Please ensure Javascript is enabled for purposes of website accessibility

Weibo (WB) Q2 2018 Earnings Conference Call Transcript

By Motley Fool Transcribing – Updated Aug 13, 2018 at 12:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

WB earnings call for the period ending June 30, 2018.

Logo of jester cap with thought bubble with words 'Fool Transcripts' below it

Image source: The Motley Fool.

Weibo (WB -2.84%)
Q2 2018 Earnings Conference Call
Aug. 8, 2018 7:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by, and welcome to Weibo reports second-quarter financial results conference call. [Operator instructions] I must advise you that this conference is being recorded today, Wednesday, 8th of August 2018. I would like to hand the conference over to your first speaker today, Ms. Wen Li.

Thank you. Please go ahead.

Wen Li -- Investor Relations

Thank you, operator. Welcome to Weibo's 2018 second-quarter earnings conference call. Joining me today are our Chairman of the Board Charles Chao, our CEO Gaofei Wang, and our Interim CFO, VP, Finance Fei Cao. The conference call is being broadcasted on the internet and is available through Weibo's IR website.Before the management presentation, I want to review the safe harbor statement in connection with today's conference call.

During the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Weibo assumes no obligation to update the forward-looking statements in this conference call and elsewhere, further information regarding these and other risks, including the Weibo's Annual Report on Form 20-F and other filings with the SEC.

All information provided in this press release is occurring as of the date hereof, and Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I'd like to remind you that our discussion today include certain non-GAAP measures, which excludes stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and the future prospects. Our non-GAAP financial excludes certain expenses, gains or losses and other items that are now expected to result in future cash payments or that are now recurring in nature and will now be indicative in our core operating results and outlook.Please refer to our press release for more information about our non-GAAP measures.

Following management's prepared remarks, we will open the lines for a brief Q&A session. With this, I'd like to turn the call over to our CEO, Gaofei Wang.

Gaofei Wang -- Chief Executive Officer

[Inaudible]  Thank you. Hello, everyone, and welcome to Weibo's second-quarter 2018 earnings call.[Inaudible] On today's call, we'll share with you highlights of Weibo's user growth, product and the monetization, as well as our key initiatives in 2018. [Inaudible] First, let me discuss our second-quarter financial results. We continued to see strong revenue and user growth this quarter.

Our total revenue reached $426.6 million, up 68% year over year. Advertising and marketing revenue reached $369.9 million, up 69% year over year, with 82% of our ad revenue in Q2 from mobile. Non-GAAP operating margin during the second quarter reached 39%. [Inaudible] On the user front, Weibo's monthly active user reached 431.1 million in June, an increase of 19% year over year or up 20 million on a quarter-over-quarter basis, representing the largest net addition of MAUs in the second-quarter 2017.

The average daily active users in June reached 189.9 million, up 19% year over year. In June, 93% of Weibo's MAU were from mobile. [Inaudible]  With the recent Fifa World Cup and other events, Weibo has once again achieved strong user growth and user engagement this quarter, leveraging our enhanced offering, consistent user engagement and content distribution, as well as our insights into market opportunity. Weibo's monetization capability was further improved.

We have diversified our advertising in the marketing solutions, tailored to different customer segments for individuals to small and medium-sized enterprises to key accounts to offer better marketing experience, and higher investment return to our customers. Advertisers are increasingly recognizing our social marketing capability. [Inaudible] In discussing our operational OPEX for the second quarter, I will cover Weibo's program in areas of users, content, and the customers. [Inaudible] First, on the user growth.

We continue to increase our channel coverage and efficiency in user acquisition. This quarter, our strategic partnership with the smartphone manufacturers, TV programs and other channels have allowed our products to reach our broader user base more rapidly. In particular, our partnership with a key domestic smartphone manufacturers have shown meaningful results. During the first half of 2018, our mobile direct coverage increased by double digit year over year, setting the stage for-- of our strong MAU growth.

Our continued investment in user acquisition is essential to help us enhance our network impact, achieve user base expansion, increase penetration into lower-tier cities, and solidify our leading act in the social and media competitive landscape. In the meantime, our efforts to promote the user discussion over high events and to strengthen the social attributes of our user product have resulted in greater user engagement at each level of our [Inaudible] compared to the last quarter.[Inaudible] This quarter, leveraging Weibo's unique market acquisition within the social media space, Weibo was able to form strategic partnership with Fifa, CCTV, youkou and China Mobile and to distribute the license to work up content generated by the partners. We will have become the primary platform for users to come to workup-related content. Users otherwise enjoy the consumption of the premium content were able to participate in workup-related Weibo activities led by the celebrity and the sports KOLs in a number of interactive format.

The significant participation by the users on workup helped by the platform to attract new users and boost our user engagement. The workup brought together over 100 million users on Weibo, generating more than 1 billion highly related interactions. Meanwhile, related short video posted nearly 700,000, and were viewed more or less 17 billion times, while related topic has viewership by nearly 100 billion times during the work. [Inaudible] Moreover, our deep collaboration with online variety show helped Weibo further solidify its competitive act in content distribution and helped our celebrities increase their influence.

For example, as part of our strategic partnership with the Tencent talent show Produce 101, Weibo was one of the official voting channels. This collaboration has promoted the show and its contestants to interact with a  broad user base. As a result, Produce 101 related topics nearly 37 billion viewership. Meanwhile, short videos exceeded 11 billion viewership, and the fan base of Produce 101 contestants reached 40 million.

This partnership has enabled Produce 101 to become the blockbuster variety show in 2018, while Weibo benefited from their increased user engagement, including the rise in daily user post on platforms. [Inaudible] Other than our continuing investment in channel marketing, we have increased our efforts and investments in user products to more efficiently acquire new users and reactivate old users. For example, we launched a number of social-focused activities, such as giving away red envelope to new users when they complete-- completed designated tasks in content creation, content consumption or social relation perturbation. In addition, we have achieved a meaningful result by deploying more effort in machine learning, which have helped the users establish more social connections and optimize their content consumption experience.

During the quarter, the user consumption rate of both relationship-based and interest-based feeds continued to grow. Moreover, the number of users on Weibo Lite, which mainly targets mobile users, who owns relatively low-end smartphones rose sharply. In June, MAUs for Weibo Lite had a triple-digit sequential increase. This has further expanded our channel network, and the product coverage and increased efficiency in acquiring new users.

[Inaudible] Moving to the relationship-based feed. We continued to strengthen the relationship-based feed with social attributes on the promoter side and interactions. In June, the users engagement rate in the relationship-based feed maintained double-digit growth year over year. Pertaining to the interest-based feed, we allocated considerable resources associated with the content safety, such as implementing manual review of the content compliance in the first quarter.

These actions have resulted in lower traffic growth of the hot search and the hot Weibo feeds in the first quarter. However, as our operations gradually return to normal during the second quarter, we were able to improve our content offerings and the user consumption rate of the interest-based feeds and the trending topics. [Inaudible] In the second quarter, we have enhanced the distribution scale of a full-screen vertical short video to users on Weibo to promote user consumption and the content creation by allowing users to distribute Weibo story in the feed, and add a separate fee to recommend other story to users in the discover zone of the Weibo app. In the second quarter, daily post of Weibo story increased by double digits sequentially and the daily star viewership increased by triple digits sequentially.

We are confident that our effort to increase the distribution of full screen ratable short videos will help to build a stronger content ecosystem and attract more top KOLs from other platforms to accumulate incremental social assets of Weibo. In addition to vertical short videos, our focus and efforts were primarily on horizontal short videos. We will leverage our deepened collaboration with the content creators in multiple fields to focus on content creation with IP and the programs in the period. In the second quarter, we ramped Weibo app client to allow users to access video content at a primary entry point, rather than asking users to navigate through the video section.

We also partially rolled out the [Inaudible] app rate to certain Weibo users. As the new version of the app will prioritize the consumption of the premium video content, the preliminary past result show a significant increase in the user scale of Weibo-- of video feeds and the user timeline. We plan to grow other new Weibo app rates beyond initial pass through of the user in the third quarter. We believe this revamp will help increase our market share in the mobile short video industry.

[Inaudible] Moving on to the content. One of our key focus area has been to further verticalize our content to build stronger engagement throughout every level of Weibo platform. To support this cause, in June, we expanded content category to 16 verticals and we partnered with more or less 1,900 MCNs. We're going to build the number of our daily posters by top content creators, and the number of our monthly views maintained double-digit growth year over year, in fact, in this quarter.

[Inaudible]Now I would like to share a few thoughts on our strategy on how to work with the top content providers and then differentiate Weibo in operation from other content-offering platform. A key product assumption of Weibo's primary focus on facilitating social relation perturbation and enabling top content creators to express themselves, grow social assets and interact with the followers or fans leveraging Weibo's diverse media formats, including fast picture, live broadcasting, and the video. For example, [Inaudible], a KOL in this vertical, was originally using Bilibili to build her personal brand. When she opened an account on Weibo and started posting content in various formats, in June, both the viewership of [Inaudible] feed and the fan's engagement increased by 20 times on a year over year basis.

Another example is [Inaudible], a KOL originally from [Inaudible] who has grew his fans to nearly 5 million followers year on year on Weibo. The interesting part that we observed recently is that despite the selected verticals more and the medium content creators, such as building [Inaudible] on Weibo may distribute where content on other platforms. We have returned to Weibo after establishing a baseline of influence. Weibo is reflected as the automated platform for KOL to expand their horizon and regain their public influence, thereby achieving effective monetization.

[Inaudible] Lastly, turning to monetization. We achieved a strong ad revenue growth in the second quarter. More and more key accounts have liked the value of our social marketing on Weibo and our successful marketing campaigns have demonstrated Weibo's ability to help advertisers generate a high marketing return rate. As a result, both the number of key advertisers and the key ad revenues continued to grow rapidly in the second quarter.

Our KOL revenue was up 91% year over year, while our customer standing hit a historical high at more than 50% year over year. Despite the price increase of our display app product earlier this year, our product sales rate hasn't been affected. Moving forward, we will continue to strengthen our cooperation with the third party to share brand marketing data across the full Weibo [Inaudible]. We expect this will help our KA customers better recognize Weibo's marketing value.

In return, we anticipate generating increased KA app spending. In the second quarter, we launched the Weibo uni-marketing program with Alibaba. Here, the program's data analyticals and integration, we were able to help brand advertisers more precisely reach a larger group of our target users and to better understand the app conversion. This program optimized the advertiser's marketing model by starting the marketing reaction to our products, marketing content, and more celebrity collaboration.

[Inaudible]Turning to SME. In the second quarter, SME revenues were up 48% year over year. Both the number of SME advertisers and app have continued to grow. This growth were preliminary driven by the increased result rates after introducing the new app inventory and the continued optimization of our app algorithm, which has helped the SME customer achieve marketing goals more efficiently.

In the second quarter, both ECPM and the app engagement rates grew sequentially. We have made a number of adjustments on our app products and have adapt our strategy to face a serially competitive information piece advertising market in the following suite access. First, grow the sales rate of new app inventory we added in the video feeds in the discover zone of the Weibo app, the recommended video feeds, and the feed in the main page. However, it may take time for our customers to adjust their content content creations to accommodate the new app format available in the app inventories that we added.

Second, further enhance our app algorithm, especially on those new app inventories to boost the targeting capability in different dimensions, as well as to improve the app conversion rate. Third, further expand our customer base and to deploy tailored product and marketing solution to advertisers to different verticals. [Inaudible]With that, let me turn the call over to Fei Cao for our financial update.

Fei Cao -- Chief Financial Officer and Vice President of Finance

Thank you, Gaofei. Welcome to Weibo's second-quarter 2018 earnings call. As a reminder, we're adopting new revenue guidance, ASC Topic 606 on January 1, 2018 in order to provide investors with more meaningful comparisons and to also indicate our revenue [Inaudible] figures under the old revenue guidance, which excludes barter transactions and added tax-- value added tax to the reported figures included in our earnings release. Now let me go through our financial highlights.

All comparisons are on a year-over-year basis, unless otherwise noted. For the second quarter, Weibo's net revenue reached $426.3 million, up $0.06-- up 68% or up 67% under the old basis. We are pleased that we delivered this growth, with tight [Inaudible] of the China RMB related to the U.S. dollar had unfavorable impact on the revenue during the quarter.

Notably, the foreign exchange rate assumption of RMB 6.35 to USD 1 that we provided last quarter is an increase of approximately 2% in the second quarter. [Inaudible] depreciation of the R&D since June 2018. Looking ahead, we expect to face continued foreign currency headwinds in the second half of this year due to the depreciation of the RMB. Non-GAAP operating income reached $167.4 million, up 67%.

Non-GAAP net income attributable to Weibo was $156.1 million, up 18%. Non-GAAP diluted EPS was $0.68, compared to $0.38 a year ago. Advertising and the marketing revenues for the second quarter reached $369.9 million, up 68%. Mobile ad revenue in the second quarter was $305 million, up 91%, which is [Inaudible] of our total ad revenue.

Given our unique market exploitation of China's premier social media platform and with 93% of our MAU from mobile in June, Weibo is continuing to benefit from the shift to corporate SME toward mobile, social, and video. As a result, total advertisers exceeded 935,000 in the second quarter, up 6%. Turning to KA. In the second quarter, our KA ad revenue reached RMB 153.3 million, up 91%.

Restructuring and advertising revenue growth was driven by both an increase in ARPA and the expansion of Weibo's advertiser base. Weibo has become a must have by increasing amount of key advertisers as more brand advertisers has seen the repricing result from their Weibo social marketing campaign. Weibo's ability to drive the highest levels of social traffic, combined with competitive edge. This has raised our unique celebrity access, KOLs, network effect, content diversity, and integrated marketing solutions will continue to generate increased KA ad spending.Moving on to SMEs.

In the second quarter, Weibo's SME ad business delivered revenue of $105.3 million, up 38%. Both number of SME advertisers and ARPA continue to grow. The top categories of our SME business include app downloads, O2O companies and e-commerce, which includes sub categories, such as beauty and wellness, [Inaudible] app, entertainment app, travel, education and others. More notably, the advertising spending of SME customers on both the channel and education segments decreased by triple digit year over year.

Revenue from Alibaba was $31.3 million, up 137%, up 19% quarter over quarter. As we mentioned the last quarter, revenue from Alibaba is highly correlated with their marketing campaign and initiative spending, which can fluctuate significantly on a sequential and annual basis for any given quarter. In the second quarter, Alibaba further increased its investment on Weibo's platform mainly to support its June 18th marketing campaign and other new branded promotion events. Weibo also has a unique position in Alibaba's ecosystem, not only providing the marketing channel for Alibaba's for e-commerce business, but also integrating into O2O, payment solutions, entertainment and video opportunity.

Value-added service net revenue was $56.6 million in the second quarter, up 62%. Membership fees, which include individual membership, enterprise account verification and V-Plus membership were up 52% and games revenue was up 46%. Membership fees and games revenue together make up more than 50% of Weibo's VAS revenues.Turning to costs and expenses. Total non-GAAP cost and expenses were $259.4 million, up 69% or 68% under the old basis.

Excluding the barter transactions related to marketing expense of $25.2 million recognized under the new basis, the increase in costs and expenses was primarily due to the increases in marketing fees and the product development cost. We are taking a more focused approach to increase user acquisition and retention, as well as expand user engagement over multiple channels. As such, the non-GAAP sales in the marketing as a percentage of net revenue was 26% during the second quarter under the old basis, up from 23% last year. The drive in sales and marketing, as a percentage of revenue, is driven by the increase in channel marketing spending, our investment on the collaboration with several online variety shows and the investment on the promotion of Weibo Lite.

The increase in product divestment expenditure was primarily attributable to increase in personnel-related costs.Non-GAAP operating income was $167.3 million in the second quarter, up 67%, representing a non-GAAP operating margin of 39%. Income tax expense was $25.1 million, compared to $16.4 million last year, a result of higher profitability. Non-GAAP net income attributable to Weibo in the second quarter was $136.1 million or up 18%.Turning to our balance sheet and cash flow items. As of June 30, 2018, Weibo's cash, cash equivalents, and short-term investments totaled $1.6 billion.

Cash provided by operating activities was $117.2 million. Capital expenditures totaled $7.5 million, while depreciation and amortization expenses amounted to $4.8 million. As leading social media platform in China, Weibo's scale and brand strength has allowed us to grow the platform efficiently. As a result, we delivered free cash flow of $109.7 million in the second quarter.According to our ADR depositary form, as of June 30, 2018, approximately 28% of Weibo's shares outstanding were represented by American depositary shares, 86% of which were considered floating shares.Turning to Weibo's third-quarter 2018 guidance.

We anticipate our third-quarter revenues to be in the range of $465 million and $475 million or an increase of 49% year over year to 52% year over year on a constant currency basis. This forecast reflect the currency translation rates and assume foreign exchange rates of RMB 6.8 to USD 1 during the third quarter.With that, let me now turn the floor over to the operator to begin the Q&A portion of the call. 

Questions and Answers:


Ladies and gentlemen, we will now begin the question-and-answer session. [Operator instructions] Our first question comes from the line of Juan Lin of 86 Research. Please ask your question.

Juan Lin -- 86Research Limited -- Analyst

Hi.Good evening. [Inaudible] Congrats on another set of solid results and thank you for taking my questions. I have two questions. My first question is on user acquisition and channel strategy.

I'm curious about the split of new users contributed by different channels and the change of the mix. Are we seeing any change in terms of user acquisition cost? And are we addressing our user channel marketing strategy in the face of slowing down smartphone sales? The second question is on our user growth target. I wonder whether there's any change to the 15% to 20% MAU growth target for this year. Thank you.

Gaofei Wang -- Chief Executive Officer

[Inaudible]We have no specific plan to decrease or change on our initial plan of MAU growth of 15% to 20%, which we indicated at the very beginning of the year, despite there's slower shipments in the smartphone and also in overall rather internal market. From the user growth point of view, it has shown some weaknes in the market.[Inaudible]I think, Gaofei indicated in his prepared remarks what we view today in terms of the penetration into the fourth, fifth, even sixth tiered city very much unlike the time if we went back to year 2013 when we started to penetrate into the third tier city. So that's sort of a time spot. In the other words, we are at the very beginning for the company to penetrate into cities lower than the third tiers.

I think the-- what Gaofei indicated is as we penetrate more into the lower tiered city, we start to see some of the benefits being a social media product. As a result, we will-- to further strengthen our collaboration with our-- Tencent manufacturers, our top-tier TV programmers or even the Miaopai video sites, given their contents, are very essential to the lower-- their channel and their contents are essential to the lower-tier city. And also, once we're-- penetration rate to reach to a certain level, we will start to see the social aspect of our product to be further amplified. [Inaudible] If we break our user into two categories, one category being the three-- third-tier city above and a third-tier city below, over 50% of our new user acquired and either acquired or recalled are from cities below the third tier.[Inaudible]So, our strategy in doing with the penetration into the fourth, fifth and even sixth-tier city is quite similar to what we have done few years back when we try to penetrate into the third-tier city.

We leveraged our channel with smartphone manufacturers. We're using premium contents generated from TV programmers, and the important corners in the video site. For example, our third-tier cities penetration, if you look back three years ago, that's about 15%, and now it's over well above 30%.[Inaudible]This year, we have done quite significant pre-installation to penetrate into the fourth-tier city.[Inaudible]Other than the pre-installation, which is a quite similar strategy we have deployed compared to certain fourth-tier city users, we try to adopt other differentiated methodology to increase our engagement level for the fourth-tier city. As I indicated in my prepared remarks that we have initiated a few social-focused activities such as red envelope, giving away red envelopes to first-tier city users when they create contents or consume contents or even when they establish certain social relationships.

As a result, we see our engagement level for our fourth-tier city users has been improved. And in terms of retention rate for the fourth-tier cities compared to a year ago has been also rising.[Inaudible]For users from the third-tier city above, we believe we have really achieved a reasonable penetration rate.[Inaudible]In terms working with those users from third-tier cities above, our relevant cost to maintain or recall those group of user are forecast compared to the cost incurred to attract users from third tiers below. Reason for that is these are-- these group of users are relatively mature and they know our products very well, and all we need to do is to ensure that our app is pre-installed or show up on their handset, and be close to our ID system in place. So, they will be returning right after they install our products.

Juan Lin -- 86Research Limited -- Analyst

Thank you, Gaofei and [Inaudible]. That's very helpful.


Our next question comes from the line of Tian Hou from T.H. Capital. Please ask your question.

Tian Hou -- T.H. Capital -- Analyst

[Inaudible]So, OK. Regarding competition, so last quarter, when we're on the call, we're talking a lot on the new players like Tencent [Inaudible]. So, they caused some pressure to a lot of leading vendors such as Tencent, such as you guys. But this quarter, if we look at the performance, which really are either much better in the older opposition of data, so what's the main driver for that? Is that because media discussion for their actions that can track or what have or the government give a pressure to [Inaudible]? What's the major driver? If those are not the major driver, what is the goal here and sustainable driver for the future growth? That's number one question.

Number two is now one of your biggest shareholders, Alibaba, also became a shareholder of [Inaudible]. So is there-- will there be some kind of cooperation in the future? And so that's my two questions. Thank you so much

Gaofei Wang -- Chief Executive Officer

[Inaudible]In terms of the competition, I will really like to address from two aspects. One is on the short video site and the other-- another angle is from the social future of our product.[Inaudible]I indicated in my prepared remarks, in the second quarter, we have significantly improved our product experience in the full-screen vertical video penetration and also the distribution of such content in our ecosystem. As a result, we have observed, there's top content creators who use to generate or create or distribute their content on other platform, have been moving their content distribution to Weibo in the second quarter. And as also I indicated, our viewership for the full-screen vertical short video has grown more than 100% on a year-over-year basis for this particular quarter.[Inaudible]In terms our core competence, to meet our users demand, we have carefully studied at the-- our core competence and believe our product features are quite significantly different from those platforms who solely distribute video content.[Inaudible]What we have seen that the other-- the short video platform had very little impact in terms of our MAU scale growth in this quarter.

However, we did notice that our user product frequency could have been impacted by some of the select platforms, particularly targeting those age group from 20 to 25.[Inaudible]As a result, we have some modified-- modification in our strategy since first quarter. Instead of purely focusing on the video content itself, we have to shift more our attention to the social relationship establishment, and it boosted the engagement level between our content generators and their fan base.[Inaudible]In terms, to me, the competition with the short video product were focused-- continued to be on-- to be to our social attributes for our product. So we've been focusing our product enhancement or upgrade with our content generators with how they engage or how they interact with their fans.[Inaudible]The data has demonstrated that we see quite significant improvement in engagement level in between our top content generators and with their fans. Our view toward the barrier for us to continue to grow our business is that from a content distribution point of view, content and the-- content creators can switch from their-- from platform to platform in terms of their distribution capability.

However, to switch their social assets from one platform to another, that is a very different story and have much higher barrier to overcome.[Inaudible]In terms of your question regarding the Ali's investment in [Inaudible], we have not noticed the related reporting or news. As a result, we will not be able to comment on this particular issue. In terms of the relationship between Weibo and Ali, as I indicated, we have developed quite significant cooperating efforts in between these two companies from a user front from a data exchange point front. Now only in the data exchange for our key accounts campaign, we have started more collaboration in terms our SME customers, the data exchange and the local.

Tian Hou -- T.H. Capital -- Analyst

[Inaudible] Thank you, Gaofei.


Our next question comes from the line of Gregory Zhao from Barclays. Please ask your question

Gregory Zhao -- Barclays -- Analyst

Hi, [Inaudible]. Thanks for taking my question and congratulations on a strong question. I have two questions. The first one is about your K and then the SME revenue growth.

So, can you help us understand the growth outlook of both in the second half? And my second question is about your story. So, can you help share some updates of operating metrics and plan to monetize story? And do you think that, going forward, story will be a key revenue driver? And as this quarter, we see Facebook actually substantially cuts second-half revenue growth outlook partially due to the story promotion. So, we just want to have a better understanding of your monetization plan on story.

Gaofei Wang -- Chief Executive Officer

[Inaudible]In terms of the Weibo story, we see quite significant viewership and the traffic that is being consumed on story products in the second quarter.[Inaudible]As I indicated in my script, we have opened and there's an advertising inventory since the first quarter. For example, our main page inventory and our video feed and also commentary. So, these are-- currently, their sell-through rates have been relatively low.[Inaudible]So, our key task in terms of monetization for the second half of 2018, would it be-- shift to more client budget and allocate more money into those new inventory we opened up in the first half. This is quite similar to those years when we had a transition from a PC inventory utilization to mobile inventory utilization.[Inaudible]Currently, we have opened up commercial monetization for key accounts to use with the story inventory, and the result has been quite up to our expectations, and we have noted that the first DAU viewership per DAU usage in frequency of Weibo story has been significantly increased in this quarter.

However, we are not in a hurry or has the urgency to monetize beyond what we have done so far. In terms your first question on your key accounts and SMU revenue growth for the second half, we generally do not break out our growth rate for each customer segment. I think our overall revenue growth target has been very clearly outlined in our guidance in the earnings release. But I think in the prior calls we-- prior calls or in the communication with the sell-side analysts, we have made it very clear that our second-half growth in terms of revenue growth will be slower than the first half.

That's primarily as a result of a higher comparable base we are experiencing. And also, the second half, I'm sure everybody is aware of, we also indicated in our prepared remarks that we are facing a very volatile foreign exchange market with the RMB being depreciated a lot faster than everyone has initially expected.

Gregory Zhao -- Barclays -- Analyst

Thank you very much.


Our next question comes from the line of Alicia Yap from Citigroup. Please ask your question.

Alicia Yap -- Citi -- Analyst

Hi. Good evening, management. Thanks for taking my question. I have two very quick ones.

One is on the margins. Your second-quarter OP margin came in better-than-expected despite the increase in the sales and marketing. I wanted to know how much of the increase in sales and marketing versus the first quarter is attributed to the spend in the workup? And then how much of those workup spend will also be recognized in 3Q? And how should we think about the margin trends for the second half? Second question is quickly on if there's any update or color on the new contract framework from the Alibaba budget commitment for this year. And given the enhanced relationship, especially on the collaboration on the uni-marketing and data integration, how should we think about the Ali revenue for this year? Thank you.

Fei Cao -- Chief Financial Officer and Vice President of Finance

Alicia, this is Fei. I think to answer your margin-- your question on margin, we expect our margin for the second half will be very similar to the levels we were able to achieve in year 2017. Even though we have been writing off our selling and marketing expenses as a percentage of revenue, we continue to see that we're able to derive certain operating leverage from our G&A expenses and also our product and development expenses. For your question on the expenses we spend on World Cup, that's quite limited.

These are content, these-- most of the content, licensed content, we were able to obtain is through the partnership we indicated with CCTV, with youkou, with China Mobile. So, we have not incurred significant incremental cost in terms of World Cup event. So that's the case for the second quarter and that will be the case for the third quarter as well. In terms of your question on the Ali, Alibaba's frame contract, we-- I think, we-- they have the basic frame contract with us and the remaining RMB amount of 700 million.

But the-- similar to prior years, this year, they are spending on Weibo is largely depending on their own strategy and their marketing efforts. So, things could have go well beyond the RMB 700 million if they decided they needed to beef up their marketing expenditures.

Alicia Yap -- Citi -- Analyst

Very clear. Thank you, [Inaudible].


I would like to hand the conference back to today's presenters. Please continue, sir.

Wen Li -- Investor Relations

That concludes today's conference call. Thank you for joining us, everyone.


[Operator signoff]

Duration: 64 minutes

Call Participants:

Wen Li -- Investor Relations

Gaofei Wang -- Chief Executive Officer

Fei Cao -- Chief Financial Officer and Vice President of Finance

Juan Lin -- 86Research Limited -- Analyst

Tian Hou -- T.H. Capital -- Analyst

Gregory Zhao -- Barclays -- Analyst

Alicia Yap -- Citi -- Analyst

More WB analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribing has no position in any of the stocks mentioned. The Motley Fool recommends Weibo. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.