Sina Earnings Preview: Will Revenue Growth Alone Be Enough To Boost Profits?

SINA: Sina logo

Sina (NASDAQ:SINA) is scheduled to announce its second quarter earnings on August 8. Sina reported strong double digit growth in revenues and a massive improvement in margins through 2017. Growth has largely come from Weibo, while growth in Sina’s core portal advertising segment has remained subdued. While the revenue growth continued in the March quarter, margins were flat over the comparable prior year period as the company reported an increase in operating expenses, particularly sales and marketing expenses. This trend is expected to continue through the current year, with margins likely to fall a couple of points through the year, per Trefis estimates.

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For the June ended quarter, we expect both revenue streams to continue to drive top line growth, particularly due to strength at Weibo. We forecast advertising revenues to increase 34-35% on a y-o-y basis to nearly $400 million. Similarly, non-advertising revenues are also expected to continue to increase by over 30% through the June quarter to $85 million. Despite revenue growth, we expect margins to be slightly lower than the comparable prior year period as the company intends to scale up its marketing expenses for the next few quarters. This could result in lower operating margins in the near term. Resulting net income and earnings are expected to be roughly flat over the prior year period at $54 million and $0.71, respectively. However, in the long run, we forecast the company’s EBITDA margin to expand, which would help drive earnings higher. Our interactive dashboard on how Sina will perform in Q2 2018 summarizes our expectations for the company. You can change expected segment revenue and margin figures for Sina to gauge how it will impact expected EPS for the quarter.

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