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Instant Analysis: Weibo Beats on Q4 EPS

By Eric Volkman – Mar 8, 2016 at 6:58AM

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The China-based microblogging platform sees notable rises in its financials, but other metrics, plus forward guidance, might not be considered so impressive.

What happened?
China's Weibo (WB 8.38%), a microblogging platform, reported a more than threefold increase in adjusted attributable net profit in its Q4 2015. This rose to the equivalent of almost $33 million ($0.15 per American depository receipt), from the Q4 2014 tally of $4.8 million ($0.02). A surge in advertising and marketing revenue was the main driver behind total revenue advancing 42% to $149 million.


For the entirety of fiscal 2015, Weibo swung to a net profit of $65 million, a vast improvement over the $7 million loss it booked the previous year. Total revenue saw a 43% increase, to just under $478 million.

In terms of operating metrics, the number of monthly average users at the end of last year was 236 million, 34% higher on a year-over-year basis. The average daily active users figure rose by 32% to 106 million.

Does it matter?
On the surface, Weibo's earnings beat and the steep rise in top and bottom lines are pleasing, but investors expect not growth from young Internet stocks, but robust growth. Where it really counts, Weibo doesn't seem to be making excessive leaps. Those key MAU and DAU growth rates on their own look nice, but weren't too far away from the end-2014 figures of 36% and 31%, respectively.

Also, going forward, the company doesn't believe it will beat the average analyst revenue projection by much, if at all. It's modeling a top line of $111 million to $116 million for the current quarter while analysts are collectively estimating $115.4 million.

So, although the flip to annual net profit is happy news, as is the pop in revenue, investors will likely be discouraged by Weibo's latest figures. Those user metrics matter, as does guidance, and neither is likely to impress the market.

Eric Volkman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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