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SINA Shares Strong Growth on Weibo Ad Gains

By Steve Symington - Nov 28, 2018 at 3:40PM

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However, the Chinese internet tech leader followed by reducing its full-year guidance.

SINA Corp. (SINA) announced strong third-quarter 2018 results on Wednesday morning, driven largely by the relative outperformance of advertising on its Weibo microblogging platform. At the same time, the company reduced its full-year outlook, as macroeconomic headwinds weighed on SINA's core business and smaller supplementary revenue streams.

With shares climbing as much as 8% early today before settling to close up around 2%, let's take a closer look at how SINA kicked off the second half.

SINA logo in both English and Chinese

IMAGE SOURCE: SINA.

SINA's results: The raw numbers

Metric

Q3 2018

Q3 2017

Year-Over-Year Growth

GAAP net revenue

$557.2 million

$433.1 million

28.7%

GAAP net income attributable to SINA

$45.4 million

$49.3 million

(7.9%)

GAAP net income per diluted share

$0.62

$0.66

(6.1%)

DATA SOURCE: SINA CORPORATION. GAAP = generally accepted accounting principles.

What happened this quarter?

  • Adjusted for items like stock-based compensation, SINA's (non-GAAP) net income attributable to shareholders increased 20.8% to $0.93 per share.
  • Though we don't usually pay close attention to Wall Street's demands, both the top and bottom lines easily exceeded expectations for revenue of $551.4 million and adjusted earnings of $0.69 per share.
  • Advertising revenue grew 33% year over year to $483.8 million, driven primarily by a 48% increase in Weibo advertising and marketing sales. Sina portal ad revenue declined 15% (down 12% at constant currencies).
  • Non-advertising revenue declined 7.3% to $73.4 million, as growth from Weibo value-added service (VAS) revenues was more than offset by a combination of revenue-reporting changes, the negative impact of foreign currency exchange, and the "lackluster" performance of SINA's fintech businesses amid regulatory headwinds.
  • SINA generated cash from operations of $100.8 million.

What management had to say

"We are pleased with SINA's third quarter results," said SINA chairman and CEO Charles Chao in a press release. "Despite intensified competition and macro headwinds, we delivered healthy growth in both revenues and profitability driven by the continued momentum of Weibo business."

During the subsequent conference call, CFO Bonnie Yi Zhang credited Weibo's "robust growth to teams' efforts in product revamp, channel investment, and the content ecosystem cultivation, which further strengthened the social network effect, and broadened our strategic mode to serve public and social interactions among Chinese and the global Chinese communities."

Looking forward

Considering the uncertainties in today's macroeconomic and regulatory environment, SINA now expects full fiscal-year 2018 revenue arriving in the range of 14 billion yuan to 14.2 billion yuan. That's roughly $2.09 billion to $2.12 billion, down from SINA's prior guidance range of $2.12 billion to $2.27 billion.

To be fair, Wall Street had already anticipated some weakness; going into the report, consensus estimates predicted SINA's top line this year would arrive at roughly $2.15 billion, well below the midpoint of its old range. In the end, however solid the quarter was, this explains why the stock gave back some of its early gains while still managing to close in the green as investors digested the news.

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