SINA Corp (SINA) Beats On Earnings And Revenues In Q1

SINA Corp. (NASDAQ:SINA) reported first-quarter 2017 adjusted earnings (including stock based compensation) of 22 cents per share, which was much better than the Zacks Consensus Estimate of a loss of 28 cents.

Non-GAAP earnings (excluding stock based compensation) of 52 cents per share surged a massive 139.3% from the year-ago quarter.

Adjusted net revenues of $275.4 million topped the Zacks Consensus Estimate of $263 million and increased 40.5% year over year.

We note that SINA’s shares have gained 58.7% on a year-to-date basis, vastly outperforming the Zacks categorized Internet-Content industry, which gained 31.3% during the period.

Quarter Details

Advertising revenues moved up 40% (48% on a constant currency basis) year over year to $228 million, driven by the momentum of the Weibo segment. Non-advertising revenues increased 40% year over year to $50.1 million.

Revenues from the Weibo (NASDAQ:WB) business surged 71% year over year to $212.7 million. Monthly active users increased 30% year over year to $340 million, driven by the increasing number of mobile users. At the end of the quarter, daily active users went up to 154 million, up 28% from the year-ago quarter.

Weibo non-ad revenues grew 49% to $29.9 million, mainly attributable to an increase in membership revenues. Weibo's ad revenues grew 71% to 169.3 million in the reported quarter.

Portal Advertising revenues decreased 6% (1% on a constant currency basis) year over year to $59.8 million. Portal non-advertising revenue increased 34% to 17.6 million resulting from the progress made in online finance business.

SINA’s online payment business - SINA Pay - reported strong figures with revenues reaching almost $10 million.

Operating income (including stock-based compensation) was $42.5 million against the year-ago quarter loss of $10.6 million.

However, operating income (excluding stock-based compensation) was $63.7 million, a massive increase from $5.6 million reported in the year-ago quarter.

Balance Sheet and Cash Flow

SINA exited the quarter with cash & cash equivalents (including short-term investments & restricted cash) of $1.8 billion compared with $1.4 billion as of Dec 31, 2016.

Cash provided by operating activities in the quarter was $93 million. Capital expenditure was $5.3 million compared with $21.5 million in the previous quarter.

Our Take

We believe that growing customer base for the company’s micro blogging platform, Weibo, is a key catalyst. Also, its expanding collaboration with Alibaba (NYSE:BABA) is a positive.

Moreover, SINA Pay has strong growth prospects in our view.

However, SINA’s business is likely to be impacted by soft macroeconomic conditions in China. Also, significant restrictions on online search and other social networking activities in the region remain concerns.

Moreover, Weibo is expected to face continued stiff competition from the likes of WeChat in China, which may hurt its user base. We believe that Weibo’s monetization ability will be a major driving factor for SINA’s growth as it competes with the likes of Sohu.com and NetEase (NASDAQ:NTES) in the video and brand advertising market.

Zacks Rank

Currently, SINA carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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