all Loans under thisAgreement are free of interest. 3.7 The Parties agree and confirm that Borrowers shall be deemed to have fully fulfilled their obligations under this Agreement only when the followingrequirements have been met: 3.7.1 Borrowers have transferred to Lender or its designated entities or individuals all Equity in the Domestic Company held by them; and 3.7.2 Borrowers have paid Lender all the consideration it has received from the transfer of the aforesaid Equity or such maximum amount as maybe permitted by law (including the principal and maximum interest permitted by law). For the avoidance of doubt, the fact that either Borrower has be deemed to have fully fulfilled his obligations under this Agreement is withoutprejudice to the exercise or performance of any rights or obligations of Lender and the other Borrower under this Agreement. 3.8 Borrowers agree to pledge all of the Equity in the Domestic Company held by them to Lender to secure the performance of Borrowers’ obligationsunder this Agreement. ARTICLE FOUR TAXES AND FEES All taxes and fees in connection with the Loan shall be borne by Lender. ARTICLE FIVE REPRESENTATIONS AND WARRANTIES 5.1 Borrowers hereby representation and warrant to Lender jointly and severally as follows: 5.1.1 They are all Chinese citizens with full civil capacities, who have complete and independent legal status and legal capacities, have been dulyauthorized to sign, deliver and perform this Agreement, and may act independently as a party to a law suit. 5 5.1.2 They have full power and authorization to sign and deliver this Agreement as well as all other documents to be signed by them in connectionwith the transaction contemplated herein and to consummate the transactions contemplated herein. 5.1.3 The execution and performance of this Agreement by Borrowers do not breach or violate any applicable laws, any agreement to which theyare parties, or violate or contradict with any court judgment, any arbitration award or any decision of administrative authorities which hasbinding force to themselves or their assets. 5.1.4 Upon being signed duly by Borrowers, this Agreement constitutes lawful, valid and binding obligations of Borrowers. 5.2 Lender representations and warrants to Borrowers as follows: 5.2.1 Lender is a wholly foreign-owned limited liability company duly registered and legally existing under PRC laws, with independent legalperson status. Lender has complete and independent legal status and legal capacities to sign, deliver and perform this Agreement, and may actindependently as a party to a law suit. 5.2.2 Lender has full internal power and authorization to sign and deliver this Agreement as well as all other documents to be signed by them inconnection with the transaction contemplated herein and to consummate the transactions contemplated herein. 5.2.3 The execution and performance of this Agreement by Lender do not breach or violate any applicable laws, any agreement to which it is aparty, or violate or contradict with any court judgment, any arbitration award or any decision of administrative authorities which has bindingforce to itself or its assets. 5.2.4 This Agreement has been legally and duly signed and delivered by Lender. This Agreement constitutes lawful, valid and binding obligationsof it. ARTICLE SIX BORROWER’ UNDERTAKING 6.1 Borrowers hereby undertake that all Loans obtained from Lender shall fully and only be used for the payment of the registered capital of the DomesticCompany. 6.2 Lender hereby undertakes that without Lender’s prior written consent, it shall not transfer, sell or otherwise dispose of the Equity held by them in theDomestic Company, or create any encumbrance on any asset (excluding the Equity Pledge in accordance with Article 3.8 of this Agreement), or votefor the aforesaid matters at shareholders’ meetings or sign any shareholders’ written resolutions approving such matters. 6 6.3 During the term hereof, Borrowers shall promptly notify WFOE of any potential or pending litigation, arbitration and administrative proceduresrelating to the assets, operations and revenues of the Domestic Company. 6.4 During the term hereof, Borrowers shall exert their best efforts and take all necessary measures, including, but not limited to, signing all necessarydocuments, bringing all necessary actions and taking all necessary means of defence, etc., in order to maintain their Equity and benefits in theDomestic Company 6.5 During the term hereof, Borrowers shall ensure not taking any actions or omissions which may materially affect the assets, operations and liabilities ofthe Domestic Company. 6.6 Borrowers shall ensure that any persons designated by Lender be nominated and elected as directors of the Domestic Company. 6.7 In case Lender requests to exercise its option, Borrowers shall immediately and unconditionally transfer the relevant Equity held by them in theDomestic Company to Lender or the entities or individuals designated by it to the extent permitted by PRC laws at the request of Lender. 6.8 Borrowers undertake not to request the Domestic Company to distribute any dividend or profit to them. 6.9 In case Borrowers have transferred all or part of the relevant Equity held by them in the Domestic Company to Lender or the entities or individualsdesignated by it at the request of Lender, Borrowers undertake to immediately transfer all consideration received from such transfer to Lender as theprincipal amount and interest/fund use cost of the Loan under this Agreement. 6.10 Borrowers undertake to strictly abide by this Agreement and perform their obligations in accordance with this Agreement and shall refrain fromtaking any actions or omissions which may affect the validity or enforceability of this Agreement. 6.11 Borrowers hereby undertake that after the establishment of the Domestic Company, they shall procure and ensure that the Domestic Company: 6.11.1 will not make any supplement, amendment or revision to its articles of association, or increase or decrease its Registered Capital, or changethe existing equity structure of the domestic companies in any way, without Lender’s prior written consent . 6.11.2 will diligently and efficiently operate and maintain its own business in accordance with good financial and business codes and practices. 6.11.3 will not transfer, sell, pledge or otherwise dispose of, or create any encumbrance on any assets, business or legal proceeds of it withoutLender’s prior written consent. 7 6.11.4 conduct all its businesses to maintain the value of its assets on a continuous basis. 6.11.5 will not lend or borrow loans, provide guarantee or make securities of other types, or undertake any material obligations out of the courseof normal business activities without the prior consent of Lender; 6.11.6 will not conduct any transaction involving any amount of not less than (or equivalent to) RMB [ ] a time, or an aggregated amount of notless than (or equivalent to) RMB [ ] without the prior consent of Lender; 6.11.7 will provide Lender with all its operation and financial information at the request of Lender. 6.11.8 will not merge with any third party, purchase the assets, equity of any third party or otherwise invest in any third party; 6.11.9 will not distribute dividend or profit to its shareholders without the prior written consent of Lender but will distribute all distributableprofits to its shareholders as soon as possible at the request of Lender; 6.11.10 will promptly notify WFOE of any potential or pending litigation, arbitration and administrative procedures relating to the assets,operations and revenues of the Domestic Company. 6.11.11 during the term hereof, shall exert its best reasonable efforts to obtain all business licenses required by it in conducting its business to beconducted by it and will not conduct any actions or omissions which may damage its assets, good will or the validity of its businesslicenses. 6.11.12 will strictly abide by any agreements signed by it and Lender and perform its corresponding obligations under such agreements, and shallrefrain from taking any actions or omissions which may affect the validity and enforceability of such agreements. ARTICLE SEVEN CONFIDENTIAL INFORMATION 7.1 Each Borrower shall keep in confidence (i) the execution, performance and content of this Agreement, and (ii) Lender’s business secrets, proprietaryinformation and client information (“Confidential Information”) of which such Borrower may become aware or to which such Borrower may haveaccess in connection with the execution and performance of this Agreement, regardless of the termination hereof. Each Borrower may use theConfidential Information solely in connection with the performance of its obligations hereunder. Without Lender’s written consent, each Borrowermay not disclose such Confidential Information to any third party, otherwise, such Borrower shall be held liable for its breaching this Agreement andindemnify Lender against all losses of Lender. 8 7.2 After the termination of this Agreement, Borrowers shall, at Lender’s request, return, destroy or otherwise dispose of any and all documents, materialsor software containing such Confidential Information and stop using such Confidential Information. 7.3 Notwithstanding any other provisions herein, the provisions of this Article Seven shall survive the suspension or termination of this Agreement. ARTICLE EIGHT NOTICE 8.1 Any and all notices, requests, instructions or other communications required to be made hereof or made pursuant to this Agreement by one Party tothe other hereunder shall be made in writing. 8.2 The foregoing notice or other communication shall be deemed duly given upon its delivery by fax or telex or personal delivery or five (5) daysfollowing its delivery by mail. ARTICLE NINE LIABILITIES FOR BREACHING 9.1 Each Borrower hereby covenants that it will indemnify and hold harmless Lender against any action, charge, claim, cost, harm, demand, fee, liability,loss and procedure incurred by Lender arising out of such Borrower’s breach of any of its obligations hereunder. 9.2 Notwithstanding any other provisions herein, the provisions of this Article Nine shall survive the suspension or termination of this Agreement. ARTICLE TEN MISCELLANEOUS 10.1 This Agreement is made in Chinese in three (3) original copies, with each Party hereto holding one (1) copy. 10.2 The execution, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the laws of thePeople’s Republic of China. 10.3 Any dispute arising out of or in connection with this Agreement shall be resolved by the Parties through negotiation. In the event that the Partiescannot reach an agreement within thirty (30) days following the occurrence of such dispute, the dispute shall be submitted to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules of such Commission then in effect. Thearbitration shall be conducted in Beijing and the arbitral award shall be final and binding upon the Parties. 10.4 The rights, power and remedies provided for each Party herein shall not exclude any other rights, power or remedies to which such Party is entitledunder law, regulations, and other provisions herein, and the exercise by one Party of its right, power, or remedies shall not hinder its exercise of anyother right, power, or remedies. 9 10.5 Failure to exercise or delay in exercising any right, power, or remedies under this Agreement or law (collectively, the “Rights”) shall not be deemed awaiver of such Rights, and waiver of any single or partial exercise of the Rights shall not exclude the exercise of the Rights in any other manner or theexercise of any other Rights. 10.6 Headings herein are inserted for ease of reference only. In no event may such headings be used to interpret or affect the interpretation of theprovisions herein. 10.7 All provisions herein are separable and independent of any other provisions. If one or more provisions hereof are held invalid, illegal orunenforceable at any time, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affectedthereby. 10.8 Amendment or addition to this Agreement shall be made in writing and may not become effective unless and until duly executed by the Parties. 10.9 Each Borrower may not assign its rights and/or obligations hereunder to any third party without the prior written consent of Lender, while Lendermay assign its rights and/or obligations hereunder to its designated third party upon notifying the other Parties. 10.10 This Agreement shall be binding upon the legal assigns of each Party. [Remainder of the page left blank intentionally] 10 [Signature Page] IN WITNESS HEREOF, the Parties have signed this Loan Agreement as of the date and in the place first written above. Wu Haipeng By:/s/ He Yansheng By:/s/ Qieyiyou (Beijing) Information Technology Co., Ltd. (seal) 11Exhibit 4.16A ENGLISH TRANSLATION FOR REFERENCE ONLY.THE ORIGINAL AGREEMENT EXECUTED IN CHINESE SHALL CONTROL.(English Translation) Voting Right Entrustment Agreement of Beijing Chenhuan Technology Co., Ltd. by and among Qieyiyou (Beijing) Information Technology Co., Ltd. Beijing Chenhuan Technology Co., Ltd. Wu Haipeng and He Yansheng January 13, 2014 1 Voting Right Entrustment Agreement This Voting Right Entrustment Agreement (the “Agreement”) is entered into by the following parties on January 13, 2014 in Beijing, the People’s Republicof China (“China”): (1) Qieyiyou (Beijing) Information Technology Co., Ltd. (“WFOE”) Registered Address: Room 08, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing Legal Representative: Li Daoxin (2) Beijing Chenhuan Technology Co., Ltd. (the “Domestic Company”) Registered Address: Room 05, 8 Floor, Building No.2, Yard No.4, Qiyang Road, Chaoyang District, Beijing Legal Representative: Wu Haipeng (3) Wu Haipeng ID No.: 110108196611071XXX (4) He Yansheng ID No.: 110105195806195XXX (The aforesaid individuals are referred to in this Agreement severally as “Shareholder” and jointly “Shareholders”). WHEREAS: 1. Shareholders are all the existing shareholders of the Domestic Company and hold all the equity interest therein; and 2. Shareholders intend to entrust the voting rights Shareholders enjoy as shareholders of the Domestic Company to certain individuals designated byWFOE and WFOE intends to designate such individuals to be so entrusted. NOW, THEREFORE, the Parties have agreed as follows upon friendly consultation: ARTICLE ONE VOTING RIGHT ENTRUST 1.1 Each Shareholder hereby irrevocably undertakes to sign a power of attorney upon the execution of this Agreement in similar form and substance withthe Power of Attorney attached hereto as Exhibit 1, whereby a certain individual (“Trustee”) then designated by WFOE will be empowered toexercise the following rights such Shareholder enjoys as shareholder of the Domestic Company(“Entrusted Rights”): 2thth (1) attend the shareholders meeting of the Domestic Company as the proxy of such Shareholder; (2) vote on behalf of such Shareholder on all matters requiring discussion and resolution by shareholders meeting(including but not limited tothe sale or transfer of the Equity held by Shareholders to any third Party or the appointment and election of directors, general manager andother senior executives of the Domestic Company); (3) propose that an interim shareholders meeting be convened; (4) exercise Shareholder’s voting right provided by law; and (5) exercise any other Shareholder’s voting right provided by the Articles of Association of the Domestic Company, as amended. 1.2 As a precondition to the abovementioned empowerment and entrustment, a Trustee shall be a PRC citizen and the abovementioned empowermentand entrustment shall be accepted by WFOE. Upon and only upon a written notice from WFOE to Shareholders regarding the removal of any Trustee,Shareholders shall immediately withdraw the entrustment made to existing Trustee under this Agreement and appoint such other PRC citizen asdesignated by WFOE then to exercise such Entrusted Rights. A new power of attorney, once made, shall replace the original one immediately. Inaddition, Shareholders may not withdraw the entrustment and empowerment made to Trustee. 1.3 To the extent authorized hereunder, Trustee shall perform its fiduciary obligations with care and diligence in accordance with law and Shareholdersshall acknowledge and be responsible for any and all legal consequences arising out of Trustee’s exercise of such Entrusted Rights. 1.4 Shareholders hereby acknowledge that Trustee may exercise its Entrusted Rights without seeking Shareholders’ opinion in advance, except to theextent required by the PRC law; provided, however, that Trustee shall advise Shareholders promptly of any resolution or any proposal for an interimshareholders meeting once the same is made. 1.5 Shareholders hereby acknowledge that Trustee shall have the right to appoint any entity or individual to exercise Trustee’s Entrusted Rights underSection 1.1 without Shareholders’ consent. 1.6 Shareholders hereby undertake that after the signing of this Agreement, regardless of any change to the ratio of Equity held by them in the DomesticCompany, they will empower Trustee to exercise all their shareholders’ rights in the Domestic Company. 3 ARTICLE TWO RIGHT TO KNOW For the purpose of the Entrusted Rights hereunder, Trustee shall have full right to know all information regarding the Domestic Company’s operation,business, clients, finance, and employees as well as full access to the relevant documentations of the Domestic Company, including but not limited to anyand all accounts, statements, contracts and internal communications in respect of finance, business and operation, all minutes of the board, and all otherdocuments, and the Domestic Company shall give full support thereto. ARTICLE THREE EXERCISE OF THE ENTRUSTED RIGHTS 3.1 Shareholders will provide Trustee with full assistance required by Trustee in its exercise of the Entrusted Rights, including signing in a timely mannerthe resolutions of the shareholders meeting or other relevant legal documents made by Trustee (so as, by way of example, to submit the documentsrequired by the regulatory bodies in their examination and approval, registration or filing procedures). 3.2 If, at any time during the term hereof, any Shareholder sells or transfers all or part of Equity held by him with the consent of WFOE, such party mustensure that the aforesaid third party signs an agreement in substantially similar form and substance with this Agreement before the closing of suchtransfer of Equity unless with the prior written consent of WFOE to exempt such requirement. 3.3 If, at any time during the term hereof, the grant or exercise of the Entrusted Rights hereunder is rendered impossible by any cause (other thanShareholder’s or the Domestic Company’s breach of this Agreement), the Parties hereto shall immediately replace the invalid provision(s) withone(s) that is closest in meaning to the invalid provision(s) and, where necessary, execute any supplementary agreement to amend or readjust theterms and conditions hereof, so as to ensure the realization of the purposes hereof. ARTICLE FOUR DISCLAIMER; INDEMNIFICATION 4.1 All Parties acknowledge that if the Entrusted Rights hereunder is exercised by any entity/individual appointed by WFOE, it shall not be required tobe liable or make any compensation, economic or otherwise, to any third party on account of such appointment. 4.2 The Domestic Company and Shareholders agree that they shall indemnify and hold harmless Trustee against all losses that Trustee sustained or maysustain by reason of its exercise of the Entrusted Rights, including but not limited to any and all losses arising out of any lawsuit, recovery,arbitration or claim brought forth by any third party or any administrative investigation or penalty, unless such losses are caused by Trustee’s willfulmisconduct or gross negligence. 4 ARTICLE FIVE REPRESENTATIONS AND WARRANTIES 5.1 Shareholders hereby represent and warrant severally and jointly that 5.1.1 each of them is a PRC citizen with full capacity, has full and independent legal status and capacity, and may act as an independent litigationsubject; 5.1.2 each of them has full power and authorization to sign and deliver this Agreement as well as all other documents to be signed by each inconnection with the transaction anticipated herein and to consummate such transaction; 5.1.3 this Agreement is duly and appropriately signed and delivered by each of them and constitutes their legal, valid and binding obligations,enforceable in accordance with its terms; and 5.1.4 each of them is a legal shareholder on record of the Domestic Company at the time this Agreement becomes effective; there is no any otherthird party right over the Entrusted Rights other than that provided for in this Agreement, the Equity Pledge Agreement by and betweenShareholders and WFOE and the Exclusive Equity Option Agreement by and among Shareholders, the Domestic Company and WFOE; andsubject to this Agreement, the Entrusted Rights may be fully exercised by Trustees in accordance with the articles of association of theDomestic Company then in effect. 5.2 WFOE and the Domestic Company each represents and warrants that 5.2.1 it is a limited liability company duly registered and validly existing under the PRC laws, with independent legal person status; it has thecomplete and independent legal status and capacity required to sign, deliver and perform this Agreement and to act as an independentlitigation subject; and 5.2.2 it has full internal corporate power and authorization to sign and deliver this Agreement as well as all other documents to be signed by it inconnection with the transaction anticipated herein and the full power and authorization to consummate such transaction. 5.3 The Domestic Company further represents and warrants that each Shareholder is a legal shareholder on record of the Domestic Company at the timethis Agreement becomes effective and that subject to this Agreement, the Entrusted Rights may be fully exercised by Trustees in accordance with thearticles of association of the Domestic Company then in effect. 5 ARTICLE SIX TERM 6.1 This Agreement shall become effective on the date on which it is duly signed by the Parties and shall continue being effective unless terminated inadvance by WFOE in writing or pursuant to Section 8.1 hereof. 6.2 If either Shareholder transfers all its equity interest in the Domestic Company upon prior consent of WFOE, such Shareholder shall no longer be aParty hereto and the obligations and warrants of the other Parties hereunder shall not be adversely affected thereby. ARTICLE SEVEN NOTICE 7.1 Any and all notices, requests, instructions or other communications required to be made hereof or made pursuant to this Agreement by one Party tothe other hereunder shall be made in writing. 7.2 The foregoing notice or other communication shall be deemed duly given upon its delivery by fax or telex or personal delivery or five (5) daysfollowing its delivery by mail. ARTICLE EIGHT LIABILITIES FOR BREACHING 8.1 All Parties agree and acknowledge that a substantial breach of any covenant or failure to substantially perform any obligation hereunder by any Party(the “Default Party”) shall constitute a breach of this Agreement (“Breach”), and the non-default Party or Parties (the “Non-default Party”) shallhave the right to demand rectification or remedy by the Default Party within a reasonable period of time. If the Default Party fails to rectify the Breachor to take remedial measures within such reasonable period of time or ten (10) days following the Non-default Party’s written notice and demand forrectification thereof, then, in the case of any Breach by Shareholders or the Domestic Company, the Non-default Party may, at its own discretion,(i) terminate this Agreement and demand indemnification by the Default Party for all damages, or (ii) require the Default Party to continue performingits obligations hereunder and indemnify the Non-default Party for all its damages; or in the case of any Breach by WFOE, the Non-default Party mayrequire the Default Party to continue performing its obligations hereunder and indemnify the Non-default Party for all its damages. 8.2 All Parties agree and acknowledge that under no circumstances may Shareholders or the Domestic Company terminate this Agreement on any ground,unless otherwise provided for by law or this Agreement. 8.3 Notwithstanding any other provisions herein, the provisions of this Article Eight shall survive the suspension or termination of this Agreement. ARTICLE NINE MISCELLANEOUS 9.1 This Agreement is made in Chinese in four (4) original copies, with each Party hereto holding one (1) copy. 6 9.2 The execution, effectiveness, performance, amendment, interpretation and termination of this Agreement shall be governed by the laws of thePeople’s Republic of China. 9.3 Any dispute arising out of or in connection with this Agreement shall be resolved by the Parties through negotiation. In the event that the Partiescannot reach an agreement within thirty (30) days following the occurrence of such dispute, the dispute shall be submitted to China InternationalEconomic and Trade Arbitration Commission for arbitration in accordance with the arbitration rules of such Commission then in effect. Thearbitration shall be conducted in Beijing and the arbitral award shall be final and binding upon the Parties. 9.4 The rights, power and remedies provided for each Party herein shall not exclude any other rights, power or remedies to which such Party is entitledunder law, regulations, and other provisions herein, and the exercise by one Party of its right, power, or remedies shall not hinder its exercise of anyother right, power, or remedies. 9.5 Failure to exercise or delay in exercising any right, power, or remedies under this Agreement or law (collectively, the “Rights”) shall not be deemed awaiver of such Rights, and waiver of any single or partial exercise of the Rights shall not exclude the exercise of the Rights in any other manner or theexercise of any other Rights. 9.6 Headings herein are inserted for ease of reference only. In no event may such headings be used to interpret or affect the interpretation of theprovisions herein. 9.7 All provisions herein are separable and independent of any other provisions. If one or more provisions hereof are held invalid, illegal orunenforceable at any time, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be adversely affectedthereby. 9.8 Amendment or addition to this Agreement shall be made in writing and may not become effective unless and until duly executed by the Parties. 9.9 No Party may assign its rights and/or obligations under this Agreement without the prior written consent of the other Party or Parties. 9.10 This Agreement shall be binding upon the legal assigns of any Party. [Remainder of the page left blank intentionally] 7 [signature page] IN WITNESS HEREOF, the Parties have signed this Voting Right Entrustment Agreement as of the date and in the place first written above. Wu HaipengBy:/s/ He YanshengBy:/s/ Beijing Chenhuan Technology Co., Ltd.(seal) Qieyiyou (Beijing) Information Technology Co., Ltd.(seal) 8 Exhibit 1 Power of Attorney I , hereby irrevocably authorize (ID No.: ) to act as my trustee, who in such capacity may exercise the shareholders’ rightscorresponding to all the Equity held by me in Beijing Chenhuan Technology Co., Ltd. (the “Domestic Company”) in accordance with the Power of Attorneyfor the Voting Rights of Shareholders signed between Qieyiyou (Beijing) Information Technology Co., Ltd. and me, which include: (1) to present at shareholders’ meetings of the Domestic Company in the capacity of Trustee of Shareholders; (2) to vote on behalf of Shareholders on all matters requisite of discussions and voting by Shareholders (including but not limited to the sale or transfer ofthe Equity held by Shareholders to any third party or designate and elect the senior management such as directors and general manager of the DomesticCompany); (3) to call for holding ad hoc shareholders’ meetings; (4) any voting rights of Shareholder under laws; (5) other Shareholders’ voting rights under the Articles of Association of the Domestic Company, as amended. Signature: Date: 9Exhibit 4.41 Schedule of Material Differences between: · the Cooperation Agreement, dated as of February 14, 2011, between China Mobile Communications Corporation and Beijing Tianying JiuzhouNetwork Technology Co., Ltd. entered into in 2011, filed as Exhibit 10.25 to the Registration Statement on Form F-1 (File No. 333-173666)(“Cooperation Agreement 2011”), · the Cooperation Agreement, dated as of June 20, 2014, between China Mobile Communications Corporation and Beijing Tianying JiuzhouNetwork Technology Co., Ltd. entered into in 2014 (“Cooperation Agreement 2014”), · the Cooperation Agreement, dated as of September 16, 2015, between China Mobile Communications Corporation and Beijing Tianying JiuzhouNetwork Technology Co., Ltd. entered into in 2015 (“Cooperation Agreement 2015”), · the Cooperation Agreement, dated as of January 16, 2017, between China Mobile Communications Corporation and Beijing Tianying JiuzhouNetwork Technology Co., Ltd. entered into in 2017 and as to 2016 and 2017 (“Cooperation Agreement 2016”), and · the Cooperation Agreement, dated as of October 18, 2017, between China Mobile Communications Corporation and Beijing Tianying JiuzhouNetwork Technology Co., Ltd. entered into in 2017 and as to 2017 and 2018 (“Cooperation Agreement 2017”). Material difference Cooperation Agreement 2011Cooperation Agreement 2014Cooperation Agreement 2015Cooperation Agreement 2016Cooperation Agreement 2017 Article 1. Content ofCooperation — Section 1.1“Party B agrees to produce solely for Party Athree kinds of multimedia message productsnamely ‘GoTone Phoenix Weekly’,‘GoTone Phoenix Observer’, and ‘PhoenixExpress’ based on the programs of PhoenixSatellite TV. Among which, one ‘GoTonePhoenix Observer’ message will betransmitted on a daily basis (excludingSaturday), one ‘GoTone Phoenix Weekly’message will be transmitted on eachSaturday, and three ‘Phoenix Express’messages will be transmitted irregularly ineach month.”“Party B agrees to produce solely for PartyA two kinds of multimedia messageproducts namely ‘GoTone Phoenix Weekly’and ‘GoTone Phoenix Observer’ based onthe programs of Phoenix Satellite TV.Among which, one ‘GoTone PhoenixWeekly’ message will be transmitted onMonday, Wednesday, and Saturday each,two “GoTone Phoenix Observer” messagewill be transmitted on a daily basis.”“Details on the content of cooperationprovided by Party B to Party A are as set outin the scheduled Party A ProjectSpecifications (Schedule II) and Party B’sresponses.”nN/A — This article remains the same asCooperation Agreement 2015.:“Details on the content of cooperationprovided by Party B to Party A are as set outin the scheduled Party A ProjectSpecifications (Schedule II) and Party B’sresponses.” Article 1. Content ofCooperation — Section 1.2“Party B agrees that Party A shall have theright to purchase the multimedia messageproducts produced by Party B solely forParty A pursuant to Section 1.1 hereof. If changes to such multimedia messageproducts are required, which changesinclude but not limited to changes to thetitle, content and delivery frequency of suchmultimedia message products, such changesmay be carried out upon mutual agreementand written confirmation of the Parties. Party B covenants that it shall not provide,with or without consideration, suchmultimedia message products to any thirdparty other than Party A.”“ Party B agrees that Party A shall have theright to purchase the multimedia messageproducts produced by Party B solely forParty A pursuant to Section 1.1 hereof. Party B covenants that (1) it shall notprovide, with or without consideration,such multimedia message products to anythird party other than Party A; and (2) itshall not use such multimedia messageproducts in its own name, unless such use iffor the purpose of this Agreement.”“The information service cooperationperiod for ‘GoTone Phoenix MobileNewspaper’ during 2015 is betweenJanuary 1 and December 31. The time limitsfor other contents of cooperation are as setout below: (1) Phase I service period: from the date thecontract is signed through December 31,2015;(2) Phase II service period: if the fiscal year2016 connected transactions between PartyA and Party B are approved by theshareholders of Party B’s parent (PhoenixSatellite Television Holdings Limited) atthe shareholders’ general meeting, the PhaseII service period will begin from the later of(i) the date of such approval or(ii) January 1, 2016; and the total length ofthe Phases I and II service periods will beone year;(3) In the event that the fiscal year 2016connected transactions between Party A andParty B are not approved by theshareholders of Party B’s parent (PhoenixSatellite Television Holdings Limited) atthe shareholders’ general meeting, thiscontract shall terminate; and the two partieswill settle payments with respect to theservice contents completed during the PhaseI service period on the basis of the actualextent of completion.”“The information service cooperationperiod for ‘GoTone Phoenix MobileNewspaper’ during 2015 is betweenJanuary 1, 2016 and April 30, 2017. Thetime limits for other contents of cooperationare between the date on which thisagreement is signed January 16, 2017 andApril 30, 2017 (for details of the contents ofcooperation, see the Project Specificationsin the schedules).” Article 1. Content ofCooperation — Section 1.3 (in2011)“Party B agrees that during the period ofcooperation, both Parties shall jointlyexplore the wireless ad business on thebasis of the foregoing multimedia messageproducts and a back charge pattern, thespecific cooperation model of which shallbe subject to a separate supplementalagreement of the Parties.”N/A — this article is deletedN/A — this article is deleted; all content ofcooperation is consolidated underSection 2.2.1, “Information Services”: N/A — this article is deleted; all content ofcooperation is consolidated underSection 2.2, “Contents of Cooperation”, ofthe scheduled Party A Project Specifications(Schedule II) and Party B’s responses: Article 1. Content ofCooperation — Section 1.3.1“Party A and Party B shall conduct jointlythe “GoTone Current Affairs Forum”activity: Party A shall provide site and hostParty B, while Party B shall provide hostsand lecturers who shall perform no less thanthirty-one (31) tour presentationsthroughout the country.”N/A — this article is deletedN/A — this article is deleted 1 Material difference Cooperation Agreement 2011Cooperation Agreement 2014Cooperation Agreement 2015Cooperation Agreement 2016Cooperation Agreement 2017 Article 1. Content ofCooperation — Section 1.3.2“Based on the blueprint of the limited-distribution edition of the ‘PhoenixWeekly’ which is distributed in themainland area of China, Party B shall makeavailable to Party A prior to the fifteenth(15th) date of each month Twenty Thousand(20,000) copies of the premium edition ofthe ‘Phoenix Weekly’, which edition shallcontain all the contents of the third issue ofthe ‘Phoenix Weekly’ of each month and thedigest of no less than eight (8) sheets(sixteen (16) pages) of the first two issues ofthe ‘Phoenix Weekly’ of the then currentmonth. Concurrently, Party B shall provideto Party A’s clients the electronic edition ofthe ‘Phoenix Weekly’ magazine for free, therealization of which to be determined byboth Parties through negotiation.”Party B will provide a series of servicesrelated to the operation and support of“Customers Club”, planning of activities,liaison, information collection, dataanalysis and dissemination package to PartyA. Based on Party A’s demand and byincorporating information of both parties’products and services and Party B’s mediaresources, Party B should develop andoperate a customer-end product for PartyA’s customer with information, service,sales and communication functions, andcontinue to improve such product asrequired by Party A.”N/A — this article is deletedN/A — this article is deleted Article 1. Content ofCooperation — Section 1.3.3“In combination with the “GoTone PhoenixCurrent Affairs Forum” and in light of thecurrent hot spots of the society, Party Bshall conduct reading activities incollaboration with Party A and present tenthousand (1,000) gift books to Party A insupport of the “GoTone Phoenix CurrentAffairs Forum” activity. The list of thebooks shall be determined by both Partiesthrough negotiation.”N/A — This article is moved toArticle 1.3.1N/A — this article is deletedN/A — this article is deleted Article 1. Content ofCooperation — Section 1.3.4“In support of Party A’s daily marketingendeavors, Party B shall provide newscoverage and dissemination services forParty A through Phoenix Satellite TV (noless than 24 times a year), GoTone PhoenixMobile Newspaper (no less than 60 times ayear), 3g.ifeng.com (no less than 40 times ayear), and Phoenix Mobile TV (a videoapplication, no less than 35 times a year).”“In support of Party A’s daily marketingendeavors, Party B shall provide mediacoverage for Party A’s relevant activitiesthrough www.ifeng.com no less than 400times a year and large special reports no lessthan five times a year.” This article is movedto Section 1.3.3N/A — this article is deletedN/A — this article is deleted Article 1. Content ofCooperation — Section 1.3.5“Party B shall set up for Party A a “GoToneVIP Current Affairs Forum”, a first-classchannel, at www.ifeng.com and giveextensive publicity to such channel and theactivities thereof by using Phoenixwebsites’s internal resources (Banner, FocusPicture and Text Link etc.). Party B shallensure average daily websites hits of over5,500,000 times. Party B shall, after editingthe wording, pictures or videos from theAffairs Forum and after obtaining speakers’approval, broadcast such information on theGoTone VIP Current Affairs Forum channel.Party B shall also set up a service and salessection (10086.ifeng.com), promote PartyA’s service in the relatively important spotin the websites for Party A in the long term,broadcast and disseminate news coverage orvideos of Party A, and ensure average dailysection hits of over 500,000.” AsSection 1.3.4, Section 1.3.5 is deletedN/A — this article is deletedN/A — this article is deleted Article 1. Content ofCooperation — Section 1.4.“The term of cooperation between Party Aand Party B shall commence on January 1,2011 and end on December 31, 2011.”“The term of cooperation between Party Aand Party B shall commence on January 1,2014 and end on December 31, 2014.”N/A — this article is deletedN/A — this article is deleted Article 2. Contract Price;Terms and Method of Payment— Section 2.1“The contract price hereof shall be the pricefor the information purchased hereunder,which shall be calculated as follows: PartyA shall pay Party B a price for theinformation products purchased during theperiod of January 1, 2011 throughDecember 31, 2011, while Party B shallprovide Party A with free informationproducts made during the period ofNovember 1, 2010 through December 31,2010. The total contract price hereof shall beFifty-eight Million Eight HundredThousand Renminbi (RMB58,800,000)…”“The contract price hereof shall be the pricefor the information purchased hereunder,which shall be calculated as follows: PartyA shall pay Party B a price for theinformation products purchased during theperiod of January 1, 2014 throughDecember 31, 2014. The total contract pricehereof shall be Forty Million Renminbi(RMB40,000,000)…”“The contract price hereof shall be the pricefor information purchased hereunder, whichshall be calculated as follows: For theinformation products purchased during thecooperation period, Party A shall pay PartyB a total contract price ofRMB19,790,000.00, inclusive of 6% VATof an amount of RMB1,120,188.68; and thecontract price net of VAT shall beRMB18,669,811.32. Except as otherwiseexpressly provided herein, the foregoingprice shall be a tax-inclusive price and shallcover all of the Party B’s costs inconnection with its performance of thiscontract. Unless otherwise consented to inwriting by Party A, Party A will not pay anyadditional amounts.”“The contract price hereof shall be the pricefor information purchased hereunder, whichshall be calculated as follows: For theinformation products purchased during thecooperation period, Party A shall pay PartyB a total contract price ofRMB14,900,000.00, inclusive of 6% VATof an amount of RMB843,396.23; and thecontract price net of VAT shall beRMB14,056,603.77. Except as otherwiseexpressly provided herein, the foregoingprice shall be a tax-inclusive price and shallcover all of the Party B’s costs inconnection with its performance of thiscontract. Unless otherwise consented to inwriting by Party A, Party A will not pay anyadditional amounts.” 2 Material difference Cooperation Agreement 2011Cooperation Agreement 2014Cooperation Agreement 2015Cooperation Agreement 2016Cooperation Agreement 2017 Article 2. Contract Price;Terms and Method of Payment— Section 2.2“Payment hereunder shall be made by PartyA through wire transfer as described below: In January 2011, Party B shall issue to PartyA an official invoice in the amount ofEleven Million Seven Hundred and SixtyThousand Renminbi (RMB11,760,000),while Party A shall pay such amount, ifproved to be correct upon verification, toParty B within ten (10) days of receivingsuch invoice; In September 2011, Party B shall issue toParty A an official invoice in the amount ofThirty-five Million Two Hundred andEighty Thousand Renminbi(RMB35,280,000), while Party A shall paysuch amount, if proved to be correct uponverification, to Party B within ten (10) daysof receiving such invoice; and In January 2012, Party B shall issue to PartyA an official invoice in the amount ofEleven Million Seven Hundred and SixtyThousand Renminbi (RMB11,760,000),while Party A shall pay such amount, ifproved to be correct upon verification, toParty B within ten (10) days of receivingsuch invoice.”“Payment hereunder shall be made by PartyA through wire transfer based on theprogress of cooperation: Upon the fulfillment of 50% of themultimedia message services, Party B shallissue to Party A an official invoice (oneoriginal and one photocopy of the VATinvoice) in the amount of Eight MillionRenminbi (RMB8,000,000), while Party Ashall pay such amount, if proved to becorrect upon verification, to Party B withinthirty (30) days of receiving such invoice; Upon the fulfillment of 80% of themultimedia message services, Party B shallissue to Party A an official invoice (oneoriginal and one photocopy of the VATinvoice) in the amount of a Twenty-fourMillion Renminbi (RMB24,000,000), whileParty A shall pay such amount, if proved tobe correct upon verification, to Party Bwithin thirty (30) days of receiving suchinvoice; and Once the term of the cooperation ends andall of Party B’s obligations are completed,Party B shall issue to Party A an officialinvoice (one orignal and one photocopy ofthe VAT invoice) in the amount of EightMillion Renminbi (RMB8,000,000), whileParty A shall pay such amount, if proved tobe correct upon verification, to Party Bwithin thirty (30) days of receiving suchinvoice.”“Payment hereunder shall be made by PartyA through wire transfer based on theprogress of cooperation: Upon the fulfillment of 50% of the MobileNewspaper services, Party B shall issue toParty A both an original copy and aduplicate copy of a VAT invoice specifyingthe contract number in an amount equal to20% of the total contract price orRMB3,958,000.00. Party A shall pay suchamount to Party B within thirty (30) daysfrom its receiving and confirming theaccuracy of said invoice; Upon the fulfillment of 80% of the MobileNewspaper services, Party B shall issue toParty A both an original copy and aduplicate copy of the VAT invoicespecifying the contract number in anamount equal to 40% of the total contractprice or RMB7,916,000.00. Party A shallpay such amount to Party B within thirty(30) days from its receiving and confirmingthe accuracy of said invoice; Upon full completion of the cooperationand performance by Party B of all of itsobligations hereunder, Party B shall issue toParty A both an original copy and aduplicate copy of the VAT invoicespecifying the contract number in anamount equal to 40% of the total contractprice or RMB7,916,000.00. Party A shallpay such amount to Party B within thirty(30) days from its receiving and confirmingthe accuracy of said invoice.”“Payment hereunder shall be made by PartyA through wire transfer based on theprogress of cooperation: At the end of the year 2016, upon thefulfillment of 60% of Party B’s services,Party B shall issue to Party A both anoriginal copy and a duplicate copy of aVAT invoice specifying the contractnumber and contract name, in an amountequal to 60% of the total contract price orRMB8,940,000.00. Party A shall pay suchamount to Party B within thirty (30) daysfrom its receiving and confirming theaccuracy of said invoice; Upon completion of the cooperation, andonce Party B has fulfilled all of itsobligations under this agreement, Party Bshall issue to Party A both an original copyand a duplicate copy of a VAT invoicespecifying the contract number in anamount equal to 40% of the total contractprice or RMB5,960,000.00. Party A shallpay such amount to Party B within thirty(30) days from its receiving and confirmingthe accuracy of said invoice.” Article 3. Party A’s Rights andObligations — Section 3.2“During the period of cooperation betweenthe Parties, Party A shall have the absolutediscretion to conduct business operations inconnection with the foregoing multimediamessage products and the contents thereof,which business operations include but notlimited to user credit exchange, mobilemarket subscription and download, andwireless ad business.”“During the period of cooperation betweenthe Parties, Party A shall have the absolutediscretion to conduct business operationsin connection with the foregoingmultimedia message products and thecontents thereof, which business operationsinclude but not limited to user creditexchange and mobile market subscriptiondownload.”“During the period of cooperation betweenthe Parties, Party A shall have the right tomanage the foregoing mobile newspapersand their contents independently (includingbut not limited to the development ofcustomer points redemption programs basedon such mobile newspapers).”N/A — This article remains the same asCooperation Agreement 2015. Article 3. Party A’s Rights andObligations — Section 3.4“With respect to the relevant supportingresources provided by Party B for free, PartyA shall have the right to decide the mannerin which such resources shall be used andthe various costs and expenses of Party B inusing such resources.”“With respect to the relevant supportingresources provided by Party B for free, PartyA shall have the right to decide the mannerin which such resources shall be organized,designed and used.”N/A — this article is deleted“With respect to the relevant resourcesprovided by Party B for free, Party A shallhave the right to decide the manner in whichsuch resources shall be organized, designedand used.” Article 4. Party B’s Rights andObligations — Section 4.2“Party B shall be responsible for the design,development, production, maintenance, andupdates of the content of the ‘GoTonePhoenix Weekly’, ‘GoTone PhoenixObserver’, and ‘Phoenix Express’, and theforegoing multimedia message productsshall contain contents that cover currentaffairs, finance, entertainments, sports,culture, science and technology, fashion,and military affairs.”“Party B shall be responsible for the design,development, production, maintenance, andupdates of the content of the ‘GoTonePhoenix Weekly’ and ‘GoTone PhoenixObserver’, and the foregoing multimediamessage products shall contain contentsthat cover current affairs, finance,entertainments, sports, culture, science andtechnology, fashion, and military affairs.”“Party B shall be responsible for theconception, development, production,maintenance and update of the content of‘GoTone Phoenix Monitor’ and ‘GoTonePhoenix Weekly’; said mobile newspapersshall include contents of various fields,such as current affairs, finance and economy,entertainment, sports, culture, science andtechnology, fashion, military.”N/A — This article remains the same asCooperation Agreement 2015. 3 Material difference Cooperation Agreement 2011Cooperation Agreement 2014Cooperation Agreement 2015Cooperation Agreement 2016Cooperation Agreement 2017 Article 4. Party B’s Rights andObligations — Section 4.3“Party B covenants that the foregoingmultimedia message products will be soldto Party A exclusively, for which productsParty B will only provide content support,and that Party B will not sell suchmultimedia message products to or incollaboration with any third party otherthan Party A.”“Party B covenants that the foregoingmultimedia message products will be soldto Party A exclusively, for which productsParty B will only provide content support,and that Party B will not sell suchmultimedia message products to or incollaboration with any third party otherthan Party A and its affiliated companies”.“Party B covenants that the foregoingmobile newspapers will be sold to Party Aexclusively, for which products Party B willonly provide content support; and thatParty B will not sell, either on its own or incollaboration with any third party, suchmobile newspapers to any person other thanParty A and its affiliates.”N/A — This article remains the same asCooperation Agreement 2015.:“Party B covenants that the foregoingmobile newspapers will be sold to Party Aexclusively, for which products Party B willonly provide content support; and thatParty B will not sell, either on its own or incollaboration with any third party, suchmobile newspapers to any person other thanParty A and its affiliates.” Article 8. Breach of Obligation— Section 8.6“If any Party is in breach of theconfidentiality provisions hereof, suchParty shall pay to the non-breaching Party aliquidated damage at 1% of the totalcontract price hereof.”“If any Party is in breach of theconfidentiality provisions hereof, suchParty shall pay to the non-breaching Party aliquidated damage at 1% of the totalcontract price hereof, and bear all expensesthereof incurred.”“If any Party is in breach of theconfidentiality provisions hereof, suchParty shall pay to the non-breaching Partyan amount equal to ten percent (10%) of thetotal contract price hereunder as liquidateddamages, and shall bear any and allexpenses incurred in connection withclaims arising from such breach.”N/A — This article remains the same asCooperation Agreement 2015.:“If any Party is in breach of theconfidentiality provisions hereof, suchParty shall pay to the non-breaching Partyan amount equal to ten percent (10%) of thetotal contract price hereunder as liquidateddamages, and shall bear any and allexpenses incurred in connection withclaims arising from such breach.” Article 4. Party B’s Rights andObligations — Section 4.6“Party B shall assist Party A in providingconsulting services to Party A’s clients andin handling and resolving their complaints.With respect to complaints arising out ofcauses attributable to Party B, it shall handleand resolve the same within forty-eight (48)hours.”“Party B shall assist Party A in providingconsulting services to Party A’s clients andin handling and resolving their complaints.With respect to complaints arising out ofcauses attributable to Party B, it shallhandle and resolve the same within eight(8) hours.”N/A — this article is deleted“Party B shall assist Party A in providingconsulting services to Party A’s clients andin handling and resolving their relatedcomplaints. With respect to complaintsarising out of causes attributable to Party B,Party B shall be responsible for handlingand resolving the same within eight(8) hours.” Article 13. ExhibitsN/AExhibit 1. Licensed Trademark Exhibit 2.Trademark License Agreement, datedNovember 24, 2009, between TianyingJiuzhou and Phoenix Satellite TelevisionTrademark Limited Exhibit 3. Agreement ofintegrity and good faith.N/A — this article is deletedExhibit 1. Trademark License Agreement,dated November 24, 2009, betweenTianying Jiuzhou and Phoenix SatelliteTelevision Trademark Limited;Exhibit 2. Party A Project Specificationsand Party B’s responses;Exhibit 3. Project Prices Table;Exhibit 4: Agreement of integrity and goodfaith. 4 Exhibit 4.53 August 9, 2017 (1) PARTICLE INC.as Borrower (2) Particle (HK) Limitedas a Covenantor (3) Beijing Particle Information Technology Co., Ltd.(北京一点网聚信息技术有限公司)as a Covenantor (4) Beijing Yidianwangju Technology Co., Ltd.(北京一点网聚科技有限公司)as a Covenantor and (5) PHOENIX NEW MEDIA LIMITEDas Original Lender AMENDMENT NO. 2TOLOAN AGREEMENT THIS AMENDMENT NO. 2 TO LOAN AGREEMENT is dated August 9,2017 and made between: (1) PARTICLE INC., an exempted limited liability company organized under the laws of the Cayman Islands (the “Borrower”) (2) PARTICLE (HK) LIMITED, a company organized under the laws of the Hong Kong and a Subsidiary (as defined herein) of the Borrower (the “HKSubsidiary”); (3) BEIJING PARTICLE INFORMATION TECHNOLOGY CO., LTD. (北京一点网聚信息技术有限公司), a company incorporated under the lawsof the PRC and a Subsidiary (as defined herein) of the Borrower (the “PRC Subsidiary”); (4) BEIJING YIDIANWANGJU TECHNOLOGY CO., LTD. (北京一点网聚科技有限公司), a company incorporated under the laws of the PRC and avariable interest entity and Subsidiary (as defined herein) of the Borrower (the “PRC VIE”); and (5) PHOENIX NEW MEDIA LIMITED, an exempted limited liability company organized under the laws of the Cayman Islands (the “OriginalLender”). WHEREAS the Borrower, the HK Subsidiary, the PRC Subsidiary, the PRC VIE and the Original Lender entered into that certain Loan Agreement (the“Original Loan Agreement”) dated as of August 10, 2016, pursuant to which the Original Lender granted an unsecured term loan (the “Loan”) to theOriginal Lender on August 10, 2016 with a principal amount of US$14,800,000. WHEREAS the Borrower, the HK Subsidiary, the PRC Subsidiary, the PRC VIE and the Original Lender entered into Amendment No. 1 (the “AmendmentNo. 1”) to the Original Loan Agreement (as amended by the Amendment No. 1, the “Loan Agreement”) dated as of January 20, 2017, pursuant to which theterm of the Loan was revised and extended. WHEREAS the Borrower has requested the Original Lender, and the Original Lender has agreed to, further revise and extend the term of the Loan. NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein and for other good and valuable consideration, the receiptand sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follow: 1. Clause 1.1 of the Loan Agreement is hereby amended to delete the definition of “Final Maturity Date” in its entirety and to replace it with thefollowing: “‘Final Maturity Date’ means the date which falls eighteen (18) Months from the relevant Utilisation Date, provided that if such day is not aBusiness Day, the Final Maturity Date shall be the next Business Day in that calendar month (if there is one) or the preceding Business Day (if thereis not).” 2. Each of the representations and warranties made by the Obligors to the Lender as set out in Clause 14 of the Loan Agreement is hereby repeated bythe Obligors as of the date hereof as if each of such representations and warranties is made by the Obligors on the date hereof. 3. From and after the date hereof, (i) all references in the Loan Agreement to “this Agreement” or words of like import referring to the Loan Agreementshall mean the Loan Agreement as amended by this Agreement, (ii) all references in the other Finance Documents to the “Loan Agreement” shallmean the Loan Agreement, as amended by this Agreement, (iii) all references in the Finance Documents to the “Finance Documents” shall mean theFinance Documents as amended by this Agreement, collectively, and (iv) all terms in the Finance Documents which, by the terms thereof, have themeanings set forth in the “Loan Agreement” shall have the respective meanings set forth in the Loan Agreement as amended by this Agreement. 1 4. The Obligors and the Original Lender hereby ratify and confirm the Loan Agreement and all other Finance Documents, in each case, as modifiedhereby. Except as modified and amended by this Agreement, the Loan, the Loan Agreement and the other Finance Documents and the respectiveobligations of the Lender and the Obligors thereunder shall be and remain unmodified and in full force and effect. 5. The execution, delivery and effectiveness of this Agreement shall not, except to the extent expressly provided herein, operate as a waiver of anyright, power or remedy of the Lender under the Loan Agreement or any of the other Finance Documents, nor constitute a waiver of any provision ofthe Loan Agreement or any of the other Finance Documents by any of the parties hereto. 6. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 7. Any term of this Agreement or any other Finance Documents may be amended or waived only with the consent of the Lender and the Obligors andany such amendment or waiver will be binding on all Parties. 8. This Agreement, and all non-contractual obligations arising from or in connection with this Agreement, are governed by, and construed exclusivelyin accordance with, the laws of Hong Kong. 9. If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction,neither the legality, validity or enforceability of the remaining provisions of this Agreement or any other Finance Documents nor the legality,validity or enforceability of such provisions under the law of any other jurisdiction will in any way be affected or impaired. 10. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 11. All disputes and controversies arising out of or in connection with this Agreement (including a dispute regarding the existence, validity ortermination of this Agreement) shall be referred to and finally settled by arbitration at the Hong Kong International Arbitration Centre in accordancewith the UNCITRAL Arbitration Rules (the “UNCITRAL Rules”) in effect, which rules are deemed to be incorporated by reference into this clause.The arbitration tribunal shall consist of three arbitrators to be appointed according to the UNCITRAL Rules. The language of the arbitration shall beEnglish. 12. This Agreement constitutes the entire agreement among the Obligors and the Original Lender with respect to subject matter hereof and supersedes allother prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 13. All capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement. This Agreement has been entered into on the date stated at the beginning of this Agreement. 2 SIGNATURE PAGE For execution by the Borrower SIGNED and DELIVERED by))for and on behalf of)PARTICLE INC.)/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY For execution by the Covenantors SIGNED and DELIVERED by))for and on behalf of)PARTICLE (HK) LIMITED)/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNED and DELIVERED by))for and on behalf of)BEIJING PARTICLE INFORMATION)TECHNOLOGY CO., LTD.)(北京一点网聚信息技术有限公司))/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNED and DELIVERED by))for and on behalf of)BEIJING YIDIANWANGJU)TECHNOLOGY CO., LTD.)(北京一点网聚科技有限公司))/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNATURE PAGE For execution by the Lender SIGNED and DELIVERED by))for and on behalf of)PHOENIX NEW MEDIA LIMITED)/s/Shuang Liu DIRECTOR / AUTHORISED SIGNATORY Exhibit 4.54 January 20, 2018 (1) PARTICLE INC.as Borrower (2) Particle (HK) Limitedas a Covenantor (3) Beijing Particle Information Technology Co., Ltd.(北京一点网聚信息技术有限公司)as a Covenantor (4) Beijing Yidianwangju Technology Co., Ltd.(北京一点网聚科技有限公司)as a Covenantor and (5) PHOENIX NEW MEDIA LIMITEDas Original Lender AMENDMENT NO. 3TOLOAN AGREEMENT THIS AMENDMENT NO. 3 TO LOAN AGREEMENT is dated January 20, 2018 and made between: (1) PARTICLE INC., an exempted limited liability company organized under the laws of the Cayman Islands (the “Borrower”) (2) PARTICLE (HK) LIMITED, a company organized under the laws of the Hong Kong and a Subsidiary (as defined herein) of the Borrower (the “HKSubsidiary”); (3) BEIJING PARTICLE INFORMATION TECHNOLOGY CO., LTD. (北京一点网聚信息技术有限公司), a company incorporated under the lawsof the PRC and a Subsidiary (as defined herein) of the Borrower (the “PRC Subsidiary”); (4) BEIJING YIDIANWANGJU TECHNOLOGY CO., LTD. (北京一点网聚科技有限公司), a company incorporated under the laws of the PRC and avariable interest entity and Subsidiary (as defined herein) of the Borrower (the “PRC VIE”); and (5) PHOENIX NEW MEDIA LIMITED, an exempted limited liability company organized under the laws of the Cayman Islands (the “OriginalLender”). WHEREAS the Borrower, the HK Subsidiary, the PRC Subsidiary, the PRC VIE and the Original Lender entered into that certain Loan Agreement (the“Original Loan Agreement”) dated as of August 10, 2016, pursuant to which the Original Lender granted an unsecured term loan (the “Loan”) to theOriginal Lender on August 10, 2016 with a principal amount of US$14,800,000. WHEREAS the Borrower, the HK Subsidiary, the PRC Subsidiary, the PRC VIE and the Original Lender entered into Amendment No. 1 (the “AmendmentNo. 1”) to the Original Loan Agreement dated as of January 20, 2017, pursuant to which the term of the Loan was revised and extended. WHEREAS the Borrower, the HK Subsidiary, the PRC Subsidiary, the PRC VIE and the Original Lender entered into Amendment No. 2 (the “AmendmentNo. 2”) to the Original Loan Agreement (as amended by the Amendment No. 1 and Amendment No. 2, the “Loan Agreement”) dated as of August 9, 2017,pursuant to which the term of the Loan was revised and extended. WHEREAS the Borrower has requested the Original Lender, and the Original Lender has agreed to, further revise and extend the term of the Loan. NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein and for other good and valuable consideration, the receiptand sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follow: 1. Clause 1.1 of the Loan Agreement is hereby amended to delete the definition of “Final Maturity Date” in its entirety and to replace it with thefollowing: “‘Final Maturity Date’ means the date which falls twenty-four (24) Months from the relevant Utilisation Date, provided that if such day is not aBusiness Day, the Final Maturity Date shall be the next Business Day in that calendar month (if there is one) or the preceding Business Day (if thereis not).” 2. Each of the representations and warranties made by the Obligors to the Lender as set out in Clause 14 of the Loan Agreement is hereby repeated bythe Obligors as of the date hereof as if each of such representations and warranties is made by the Obligors on the date hereof. 3. From and after the date hereof, (i) all references in the Loan Agreement to “this Agreement” or words of like import referring to the Loan Agreementshall mean the Loan Agreement as amended by this Agreement, (ii) all references in the other Finance Documents to the “Loan Agreement” shallmean the Loan Agreement, as amended by this Agreement, (iii) all references in the Finance Documents to the “Finance Documents” shall mean theFinance Documents as amended by this Agreement, collectively, and (iv) all terms in the Finance Documents which, by the terms thereof, have themeanings set forth in the “Loan Agreement” shall have the respective meanings set forth in the Loan Agreement as amended by this Agreement. 1 4. The Obligors and the Original Lender hereby ratify and confirm the Loan Agreement and all other Finance Documents, in each case, as modifiedhereby. Except as modified and amended by this Agreement, the Loan, the Loan Agreement and the other Finance Documents and the respectiveobligations of the Lender and the Obligors thereunder shall be and remain unmodified and in full force and effect. 5. The execution, delivery and effectiveness of this Agreement shall not, except to the extent expressly provided herein, operate as a waiver of anyright, power or remedy of the Lender under the Loan Agreement or any of the other Finance Documents, nor constitute a waiver of any provision ofthe Loan Agreement or any of the other Finance Documents by any of the parties hereto. 6. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 7. Any term of this Agreement or any other Finance Documents may be amended or waived only with the consent of the Lender and the Obligors andany such amendment or waiver will be binding on all Parties. 8. This Agreement, and all non-contractual obligations arising from or in connection with this Agreement, are governed by, and construed exclusivelyin accordance with, the laws of Hong Kong. 9. If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction,neither the legality, validity or enforceability of the remaining provisions of this Agreement or any other Finance Documents nor the legality,validity or enforceability of such provisions under the law of any other jurisdiction will in any way be affected or impaired. 10. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 11. All disputes and controversies arising out of or in connection with this Agreement (including a dispute regarding the existence, validity ortermination of this Agreement) shall be referred to and finally settled by arbitration at the Hong Kong International Arbitration Centre in accordancewith the UNCITRAL Arbitration Rules (the “UNCITRAL Rules”) in effect, which rules are deemed to be incorporated by reference into this clause.The arbitration tribunal shall consist of three arbitrators to be appointed according to the UNCITRAL Rules. The language of the arbitration shall beEnglish. 12. This Agreement constitutes the entire agreement among the Obligors and the Original Lender with respect to subject matter hereof and supersedes allother prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 13. All capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement. This Agreement has been entered into on the date stated at the beginning of this Agreement. 2 SIGNATURE PAGE For execution by the Borrower SIGNED and DELIVERED by))for and on behalf of)PARTICLE INC.)/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY For execution by the Covenantors SIGNED and DELIVERED by))for and on behalf of)PARTICLE (HK) LIMITED)/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNED and DELIVERED by))for and on behalf of)BEIJING PARTICLE INFORMATION)TECHNOLOGY CO., LTD.)(北京一点网聚信息技术有限公司))/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNED and DELIVERED by))for and on behalf of)BEIJING YIDIANWANGJU)TECHNOLOGY CO., LTD.)(北京一点网聚科技有限公司))/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNATURE PAGE For execution by the Lender SIGNED and DELIVERED by))for and on behalf ofPHOENIX NEW MEDIA LIMITED)/s/Shuang Liu DIRECTOR / AUTHORISED SIGNATORY Exhibit 4.55 January 20, 2018 (1) Beijing Particle Information Technology Co., Ltd.(北京一点网聚信息技术有限公司)as Borrower (2) PARTICLE INC.as a Covenantor (3) Particle (HK) Limitedas a Covenantor (4) Beijing Yidianwangju Technology Co., Ltd.(北京一点网聚科技有限公司)as a Covenantor and (5) Beijing Tianying Jiuzhou Network Technology Co., Ltd.(北京天盈九州网络技术有限公司)as Original Lender AMENDMENT NO. 1TOLOAN AGREEMENT THIS AMENDMENT NO. 1 TO LOAN AGREEMENT is dated January 20, 2018 and made between: (1) BEIJING PARTICLE INFORMATION TECHNOLOGY CO., LTD. (北京一点网聚信息技术有限公司), a company incorporated under the lawsof the PRC (the “Borrower”) (2) PARTICLE INC., a company organized under the laws of the Cayman Islands and a Parent company (as defined herein) of the Borrower (the“Cayman Company”); (3) PARTICLE (HK) LIMITED, a company organized under the laws of the Hong Kong and a Subsidiary (as defined herein) of the Cayman Company(the “HK Subsidiary”); (4) BEIJING YIDIANWANGJU TECHNOLOGY CO., LTD. (北京一点网聚科技有限公司), a company incorporated under the laws of the PRC and avariable interest entity and Subsidiary (as defined herein) of the Cayman Company (the “PRC VIE”); and (5) Beijing Tianying Jiuzhou Network Technology Co., Ltd.(北京天盈九州网络技术有限公司), a company incorporated under the laws of the PRC(the “Original Lender”). WHEREAS the Borrower, the Cayman Company, the HK Subsidiary, the PRC VIE and the Original Lender entered into that certain Loan Agreement (the“Loan Agreement”) dated as of January 20, 2017, pursuant to which the Original Lender granted an unsecured term loan (the “Loan”) to the Original Lenderon January 20, 2017 with a principal amount of RMB74,000,000. WHEREAS the Borrower has requested the Original Lender, and the Original Lender has agreed to, revise and extend the term of the Loan. NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein and for other good and valuable consideration, the receiptand sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follow: 1. Clause 1.1 of the Loan Agreement is hereby amended to delete the definition of “Final Maturity Date” in its entirety and to replace it with thefollowing: “‘Final Maturity Date’ means the date which falls eighteen (18) Months from the relevant Utilisation Date, provided that if such day is not aBusiness Day, the Final Maturity Date shall be the next Business Day in that calendar month (if there is one) or the preceding Business Day (if thereis not).” 2. Each of the representations and warranties made by the Obligors to the Lender as set out in Clause 14 of the Loan Agreement is hereby repeated bythe Obligors as of the date hereof as if each of such representations and warranties is made by the Obligors on the date hereof. 3. From and after the date hereof, (i) all references in the Loan Agreement to “this Agreement” or words of like import referring to the Loan Agreementshall mean the Loan Agreement as amended by this Agreement, (ii) all references in the other Finance Documents to the “Loan Agreement” shallmean the Loan Agreement, as amended by this Agreement, (iii) all references in the Finance Documents to the “Finance Documents” shall mean theFinance Documents as amended by this Agreement, collectively, and (iv) all terms in the Finance Documents which, by the terms thereof, have themeanings set forth in the “Loan Agreement” shall have the respective meanings set forth in the Loan Agreement as amended by this Agreement. 1 4. The Obligors and the Original Lender hereby ratify and confirm the Loan Agreement and all other Finance Documents, in each case, as modifiedhereby. Except as modified and amended by this Agreement, the Loan, the Loan Agreement and the other Finance Documents and the respectiveobligations of the Lender and the Obligors thereunder shall be and remain unmodified and in full force and effect. 5. The execution, delivery and effectiveness of this Agreement shall not, except to the extent expressly provided herein, operate as a waiver of anyright, power or remedy of the Lender under the Loan Agreement or any of the other Finance Documents, nor constitute a waiver of any provision ofthe Loan Agreement or any of the other Finance Documents by any of the parties hereto. 6. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 7. Any term of this Agreement or any other Finance Documents may be amended or waived only with the consent of the Lender and the Obligors andany such amendment or waiver will be binding on all Parties. 8. This Agreement, and all non-contractual obligations arising from or in connection with this Agreement, are governed by, and construed exclusivelyin accordance with, the laws of Hong Kong. 9. If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction,neither the legality, validity or enforceability of the remaining provisions of this Agreement or any other Finance Documents nor the legality,validity or enforceability of such provisions under the law of any other jurisdiction will in any way be affected or impaired. 10. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 11. All disputes and controversies arising out of or in connection with this Agreement (including a dispute regarding the existence, validity ortermination of this Agreement) shall be referred to and finally settled by arbitration at the Hong Kong International Arbitration Centre in accordancewith the UNCITRAL Arbitration Rules (the “UNCITRAL Rules”) in effect, which rules are deemed to be incorporated by reference into this clause.The arbitration tribunal shall consist of three arbitrators to be appointed according to the UNCITRAL Rules. The language of the arbitration shall beEnglish. 12. This Agreement constitutes the entire agreement among the Obligors and the Original Lender with respect to subject matter hereof and supersedes allother prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 13. All capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement. This Agreement has been entered into on the date stated at the beginning of this Agreement. 2 SIGNATURE PAGE For execution by the Borrower SIGNED and DELIVERED by))for and on behalf of)BEIJING PARTICLE INFORMATION)TECHNOLOGY CO., LTD.)(北京一点网聚信息技术有限公司))/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY For execution by the Covenantors SIGNED and DELIVERED by))for and on behalf of)PARTICLE INC.)/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNED and DELIVERED by))for and on behalf of)PARTICLE (HK) LIMITED)/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNED and DELIVERED by))for and on behalf of)BEIJING YIDIANWANGJU)TECHNOLOGY CO., LTD.)(北京一点网聚科技有限公司))/s/Ya Li DIRECTOR / AUTHORISED SIGNATORY SIGNATURE PAGE For execution by the Lender SIGNED and DELIVERED by))for and on behalf of)BEIJING TIANYING JIUZHOUNETWORK TECHNOLOGY CO., LTD.)(北京一点网聚科技有限公司))(Seal) DIRECTOR / AUTHORISED SIGNATORY Exhibit 4.56 Assignment Agreement Dated April 2, 2018 Among (1) PARTICLE INC.as Borrower (2) Particle (HK) Limitedas a Covenantor (3) Beijing Particle Information Technology Co., Ltd.as a Covenantor (4) Beijing Yidianwangju Technology Co., Ltd.as a Covenantor (5) PHOENIX NEW MEDIA LIMITEDAs Existing Lender and (6) Long De Cheng Zhang Culture Communication (Tianjin) Co., Ltd.（龙德成长文化传播（天津）有限公司）As New Lender This Assignment Agreement is dated April 2, 2018 and made among: (1) Particle Inc., an exempted limited liability company organized under the laws of the Cayman Islands (the “Borrower”); (2) Particle (HK) Limited, a company organized under the laws of Hong Kong and a Subsidiary of the Borrower (the “HK Subsidiary”); (3) Beijing Particle Information Technology Co., Ltd., a company incorporated under the laws of the PRC and a subsidiary of the borrower (the “PRCSubsidiary”); (4) Beijing Yidianwangju Technology Co., Ltd., a company incorporated under the laws of the PRC and a variable interest entity and subsidiary of theborrower (the “PRC VIE”); (5) Phoenix New Media Limited (the “Existing Lender”); and (6) Long De Cheng Zhang Culture Communication (Tianjin) Co., Ltd.（龙德成长文化传播（天津）有限公司） (the “Long De”). Long De and/or its designated affiliate shall be referred to herein as the “New Lender”. Reference is made to the Loan Agreement dated August 10, 2016, among Particle Inc., as borrower, HK Subsidiary, PRC Subsidiary and PRC VIE, together ascovenantors, Phoenix New Media Limited, as lender, as amended by Amendment No. 1 dated January 20, 2017, Amendment No. 2 dated August 9, 2017, andAmendment No. 3 dated January 22, 2018 (the “Agreement”). (1) We refer to the Agreement. This is an Assignment Agreement. Terms defined in the Agreement have the same meaning in this AssignmentAgreement unless given a different meaning in this Assignment Agreement. (2) We refer to Clause 18.3 (Procedure for transfer). Subject to the fulfillment by the New Lender and the Borrower of their respective paymentobligations provided in Clause 3 of this Assignment Agreement (the date of such fulfillment, the “Transfer Date”), (a) The Existing Lender shall assign absolutely to the New Lender all the rights of the Existing Lender under the Agreement and the otherFinance Documents which relate to the loan with the principal amount of US$14,800,000 (the “Assigned Loan”) on the Transfer Date. (b) The Existing Lender shall be released from all the obligations of the Existing Lender which correspond to the Assigned Loan on theTransfer Date. (c) The New Lender shall become a Party as a Lender and is (i) entitled to the rights assigned by the Existing Lender under paragraph (a) aboveand (ii) bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above on the TransferDate. 2 (3) In consideration for the Assigned Loan, the New Lender shall pay the Existing Lender US$16,988,180.00 on the Transfer Date. In addition, theBorrower shall pay the Existing Lender on the Transfer Date (i) the accrued but unpaid interest on the Assigned Loan for the period from August 9,2017 to the Transfer Date and (ii) all of the costs and expenses in connection with Fund Raising up to the Transfer Date as provided in Clause 13.1of the Loan Agreement. For the avoidance of doubt, (i) the New Lender and the Borrower shall respectively perform their own obligations, and shallnot be considered bearing joint and several liability under any circumstance; (ii) since the Borrower will have paid the interest accrued on theprincipal amount of the Assign Loan for the period from August 9, 2017 to the Transfer Date to the Existing Lender before or on the Transfer Date,the Borrower shall no longer be obliged to pay the same amount of interest the New Lender. (4) On the Transfer Date, the New Lender becomes Party to the Finance Documents as a Lender. The Borrower, HK Subsidiary, PRC Subsidiary and PRCVIE acknowledge that their respective obligations under the Agreement shall not be reduced or changed in any way because of the execution of thisAssignment Agreement. (5) The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 23.2 (Addresses) are setout in the Clause 10 herein. (6) The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraphs (a) and (c) of Clause 18.2(Limitation of responsibility of Existing Lenders). (7) The Existing Lender and the Borrower hereby make the following representations and warranties to the New Lender: the principal amount of theAssigned Loan has been fully paid up to the Borrower by the Existing Lender, and the Borrower has not repaid any amount of the Assigned Loan tothe Existing Lender. (8) The Existing Lender and the New Lender confirm that the New Lender is not an Obligor or an Affiliate of an Obligor. (9) The Existing Lender shall agree to amendments of (i) the shareholders agreement among the Borrower and all of existing shareholders of theBorrower and (ii) the memorandum and articles of association of the Borrower, which amendments shall grant the New Lender the right to convert allor a portion of the principal amount of the Assigned Loan plus any interest thereon into Series D1 preferred shares of the Borrower (“Series D1Shares”) at any time prior to August 9, 2018 provided that the New Lender shall have fully fulfilled its payment obligations on the Transfer Datepursuant to this Assignment Agreement. Such amendments shall also provide that the number of Series D1 Shares to be issued upon conversion ofany portion or all of the Assigned Loan shall be equal to the quotient obtained by dividing (x) the principal amount (plus interests incurred as of theconversion) of the Assigned Loan the New Lender elects to convert, which amount to be converted shall not exceed US$15,443,800 in any case, by(y) US$1.071803, subject to adjustments for share splits, share dividends, combinations, recapitalizations and similar events with respect to suchshares. 3 (10) The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of the New Lender for anycommunication or document to be made or delivered under or in connection with the Agreement and the other Finance Documents is: Address: Fax: Attention: (11) Signature of this Assignment Agreement by the Borrower constitutes confirmation by the Borrower of receipt of notice of the assignment referred toin this Assignment Agreement. (12) This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts wereon a single copy of this Assignment Agreement. (13) This Assignment Agreement, and all non-contractual obligations arising from or in connection with this Agreement, are governed by, and construedexclusively in accordance with, the laws of Hong Kong. (14) This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement. [Remainder of this page intentionally left blank] 4 Signature Page Particle Inc. (Seal) By:/s/Ya Li Name:Ya Li Particle (HK) Limited (Seal) By:/s/Ya Li Name:Ya Li Beijing Particle Information Technology Co., Ltd. (Seal) By:/s/Ya Li Name:Ya Li Beijing Yidianwangju Technology Co., Ltd. (Seal) By:/s/Ya Li Name:Ya Li Phoenix New Media Limited (Seal) By:/s/Shuang Liu Name:Shuang Liu 5 Long De Cheng Zhang Culture Communication (Tianjin) Co., Ltd.（龙德成长文化传播（天津）有限公司） (Seal) By:/s/Sun Dongzhi Name:Sun Dongzhi 6Exhibit 8.1 List of Significant Subsidiaries of the Registrant (as of December 31, 2017) Subsidiaries Phoenix Satellite Television Information LimitedPhoenix New Media (Hong Kong) Company LimitedPhoenix New Media (Hong Kong) Information Technology Company LimitedFread LimitedI Game (Hong Kong) Company LimitedFenghuang On-line (Beijing) Information Technology Co., Ltd.Beijing Fenghuang Yutian Software Technology Co., Ltd.Fenghuang Feiyang (Beijing) New Media Information Technology Co., Ltd.Beijing Fenghuang Borui Software Technology Co., Ltd.Qieyiyou (Beijing) Information Technology Co., Ltd. Affiliated consolidated entities Yifeng Lianhe (Beijing) Technology Co., Ltd.Beijing Tianying Jiuzhou Network Technology Co., Ltd.Beijing Chenhuan Technology Co., Ltd. Subsidiaries of affiliated consolidated entity Beijing Tianying Chuangzhi Advertising Co., Ltd.Tianjin Fenghuang Mingdao Culture Communication Co., Ltd.Beijing Fengyu Network Technology Co., Ltd.Beijing Fengyue Culture Technology Co., Ltd.Beijing Youjiuzhou Technology Co., Ltd.Beijing Huanyou Tianxia Technology Co., Ltd.Shanghai Meowpaw Info&Tech Co., Ltd. Exhibit 12.1 Certification by the Chief Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Shuang Liu, certify that: 1. I have reviewed this annual report on Form 20-F of Phoenix New Media Limited (the “Company”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made knownto us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal controlover financial reporting; and 5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalentfunctions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information;and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in theCompany’s internal control over financial reporting. Date: April 26, 2018 By:/s/ Shuang LiuName:Shuang LiuTitle:Chief Executive Officer Exhibit 12.2 Certification by the Chief Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Betty Yip Ho, certify that: 1. I have reviewed this annual report on Form 20-F of Phoenix New Media Limited (the “Company”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made knownto us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal controlover financial reporting; and 5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalentfunctions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information;and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in theCompany’s internal control over financial reporting. Date: April 26, 2018 By:/s/ Betty Yip HoName:Betty Yip HoTitle:Chief Financial Officer Exhibit 13.1 Certification by the Chief Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of Phoenix New Media Limited (the “Company”) on Form 20-F for the year ended December 31, 2017 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Shuang Liu, Chief Executive Officer of the Company, certify, pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 26, 2018 By:/s/ Shuang LiuName:Shuang LiuTitle:Chief Executive Officer Exhibit 13.2 Certification by the Chief Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of Phoenix New Media Limited (the “Company”) on Form 20-F for the year ended December 31, 2017 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Betty Yip Ho, Chief Financial Officer of the Company, certify, pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 26, 2018 By:/s/ Betty Yip HoName:Betty Yip HoTitle:Chief Financial Officer Exhibit 15.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No.333-217490, No.333-200630, No.333-191177 andNo.333-177810) of Phoenix New Media Limited of our report dated April 26, 2018 relating to the consolidated financial statements and the effectiveness ofinternal control over financial reporting, which appears in this Form 20-F. /s/ PricewaterhouseCoopers Zhong Tian LLP PricewaterhouseCoopers Zhong Tian LLPBeijing, the People’s Republic of ChinaApril 26, 2018 Exhibit 15.2 April 26, 2018 Phoenix New Media LimitedSinolight Plaza, Floor 16, No. 4, Qiyang RoadWangjing, Chaoyang DistrictBeijing 100102People’s Republic of China Dear Sir/Madam: We consent to the reference to our firm under the headings of “Risk Factors” and “Regulatory Matters” in Phoenix New Media Limited’s Annual Report onForm 20-F for year ended December 31, 2017, which will be filed with the Securities and Exchange Commission (the “SEC”). We also consent to the filingwith the SEC of this consent letter as an exhibit to the Annual Report on Form 20-F for the year ended December 31, 2017. In giving such consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Actof 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder. Yours faithfully, /s/ Zhong Lun Law FirmZhong Lun Law Firm

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