Sina Q4 2014 Earnings Preview
In our Q4 2014 earnings preview of Sina (NYSE:SINA), we focus on the portal advertising revenues and the company’s investment in new verticals. While portal advertising revenues saw increases on both a sequential and year on year basis, the decline in the contribution from two important sectors is a concern. The promising new verticals of Sina, meanwhile, require considerable investment in the coming quarters.
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See our complete analysis of Sina here
Advertising Revenues: Shift To Mobile And Verticals
When it comes to advertising revenues, two trends stand out. Firstly, there has been the shift to mobile, as from Q2 to Q3 the contribution to mobile ad revenues saw a 5% increase. The second trend is the decline in portal advertising revenues from the automobile and FMCG sectors. This trend does not bode well for Sina, as over 50% of its advertising revenue still comes from advertisements targeted at PC-based consumers.
Investments In Focus
To address the company’s dependence on portal advertisements, it has been investing in other verticals such as online lottery and Internet finance. On its Q3 conference call, Sina’s management announced that operating revenues could be volatile for the next few quarters as a result of continued investments in verticals where monetization may take some time. [1]
Operating Expense Likely To Increase
Operating expenses increased 40% year on year in Q3 2014 to reach $127.1 million, as a result of higher personnel costs, marketing costs, and bad debt allowances. Businesses other than portal advertising incurred costs of $60 million this quarter, up 28% on a year on year basis. This was largely on account of higher labor-related costs due to headcount and salary increases in product development and marketing.
As for Q4, management has given a guidance for non-GAAP net revenues between $204 million and $210 million. Reuters on the other hand has a consensus estimate of roughly $215 million, with an EPS forecast of $0.24 per share. [2]
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- Sina Financials Page At Reuters [↩]