Sina Earnings: Weibo Drives Revenues, Profits In The September Quarter

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Sina (NASDAQ:SINA) announced its third quarter earnings on November 21, reporting a 14% annual increase in net revenues to $242 million. [1] Revenue growth was driven evenly by both the advertising segment, which includes display ads on Sina and Weibo, and non-advertising revenues which include value added services on weibo.com as shown below. Within the advertising segment, portal advertising includes revenue generated from online brand advertising on Sina.com and Sina mobile properties, while Weibo advertising revenue is comprised of revenue generated by advertising and marketing on the microblogging and social media platform.

sina_q3_e1

Ad revenues from Weibo were up 48% to $156 million for the quarter, primarily due to a surge in revenue contribution from small and medium enterprise (SME) customers. Revenue generated from SME accounts has been the fastest-growing revenue stream over the past few quarters. In addition to Weibo’s ad revenues, non-ad revenues from Weibo were also up 7% y-o-y to $20.2 million. As a result, combined Weibo revenues were up 42% over the year ago period to $177 million.

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sina_q3_e3

Weibo’s strong revenue growth was complemented by an increase in divisional gross profit. Weibo’s gross profit was up 51% y-o-y to $132 million as its gross margin expanded by almost 5 percentage points to just under 75%. On the other hand, the non-Weibo segment reported a 1% decline in revenues and a 2% decline in gross profit to $101 million and $55 million, respectively.

Continuing the trend from previous quarters, Sina reported roughly flat operating expenses for the three quarters of the year at $405 million. The company has successfully improved operating efficiency, and its largely fixed operational costs led the company’s cash operating expenses to stay flat over previous year levels. As a result, Sina’s non-GAAP operating income was over 450% higher than the year-ago levels at $96.6 million. Consequently, the company’s non-GAAP net income was up by almost 200% to $60.8 million for the three quarters combined.

Similarly, Sina’s non-GAAP operating income almost 100% higher on a y-o-y basis to $57 million as shown below. Moreover, the company’s net income (non-GAAP) was around 80% higher over the year ago period to $44 million for the September quarter.

sina_q3_e2

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Notes:
  1. SINA Reports Third Quarter 2016 Financial Results, Sina Press Release, November 2016 []