Sina Earnings: Advertising, Weibo Drive Q1 Results

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Sina

Sina (NASDAQ:SINA) reported an 8% annual increase in net revenues to just under $200 million in Q1’16. [1]

Sin_Q1 16_Ear1

The company observed healthier gross margins for both its advertising and non-advertising revenue streams compared to the prior year quarter, owing to a lower revenue contribution of low-margin businesses. [2] Additionally, improved operating efficiency and cost management led the company’s cash operating expenses to decline on a year-over-year basis. As a result, its operating income (non-GAAP) for the quarter was significantly higher than the year-ago levels at $24 million.

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Sin_Q1 16_Ear2

Top line growth was largely driven by social media platform Weibo, which reported nearly 24% growth in revenues in the quarter to $119 million. On the other hand, Sina’s core portal business continued to struggle, with revenues declining over the previous year quarter. Increasing competition in the online advertising market and negative currency fluctuations drove portal revenues down last year, a trend which has continued in 2016 thus far. Moreover, much of the decline in the company’s portal revenues was due to a 72% reduction in revenue contributed by Alibaba through the quarter. [2]

Sin_Q1 16_Ear3Within the advertising business, particularly on Weibo, Sina reported that the ad revenue from the small and medium enterprise (SME) customer base has been the fastest-growing segment over the past few quarters. As a result, the contribution of ad revenues from SME customers was up to 43% of total advertising revenues for the quarter, from about 22% of total advertising revenues in the year-ago period.

Sin_Q1 16_Ear5

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Sina.

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Notes:
  1. SINA Reports First Quarter 2016 Financial Results, Sina Press Release, May 2016 []
  2. SINA Q1 2015 Earnings Call Transcript, Seeking Alpha, May 2016 [] []