Robust Weibo Growth Drives Q4 Results For Sina

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Sina (NASDAQ:SINA) reported a 21% annual increase in net revenues to $256 million in Q4’15. [1] Correspondingly, full year revenues were up by 15% y-o-y to $881 million. Growth was largely driven by the company’s social media platform Weibo, which reported nearly 42-43% growth in revenues in Q4 and through the year to $149 million and $478 million, respectively. The tables below show a split of Sina’s top line by business segments and revenue streams.

Sina_Ear3Sina_Ear2Within the advertising business, particularly on Weibo, Sina reported that the ad revenue from the small and medium enterprise (SME) customer base was the fastest growing segment with a nearly 100% growth rate through the December quarter. As a result, the contribution of ad revenues from SME customers were up to 39% of total advertising revenues for the quarter, from about 24% of total advertising revenues in the year-ago period.

Sina_Ear4

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On the other hand, Sina’s core portal business continued to struggle with revenues staying flat over the previous year quarter at just under $94 million. Moreover, full year revenues were down by over 9% y-o-y to $341 million. Increasing competition in the online advertising market and negative currency fluctuations drove portal revenues to decline through the year. Despite the fall in revenues, the company witnessed consistent growth in mobile traffic and ad revenues on mobile platforms. The company expects the increase in mobile traffic to continue through 2016, which could eventually drive revenue growth for this segment. [2]

Sina’s management has given soft revenue guidance for fiscal 2016, with revenues expected to grow by 4-5% at the midpoint of the guided range. We have a revised $48 price estimate for Sina’s stock, which is over 15% higher than the current market price. Sina’s stock price has fluctuated between $40 and $50 since the beginning of the year.

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Notes:
  1. SINA Reports Fourth Quarter and Fiscal Year 2015 Financial Results, Sina Press Release, March 2016 []
  2. SINA Q4 2015 Earnings Call Transcript, Seeking Alpha, March 2016 []