SINA Corporation (SINA) announced better-than-expected first-quarter 2017 results on Tuesday. The Chinese online media company's performance was bolstered -- as usual -- by momentum in both its mobile initiatives and its Weibo micro-blogging platform.
With shares up more than 18% as of this writing, let's have a closer look at what drove SINA's latest outperformance as it kicked off the new year.
IMAGE SOURCE: GETTY IMAGES.
SINA's results: The raw numbers
| Metric |
Q1 2017 |
Q1 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
GAAP net revenue |
$278.1 million |
$198.7 million |
40% |
|
GAAP net income attributable to SINA |
$38.5 million |
$15.3 million |
151.6% |
|
GAAP net income per diluted share |
$0.52 |
$0.22 |
136.4% |
Data source: SINA Corporation.
What happened with SINA this quarter?
- On an adjusted (non-GAAP) basis, revenue increased 40.5% year over year, to $275.5 million.
- Adjusted net income swung to $37.6 million, or $0.50 per share, from an adjusted net loss of $2.8 million, or $0.04 per share, in the same year-ago period.
- Both the top and bottom lines were well ahead of investors' expectations for adjusted earnings of $0.14 per share and revenue of $265.1 million.
- Online advertising revenue jumped 39.9% to $228 million -- a notable acceleration from 20.8% year-over-year growth last quarter -- including accelerated 71% growth in Weibo advertising and marketing revenue to $70.1 million, and a narrower 6.2% decline in portal advertising revenue to $59.8 million. The latter benefited from more stable SINA brand advertising performance and improved mobile monetization.
- Adjusted non-advertising revenue rose 43.5% to $47.5 million, driven by a combination of growth in Weibo's membership revenue and progress made in the online financing business on the portal side.
- Weibo's monthly active users increased 30.3% year over year to 340 million in March 2017. Average daily active users climbed 28.3% to 154 million.
- Gross margin increased 10 percentage points to 69%, thanks to strong advertising demand from Weibo and cost structure optimization both at Weibo and the portal business.
- Weibo generated $93 million in cash from operations and ended the quarter with cash equivalents and short-term investments of $1.8 billion.
What management had to say
SINA Chairman and CEO Charles Chao stated:
We started the year 2017 with a great quarter. Weibo continued its strong momentum with accelerated growth in revenues and impressive expansion of user base. On the SINA media business, our performance was in line with our expectation, taking seasonality factors into account. We have further restructured our mobile media business to accelerate the pace for the mobile transition.
Chao also singled out the online financing sector as one of SINA's most significant growth opportunities over the next three to five years "given its huge addressable market and the low penetration by the internet." Online payment revenue from SINA Pay, in particular, reached nearly $10 million this quarter and is expected to continue to drive outsize growth going forward.
Looking forward
SINA made no changes to its full-year guidance, which was introduced last quarter and calls for 2017 adjusted revenue of between $1.30 billion and $1.44 billion assuming constant exchange rates. But this was a great start to 2017, both as SINA stemmed the revenue decline at its portal business and as Weibo accelerated its momentum in both advertising and value-added services. With shares of SINA up more than 60% year to date as of this writing, investors have every reason to celebrate today.
