SINA Q2 Earnings And Revenues Surge Y/Y Driven By Weibo

SINA Corp.’s (NASDAQ:SINA) second-quarter 2017 non-GAAP earnings of 70 cents per share surged a massive 159.3% from the year-ago quarter while non GAAP net revenue grew 48% to $356.3 million.

We note that SINA’s shares have gained 47.2% in the past one year, vastly outperforming the industry, which gained 35% during the period.

Quarter Details

Advertising revenues moved up 44% year over year to $295.2 million, driven by the momentum of the Weibo segment. Non-advertising (non GAAP) revenues increased 68% year over year to $61.2 million.

Revenues from the Weibo (NASDAQ:WB) business surged 72.5% year over year to $253.4 million. Monthly active users increased 28% year over year to $361 million, driven by the increasing number of mobile users. At the end of the quarter, daily active users went up to 159 million, up 26.2% from the year-ago quarter.

Weibo non-ad revenues grew 77.7% to $35 million, mainly attributable to an increase in membership revenues. Weibo's ad revenues grew 71.7% to $218.3 million in the reported quarter.

Portal advertising revenues were down almost 1% year over year to $77.9 million. Portal non-advertising revenues increased 57% to $26.2 million on the back of the progress made in online payment business.

Non GAAP operating income was $115.5 million, which more than doubled year over year.

Balance Sheet and Cash Flow

SINA exited the quarter with cash & cash equivalents (including short-term investments & restricted cash) of $2.4 billion compared with $2 billion as of Dec 31, 2016.

Cash provided by operating activities in the quarter was $238.3 million. Capital expenditure was $2.8 million.

SINA has extended the expiry period of its earlier announced (March 2016) $500 million share repurchase plan. The deadline will now set for Jun 2018.

Our Take

SINA has a strong product pipeline and is also investing in product development and marketing. Plus, strong performance of its Weibo platform continues to be a big positive.

Moreover, we believe that SINA will benefit from growth potential of e-commerce, e-banking, online payment and online entertainment services markets in China. Furthermore, the booming gaming market in China is also a positive.

We also believe that Weibo’s monetization ability will continue to be a major driving factor for SINA amid intensifying competition from the likes of Sohu.com Inc. ( (NASDAQ:SOHU) ) and NetEase (NASDAQ:NTES) in the video and brand advertising market.

However, the company’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.

Recently, Chinese government reportedly had ordered shutdown of certain audio and video streaming on Weibo’s platform as these didn’t meet the government’s stringent regulations. On Jun 1, 2017, China implemented a tougher cyber security law which gives the government stronger control over online content.

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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