Sina’s Recent Results Were Driven By Weibo As Core Business Continues To Face Challenges
Sina’s (NASDAQ: SINA) net revenues rose by 8% annually to $184.6 million in Q1 2015. This was driven by ongoing strength on the Weibo platform, even as the core portal business continued to face a decline owing to reduced PC usage. In addition, the company’s non-GAAP diluted EPS came in at $0.04, compared to $0.15 in a similar period year ago. Heavy growth in personnel costs and marketing expenses weighed on the company’s margins during the quarter.
Going forward, we expect Sina to be driven by continued momentum in the Weibo business, which will partially be offset by weakness in the portal business. We expect mobile advertising revenues on both Weibo and portal to rise sharply in the coming quarters and account for a larger share of the company’s overall advertising revenues.
See our complete analysis of Sina here
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Advertising Revenues Were Driven By Weibo As Portal Continued To Face Challenges
Sina’s online advertising revenue rose by 11% annually in Q1 2015 to $150.4 million, primarily driven by growth on the Weibo platform. Advertising and marketing revenues on Weibo grew by 53% year over year owing to strong growth on the mobile platform. The share of mobile in overall Weibo advertising revenues increased to 58% as compared to 54% in the previous quarter and 31% in a similar period a year ago. [1] Stellar growth in the user base, which surged by 38% annually, also helped drive this performance on the Weibo platform. [1] Going forward, we think revenues on Weibo will continue to rise sharply in the coming future, driven by increased mobile usage and higher demand from SME (small and medium-sized) customers.
On the other hand, advertising revenues on the Portal fell by $12.7 million annually on account of a significant decline in PC usage. While mobile advertising revenues on Portal rose by 239% year over year, it was not enough to offset the fall in traditional PC business. We expect Sina’s portal business to face continued challenges during 2015, even while the company is making efforts to reinvigorate it by focusing on mobile and vertical expansion.
Non-Advertising Revenue Came In Flat As Compared To Prior Year Due To Sluggish MVAS Sales
Sina’s non-GAAP non-advertising revenues came in at $31.6 million in Q1 2015, which represented flat growth as compared to prior year. Decline in mobile value added services business and in Weibo data licensing revenue contributed to this performance. Going forward, we believe the Portal mobile value added services will continue to see sluggish demand, which will be offset by growth in Weibo value added services (which includes gaming and Weibo membership services).
Our $39.81 price estimate for Sina’s stock, represents near-10% downside to the current market price.
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Notes:- SINA Corporation’s (SINA) CEO Charles Chao on Q1 2015 Results – Earnings Call Transcript, Seeking Alpha, May 15, 2015 [↩] [↩]