SINA Corporation Rides Weibo, Mobile Strength to a Solid Quarter

Image source: Sina Corporation.

SINA Corporation (SINA) released third-quarter 2015 results Wednesday after the market close, and the report unsurprisingly shows the Chinese web giant's continued reliance on its large stake in microblogging website Weibo (WB -1.05%) to drive growth. But SINA also demonstrated encouraging progress in its efforts to monetize China's growing mobile Internet user base.

But first, let's take a look at what SINA accomplished this quarter.

SINA's results: The raw numbers

Data source: Sina Corporation.

What happened with SINA this quarter?

• On a GAAP basis, SINA's net income fell more than 90% year over year to $9.8 million, or $0.16 per share. But keep in mind last year's reported results included several large one-time gains related to the sale of investments.
• Online advertising revenue increased 16% to $193.5 million, and while non-advertising sales rose 3.2% to $32.8 million.
• Weibo advertising and marketing revenue rose 48.3% year over year to $124.7 million, more than offsetting a 13.6% decline in Sina's portal advertising revenue to $87.6 million.
• Mobile advertising revenue at Weibo grew 136% year over year, representing 64% of Weibo's total ad sales.
• Mobile portal advertising revenue more than tripled year over year, reaching 30% of total portal ad sales.
• Non-advertising revenue continued to be driven by Sina's new business initiatives and sales from Weibo games and membership fees. 
• On Nov. 6, 2015, the company completed the issuance of 11 million shares to a special purpose vehicle owned by SINA CEO Charles Chao, for an aggregate price of $456.39 million, or $41.49 per share. This fulfills an agreement between Chao and SINA announced in early June.
• The company ended the quarter with cash and short-term investments of $1.9 billion, and $855 million in debt (including $800 million in convertible debt, and short-term loans of $55.1 million).
• Cash from operations of $107.1 million, capital expenditures of $6.7 million.

What management had to say 
Chao insisted while Weibo continues to demonstrate "strong performance on both operational and financial fronts," he's also happy with SINA's results given the macroeconomic headwinds the company is still facing. Chao added:

For SINA's portal business, taking macro factors into account, our performance was largely in line with our expectation. We are encouraged by the progresses we made on monetizing mobile traffic and expanding our customer community. In addition, we will persist with our business endeavor to diversify our business models and implement the vertical strategy.

Looking forward 
SINA management didn't offer any revisions to existing financial guidance going forward. But during the subsequent conference call, CFO Bonnie Zhang did broadly suggest the headwinds will remain: "[M]oving into 2016, I think we will continue to face challenges in the traditional brand advertising, particularly for portal."

For perspective, keep in mind in March SINA issued broad guidance for full-year 2015 revenue of $800 million to $900 million. In the end, this quarter marked a relatively solid performance for SINA in light of continued macroeconomic headwinds. Though plenty of work remains to return its core business to sustained, profitable growth, investors should take solace knowing the company is continuing to make progress monetizing China's burgeoning base of mobile Internet users.