SINA Corporation (SINA +0.00%) released stronger-than-expected third-quarter 2017 results on Tuesday morning, detailing sustained momentum at microblogging site Weibo, a return to growth for advertising at its core portal business, and meaningful contributions from its newer internet finance business.
With shares of the Chinese online media company down more than 6% on the news -- a likely consequence of profit-taking given its 80% year-to-date gain as of yesterday's close -- let's take a closer look at what drove SINA's business as it kicked off the second half of 2017.
SINA's results: The raw numbers
| Metric |
Q3 2017 |
Q3 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
GAAP net revenue |
$443.1 million |
$274.9 million |
61.2% |
|
GAAP net income attributable to SINA |
$49.3 million |
$146.5 million |
(66.3%) |
|
GAAP net income per diluted share |
$0.66 |
$1.90 |
(65.3%) |
Data source: SINA Corporation.
What happened with SINA this quarter?
- On an adjusted (non- GAAP) basis -- which excludes items like stock-based compensation and gains on the sale of investments -- net income increased 32% to $57.7 million, while adjusted net income per share rose 37.5% to $0.77. Adjusted revenue grew 62% to $440.5 million.
- SINA doesn't provide specific quarterly financial guidance. So, for perspective, consensus estimates predicted lower adjusted earnings of $0.75 per share on revenue of $406.5 million.
- Online advertising revenue climbed 56% to $364 million, driven primarily by a 77% increase in Weibo advertising and marketing revenues, and 9% growth in portal advertising revenue.
- Adjusted nonadvertising revenue increased 98% to $76.6 million, driven by a combination of new revenue from SINA's online finance segment, higher Weibo membership fees, and SINA's revenue share from its live broadcasting business.
- Weibo added 79 million net monthly active users year over year, bringing its total to 376 million in September 2017, 92% of whom are mobile users. Weibo also added 33 million daily active users (DAUs), bringing its total to 165 million.
- Generated cash from operations of $188.1 million, and ended the quarter with $2.2 billion in cash and short-term investments.
What management had to say
SINA chairman and CEO Charles Chao stated:
We are very pleased to deliver another strong quarter of financial results with record revenues and operating profit. Weibo continued its strong momentum with substantial user base expansion and improved user engagement. Leveraging platform effect, Weibo has achieved further operating leverage and a record high level of net income. Portal advertising resumed in the growth trajectory this quarter as we continue to ramp up mobile traffic of SINA media properties and improve mobile monetization. We are also pleased to see the encouraging progresses we have made in the online finance business.
Looking forward
As usual, SINA declined to offer specific revenue or earnings guidance for the current quarter. And despite its consistent outperformance relative to the market's expectations, management offered no additional color on its latest full-year guidance, which was initially provided in February and calls for 2017 revenue of between $1.30 billion and $1.44 billion. Wall Street, for its part, now expects SINA's full-year sales to be closer to $1.49 billion -- a figure that shouldn't be too far off the mark when all is said and done.
In the meantime, there's no disputing that this was another great quarter for SINA. The company continues to march forward and grow stronger, fostering new growth opportunities in online finance, returning its core portal ad business to growth, and enjoying the fast-growing fruits of its large Weibo stake. For long-term investors, it's hard to ask for much more.
