Weibo Reports Third Quarter 2018 Unaudited Financial Results
BEIJING, Nov. 28, 2018 /PRNewswire/ -- Weibo Corporation ("Weibo" or the "Company") (NASDAQ: WB), a leading social media in China, today announced its unaudited financial results for the third quarter ended September 30, 2018.
"Weibo has once again achieved strong user growth and user engagement this quarter. We are delighted to see our adverting and marketing revenues continue to deliver healthy growth." said Gaofei Wang, CEO of Weibo. "We continue to focus on optimizing user product experience and strengthening content distribution to feature Weibo's unique advantages in content creation, consumption and user social interaction. We expect these actions will help increase user acquisition efficiency, and in the longer-term, enhance Weibo's monetization potentials."
Third Quarter 2018 Highlights
-- Net revenues totaled $460.2 million, an increase of 44% year-over-year.
-- Advertising and marketing revenues were $409.3 million, an increase of
48% year-over-year.
-- Value-added service ("VAS") revenues were $50.9 million, an increase of
18% year-over-year.
-- Net income attributable to Weibo was $165.3 million, an increase of 63%
year-over-year, and diluted net income per share was $0.73, compared to
$0.45 for the same period last year.
-- Non-GAAP net income attributable to Weibo was $171.8 million, an
increase of 49% year-over-year, and non-GAAP diluted net income per
share was $0.75, compared to $0.51 for the same period last year.
-- Adjusted EBITDA was $192.8 million, an increase of 42% year-over-year,
or 42% of net revenues, compared to 42% for the same period last year.
-- Monthly active users ("MAUs") had a net addition of approximately 70
million users year over year and reached 446 million in September 2018.
Mobile MAUs represented 93% of MAUs.
-- Average daily active users ("DAUs") had a net addition of approximately
30 million users year over year and reached 195 million in September
2018.
Third Quarter 2018 Financial Results
For the third quarter of 2018, Weibo reported net revenues of $460.2 million. The net revenues for the same period last year were $320.0 million. Advertising and marketing revenues totaled $409.3 million, compared to $276.8 million for the same period last year, and advertising and marketing revenues from small & medium-sized enterprises ("SMEs") and key accounts were $380.7 million, compared to $251.5 million for the same period last year, or an increase of 51% year-over-year. VAS revenues totaled $50.9 million, compared to $43.2 million for the same period last year.
Costs and expenses for the third quarter of 2018 totaled $298.2 million, compared to $201.6 million for the same period last year. Other than the inclusion of marketing expense related to advertising barter transactions under ASC Topic 606 as illustrated below, the increase in costs and expenses was primarily attributable to more marketing expenses incurred for channels, product promotion and development expenditures incurred in relations to the personnel-related cost, as well as goodwill and acquired intangibles impairment charge for non-core business line. Non-GAAP costs and expenses were $272.2 million, compared to $188.0 million for the same period last year.
Income from operations for the third quarter of 2018 was $162.0 million, compared to $118.5 million for the same period last year. Non-GAAP income from operations was $188.0 million, compared to $132.0 million for the same period last year.
Non-operating income for the third quarter of 2018 was $42.9 million, compared to a non-operating income of $4.3 million for the same period last year. The increase was primarily due to $41.9 million of fair value change of investments. Income tax expenses were $37.9 million, compared to $22.0 million for the same period last year, largely attributable to the deferred tax liabilities recognized from fair value change of investments and higher profitability with a relatively stable tax rates in the Company's PRC operation.
Net income attributable to Weibo for the third quarter of 2018 was $165.3 million, or diluted net income per share of $0.73, compared to $101.1 million for the same period last year, or diluted net income per share of $0.45. Non-GAAP net income attributable to Weibo for the third quarter of 2018 was $171.8 million, or diluted net income per share of $0.75, compared to $115.2 million for the same period last year, or diluted net income per share of $0.51.
As of September 30, 2018, Weibo's cash, cash equivalents and short-term investments totaled $1.60 billion. For the third quarter of 2018, cash provided by operating activities was $122.1 million, capital expenditures totaled $6.0 million, and depreciation and amortization expenses amounted to $4.5 million.
Annual General Meeting
On November 22, 2018, the Company held its annual general meeting of shareholders,
where the shareholders re-elected each of Mr. Frank Kui Tang and Ms. Hong Du as a director of Weibo.
Business Outlook
For the fourth quarter of 2018, Weibo estimates its net revenues to be between $480 million and $490 million, or an increase of 35% year over year to 38% year over year on a constant currency basis. This forecast reflects the currency translation risks and assumes an average exchange rate of RMB 7.00 to US$1.00. This forecast also reflects Weibo's current and preliminary view, which is subject to change.
Financial Impact from New Revenue Guidance
As the Company adopted new revenue guidance ASC Topic 606 on January 1, 2018, results for reporting periods beginning after January 1, 2018 are presented under Topic 606 ('New Basis'), while prior period amounts are not adjusted and continue to be reported under Topic 605 ('Old Basis'), the Company's historic accounting method.
Adoption of the new revenue guidance impacted the Company's current period reported results as follows:
Three months ended
September 30, 2018
Adjustments
Old Basis
VAT
Barter
New Basis
ASC 605 Transaction ASC 606
($ In thousands, except for percentage)
Net revenues 459,232 (25,886) 26,825 460,171
Cost of revenues 95,902 (25,886) 70,016
Operating expenses
-Sales and 112,132 28,927 141,059
marketing expenses
Income from 164,061 (2,102) 161,959
operations
Operating margin 35.7% 35.2%
Conference Call
Weibo's management team will host a conference call from 6AM - 7AM Eastern Time on November 28, 2018 (or 7 PM - 8 PM Beijing Time on November 28, 2018) to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available through the Company's corporate website at http://ir.weibo.com.
The conference call can be accessed as follows:
US Toll Free: +1 866-519-4004
Hong Kong Toll Free:
800-906-601
China Toll Free:
400-620-8038
International:
+65 6713-5090
Passcode for all regions: 5368429
A replay of the conference call will be available from 22:00 China Standard Time on November 28, 2018 - 20:59 China Standard Time on December 6, 2018. The dial-in number is +61 2-8199-0299. The passcode for the replay is 5368429.
Non-GAAP Financial Measures
This release contains the following non-GAAP financial measures: non-GAAP costs and expenses, non-GAAP income from operations, non-GAAP net income attributable to Weibo, non-GAAP diluted net income per share attributable to Weibo and adjusted EBITDA. These non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with U.S. GAAP.
The Company's non-GAAP financial measures exclude stock-based compensation, amortization of intangible assets, net results of impairment on, gain/loss on sale of and fair value change of investments, non-GAAP to GAAP reconciling items for the gain/loss attributable to non-controlling interests, provision for income tax related to the amortization of intangible assets and fair value change of investments (other non-GAAP to GAAP reconciling items have no tax effect), and amortization of convertible debt issuance cost. Adjusted EBITDA excludes interest income, net, income tax expenses, and depreciation expenses. The Company's management uses these non-GAAP financial measures in their financial and operating decision-making, because management believes these measures reflect the Company's ongoing operating performance in a manner that allows more meaningful period-to-period comparisons. The Company believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: (i) in comparing the Company's current financial results with the Company's past financial results in a consistent manner, and (ii) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains (losses) and other items (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of the Company's core operating results and business outlook.
Use of non-GAAP financial measures has limitations. The Company's non-GAAP financial measures do not include all income and expense items that affect the Company's operations. They may not be comparable to non-GAAP financial measures used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures. Reconciliations of the Company's non-GAAP financial measures to the nearest comparable GAAP measures are set forth in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."
About Weibo
Weibo is a leading social media for people to create, share and discover content online. It combines the means of public self-expression in real time with a powerful platform for social interaction, content aggregation and content distribution. Any user can create and post a feed and attach multi-media and long-form content. User relationships on Weibo may be asymmetric; any user can follow any other user and add comments to a feed while reposting. This simple, asymmetric and distributed nature of Weibo allows an original feed to become a live viral conversation stream.
Weibo enables its advertising and marketing customers to promote their brands, products and services to users. Weibo offers a wide range of advertising and marketing solutions to companies of all sizes. The Company generates a substantial majority of its revenues from the sale of advertising and marketing services, including the sale of social display advertisement and promoted marketing offerings. Weibo has developed and is continuously refining its social interest graph recommendation engine, which enables its customers to perform people marketing and target audiences based on user demographics, social relationships, interests and behaviors, to achieve greater relevance, engagement and marketing effectiveness.
Safe Harbor Statement
This press release contains forward-looking statements that relate to, among other things, Weibo's expected financial performance and strategic and operational plans (as described, without limitation, in the "Business Outlook" section and in quotations from management in this press release. Weibo may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission ("SEC"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology, such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "confidence," "estimates" and similar statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, Weibo's limited operating history in certain new businesses; failure to grow active user base and the level of user engagement; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly operating results; the Company's reliance on advertising and marketing sales for a majority of its revenues; failure to successfully develop, introduce, drive adoption of or monetize new features and products; failure to compete effectively for advertising and marketing spending; failure to successfully integrate acquired businesses; risks associated with the Company's investments, including equity pick-up and impairment; failure to compete successfully against new entrants and established industry competitors; changes in the macro-economic environment, including the depreciation of the Renminbi; and adverse changes in economic and political policies of the PRC government and its impact on the Chinese economy. Further information regarding these and other risks is included in Weibo's annual report on Form 20-Fs and other filings with the SEC. All information provided in this press release is current as of the date hereof, and Weibo assumes no obligation to update such information, except as required under applicable law.
Contact:
Investor Relations
Weibo Corporation
Phone: +86 10 5898-3017
Email: ir@staff.weibo.com
WEIBO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended Nine months ended
September 30,
June 30, September 30,
2018 2017 2018 2018 2017
Net revenues [1]:
Advertising and marketing $409,273 $276,803 $369,942 $1,082,164 $664,440
Value-added service 50,898 43,232 56,647 154,479 108,169
Net revenues 460,171 320,035 426,589 1,236,643 772,609
Costs and expenses:
Cost of revenues [1][2] 70,016 62,428 61,790 194,708 159,250
Sales and marketing [1][2] 141,059 76,346 139,977 386,899 182,872
Product development[2] 66,222 50,770 60,613 187,358 135,489
General and administrative[2] 10,361 12,037 9,313 30,890 32,723
Goodwill and acquired intangibles impairment 10,554 10,554
Total costs and expenses 298,212 201,581 271,693 810,409 510,334
Income from operations 161,959 118,454 154,896 426,234 262,275
Non-operating income:
Impairment on, gain/loss on sale of and 31,683 (680) (1,535) 28,649 (2,050)
fair value change of investments, net [3]
Interest and other income , net 11,218 4,937 12,481 32,827 9,927
42,901 4,257 10,946 61,476 7,877
Income before income tax expenses 204,860 122,711 165,842 487,710 270,152
Income tax expenses (37,882) (22,022) (25,148) (81,327) (49,701)
Net income 166,978 100,689 140,694 406,383 220,451
Less: Net income (loss) attributable to 1,661 (440) (220) 1,067 (1,157)
noncontrolling interests
Net income attributable to Weibo $165,317 $101,129 $140,914 $405,316 $221,608
Basic net income per share attributable to Weibo $0.74 $0.46 $0.63 $1.81 $1.01
Diluted net income per share attributable to Weibo $0.73 $0.45 $0.62 $1.79 $0.98
Shares used in computing basic
net income per share attributable to Weibo 224,060 221,428 223,542 223,506 220,005
Shares used in computing diluted
net income per share attributable to Weibo 232,660 225,683 232,768 232,719 225,162
[1] On January 1, 2018, the Company adopted ASC 606 "Revenue from Contracts with Customers" using the modified retrospective method, which means
amounts for 2018 are reported on the new basis while prior periods amount will be reported on a historical basis. Under the new accounting standard, the
main impact to the Company is that it now reports the revenue net of value added tax and recognizes revenues and expenses at fair value for the
advertising barter transaction.
[2] Stock-based compensation in each category:
Cost of revenues $1,684 $1,014 $1,445 $4,140 $2,649
Sales and marketing 3,243 2,287 2,831 8,042 6,048
Product development 7,829 6,386 6,064 18,944 16,631
General and administrative 2,598 3,689 1,908 7,490 10,674
[3] The Company adopted ASU 2016-01 "Classification and Measurement of Financial Instruments" beginning the first quarter of fiscal year 2018. After
the adoption of this new accounting update, the Company measures long-term investments, other than equity method, at fair value through earnings. For
those investments without readily determinable fair values, the Company elected to record these investments at cost, less impairment, and plus or minus
subsequent adjustments for observable price changes. Changes in the basis of these investments are reported in current earnings.
WEIBO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30,
December 31,
2018 2017
Assets
Current assets:
Cash and cash equivalents $792,533 $1,000,953
Short-term investments 807,032 791,730
Accounts receivable, net 304,182 170,100
Prepaid expenses and other current assets[1] 319,470 69,233
Amount due from SINA 68,266 16,356
Current assets subtotal 2,291,483 2,048,372
Property and equipment, net 41,155 33,793
Goodwill and intangible assets, net 2,284 13,937
Long-term investments 700,341 452,337
Other assets 11,760 13,380
Total assets $3,047,023 $2,561,819
Liabilities and Shareholders' Equity
Liabilities:
Current liabilities:
Accounts payable $102,300 $64,043
Accrued expenses and other current liabilities 284,859 268,615
Deferred revenues 106,327 81,311
Income tax payable[2] 80,347 70,907
Current liabilities subtotal 573,833 484,876
Long-term liabilities:
Convertible debt 883,089 879,983
Other long-term liabilities 11,258 2,166
Total liabilities 1,468,180 1,367,025
Shareholders' equity :
Weibo shareholders' equity[3] 1,575,889 1,192,587
Non-controlling interests 2,954 2,207
Total shareholders' equity 1,578,843 1,194,794
Total liabilities and shareholders' equity $3,047,023 $2,561,819
[1] Included short-term loans to SINA of $104.8 million as of September 30, 2018.
[2] Commencing on January 1, 2018, in order to enhance comparability with industry peers, income
tax payable has
been presented as a single line item in balance sheet as opposed to be part of accounts payable.
To conform with
current period presentation, the relevant amount of $70.9 million as of December 31, 2017 has
been adjusted
accordingly.
[3] The Company adopted ASU 2016-1 "Classification and Measurement of Financial Instruments"
beginning the
first quarter of fiscal year 2018. After the adoption of this new accounting update, the
Company measures long-
term investments, other than equity method, at fair value through earnings. For those
investments without readily
determinable fair values, the Company elected to record these investments at cost, less
impairment, and plus or
minus subsequent adjustments for observable price changes. Changes in the basis of these
investments are
reported in current earnings. The cumulative impact arising from the adoption of this update
was immaterial to
retained earnings as of January 1, 2018.
WEIBO CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(In thousands, except per share data)
Three months ended
---
September 30, 2018
September 30, 2017
June 30, 2018
Non-GAAP
Non-GAAP
Non-GAAP
Actual Adjustments
Results
Actual Adjustments
Results
Actual Adjustments
Results
Advertising and marketing $409,273 $409,273 $276,803 $276,803 $369,942 $369,942
Value-added service 50,898 50,898 43,232 43,232 56,647 56,647
Net revenues $460,171 $460,171 $320,035 $320,035 $426,589 $426,589
(15,354) (a)
(90) (b) (13,376) (a) (12,248) (a)
(10,554) (c) (161) (b) (164) (b)
Total costs and expenses $298,212 $(25,998) $272,214 $201,581 $(13,537) $188,044 $271,693 $(12,412) $259,281
15,354 (a)
90 (b) 13,376 (a) 12,248 (a)
10,554 (c) 161 (b) 164 (b)
Income from operations $161,959 $25,998 $187,957 $118,454 $13,537 $131,991 $154,896 $12,412 $167,308
15,354 (a)
90 (b) 12,248 (a)
10,554 (c) 13,376 (a) 164 (b)
(31,683) (d) 161 (b) 1,535 (d)
1,560 (e) 680 (d) 277 (e)
9,582 (f) (113) (e) (41) (f)
1,035 (g) (40) (f) 1,035 (g)
Net income attributable to Weibo $165,317 $6,492 $171,809 $101,129 $14,064 $115,193 $140,914 $15,218 $156,132
Diluted net income per share attributable to Weibo $0.73 * $0.75 * $0.45 $0.51 $0.62 * $0.68 *
Shares used in computing diluted
net income per share attributable to Weibo 232,660 232,660 225,683 225,683 232,768 232,768
Adjusted EBITDA:
Non-GAAP net income attributable to Weibo $171,809 $115,193 $156,132
Interest income,net (11,733) (5,131) (12,604)
Income tax expenses 28,300 22,062 25,189
Depreciation expenses 4,437 3,733 4,626
Adjusted EBITDA $192,813 $135,857 $173,343
WEIBO CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(In thousands, except per share data)
Nine months ended
September 30, 2018
September 30, 2017
Non-GAAP
Non-GAAP
Actual Adjustments
Results
Actual Adjustments
Results
Advertising and marketing $1,082,164 $1,082,164 $664,440 $664,440
Value-added service 154,479 154,479 108,169 108,169
Net revenues $1,236,643 $1,236,643 $772,609 $772,609
(38,616) (a)
(423) (b) (36,002) (a)
(10,554) (c) (473) (b)
Total costs and expenses $810,409 $(49,593) $760,816 $510,334 $(36,475) $473,859
38,616 (a)
423 (b) 36,002 (a)
10,554 (c) 473 (b)
Income from operations $426,234 $49,593 $475,827 $262,275 $36,475 $298,750
38,616 (a)
423 (b)
10,554 (c) 36,002 (a)
(28,649) (d) 473 (b)
1,719 (e) 2,050 (d)
9,499 (f) (336) (e)
3,105 (g) (118) (f)
Net income attributable to Weibo $405,316 $35,267 $440,583 $221,608 $38,071 $259,679
Diluted net income per share attributable to Weibo $1.79 * $1.93 * $0.98 $1.15
Shares used in computing diluted
net income per share attributable to Weibo 232,719 232,719 225,162 225,162
Adjusted EBITDA:
Non-GAAP net income attributable to Weibo $440,583 $259,679
Interest income, net (35,246) (10,385)
Income tax expenses 71,828 49,819
Depreciation expenses 13,584 10,343
Adjusted EBITDA $490,749 $309,456
(a) To exclude stock-based compensation.
(b) To exclude amortization of intangible assets.
(c) To exclude goodwill and acquired intangibles impairment.
(d) To exclude net results of impairment on, gain/loss on sale of and fair value change of investments.
(e) To exclude non-GAAP to GAAP reconciling items for the income/loss attributable to non-controlling interests.
(f) To exclude the provision for income tax related to item (b) and (d). Other non-GAAP to GAAP reconciling items have no income tax effect.
The Company considered the tax implication arising from the reconciliation items and part of these items recorded in entities in tax free jurisdictions were without relevant tax implications.
For impairment on investments, valuation allowances were made for those differences the Company does not expect they can be realized in the foreseeable future.
(g) To exclude the amortization of convertible debt issuance cost.
* Net income attributable to Weibo is adjusted for interest expense of convertible debt for calculating diluted EPS.
WEIBO CORPORATION
UNAUDITED ADDITIONAL INFORMATION
(In thousands)
Three months ended Nine months ended
September 30,
June 30, September 30,
2018 2017 2018 2018 2017
Net revenues
Advertising and marketing
Small & medium-sized enterprises and key accounts $380,745 $251,456 $338,662 $996,020 $618,106
Alibaba 28,528 25,347 31,280 86,144 46,334
Subtotal 409,273 276,803 369,942 1,082,164 664,440
Value-added service 50,898 43,232 56,647 154,479 108,169
$460,171 $320,035 $426,589 $1,236,643 $772,609
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SOURCE Weibo Corporation
