SINA Reports First Quarter 2019 Unaudited Financial Results
BEIJING, May 23, 2019 /PRNewswire/ -- SINA Corporation (the "Company" or "SINA") (NASDAQ: SINA), a leading online media company serving China and the global Chinese communities, today announced its unaudited financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights
-- Both net revenues and non-GAAP net revenues increased 8% year-over-year
to $475.1 million and $472.5 million.
-- Advertising revenues increased 6% year-over-year to $388.0 million.
-- Non-advertising revenues increased 18% year-over-year to $87.1 million.
Non-GAAP non-advertising revenues increased 19% year-over-year to $84.5
million.
-- Income from operations increased 19% year-over-year to $86.9 million.
Non-GAAP income from operations increased 21% year-over-year to $114.2
million.
-- Net income attributable to SINA was $33.1 million, or $0.46 for diluted
net income per share attributable to SINA's ordinary shareholders.
Non-GAAP net income attributable to SINA was $28.9 million, or $0.40 for
non-GAAP diluted net income per share attributable to SINA's ordinary
shareholders.
First Quarter 2019 Financial Results
For the first quarter of 2019, SINA reported net revenues of $475.1 million, an increase of 8% compared to $440.8 million for the same period last year. Non-GAAP net revenues for the first quarter of 2019 were $472.5 million, an increase of 8% compared to $438.1 million for the same period last year.
Advertising revenues for the first quarter of 2019 were $388.0 million, an increase of 6% compared to $367.1 million for the same period last year, primarily driven by an increase of $38.2 million, or 13% growth in Weibo advertising and marketing revenues and partially offset by a decrease of portal advertising revenues.
Non-advertising revenues for the first quarter of 2019 were $87.1 million, an increase of 18% compared to $73.7 million for the same period last year. Non-GAAP non-advertising revenues for the first quarter of 2019 were $84.5 million, an increase of 19% compared to $71.1 million for the same period last year. The year-over-year growth in non-advertising revenues was mainly attributable to the revenues derived from Weibo's live streaming business acquired in the fourth quarter of 2018 and increased revenues generated from SINA fin-tech businesses.
Gross margin for the first quarter of 2019 was 76%, compared to 75% for the same period last year. Advertising gross margin for the first quarter of 2019 was 78%, compared to 77% for the same period last year. Non-advertising gross margin for the first quarter of 2019 was 64%, compared to 65% for the same period last year.
Operating expenses for the first quarter of 2019 totaled $272.7 million, compared to $258.8 million for the same period last year. Non-GAAP operating expenses for the first quarter of 2019 totaled $245.3 million, compared to $237.3 million for the same period last year.
Income from operations for the first quarter of 2019 was $86.9 million, compared to $73.3 million for the same period last year. Operating margin was 18%, compared to 17% for the same period last year. Non-GAAP income from operations for the first quarter of 2019 was $114.2 million, compared to $94.6 million for the same period last year. Non-GAAP operating margin was 24%, compared to 22% for the same period last year.
Non-operating income for the first quarter of 2019 was $77.7 million, compared to $22.6 million for the same period last year. Non-operating income for the first quarter of 2019 included (i) an $80.8 million net gain on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measure; (ii) a $13.1 million net interest and other income; and (iii) a $16.3 million net loss from equity method investments, which is reported one quarter in arrears. Non-operating income for the first quarter of 2018 mainly included (i) a $17.1 million net interest and other income; and (ii) a $7.2 million net gain on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measure.
Income tax expenses for the first quarter of 2019 were $65.2 million, compared to $18.8 million for the same period last year, largely attributable to the deferred tax charges recognized from the fair value changes of investments.
Net income attributable to SINA's ordinary shareholders for the first quarter of 2019 was $33.1 million, compared to $28.7 million for the same period last year. Diluted net income per share attributable to SINA's ordinary shareholders for the first quarter of 2019 was $0.46, compared to $0.38 for the same period last year. Non-GAAP net income attributable to SINA's ordinary shareholders for the first quarter of 2019 was $28.9 million, compared to $35.2 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA's ordinary shareholders for the first quarter of 2019 was $0.40, compared to $0.47 for the same period last year.
As of March 31, 2019, SINA's cash, cash equivalents and short-term investments totaled $2.1 billion, compared to $2.3 billion as of December 31, 2018. The decrease of SINA's cash, cash equivalents and short-term investments mainly resulted from continued investment activities. For the first quarter of 2019, net cash provided by operating activities was $93.5 million, capital expenditures totaled $10.0 million, and depreciation and amortization expenses amounted to $11.1 million.
Non-GAAP Measures
This release contains the following non-GAAP financial measures: non-GAAP net revenues, non-GAAP non-advertising revenues, non-GAAP advertising and non-advertising gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income attributable to SINA's ordinary shareholders and non-GAAP diluted net income per share attributable to SINA's ordinary shareholders. 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 may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.
The Company's non-GAAP financial measures exclude recognition of deferred revenues related to the license granted to Leju, stock-based compensation, amortization of intangible assets, goodwill and acquired intangibles impairment, adjustment for non-GAAP to GAAP reconciling items on the share of equity method investments, gain (loss) on sale of investment, deemed disposal, fair value changes and impairment on investment, and income tax effects of above non-GAAP to GAAP reconciling items and adjustment for non-GAAP to GAAP reconciling items for the income attributable to non-controlling interests and amortization of convertible debt issuance cost. 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 business operations 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, gain/loss 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. Management compensates for these limitations by also considering the Company's financial results prepared in accordance with U.S. GAAP. Reconciliations of the Company's non-GAAP measures to the nearest comparable GAAP measures are set forth in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."
Conference Call
SINA will host a conference call from 8:10 a.m. - 8:40 a.m. Eastern Time on May 23, 2019 (or 8:10 p.m. - 8:40 p.m. Beijing Time on May 23, 2019) 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.sina.com. The conference call can be accessed as follows:
US:
+1 845 675 0438
Hong Kong:
+852 3018 6776
China:
400 120 0654
International:
+65 6713 5440
Passcode for all regions: 3264429
A replay of the conference call will be available through morning Eastern Time May 31, 2019. The dial-in number is +61 2 9003 4211. The passcode for the replay is 3264429.
About SINA
SINA is a leading online media company serving China and the global Chinese communities. Its digital media network of SINA.com (portal), SINA mobile (mobile portal and mobile apps) and Weibo (social media) enables internet users to access professional media and user generated content in multi-media formats from personal computers and mobile devices and share their interests with friends and acquaintances.
SINA.com offers distinct and targeted professional content on each of its region-specific websites and a full range of complementary offerings. SINA mobile provides news information, professional and entertainment content customized for mobile users through mobile applications and mobile portal site SINA.cn.
Weibo is a leading social media platform for people to create, distribute and discover content. Based on an open platform architecture, Weibo provides unprecedented and simple way for people and organizations to publicly express themselves in real time, interact with others on a massive global platform and stay connected with the world.
Through these properties and other product lines, SINA offer an array of online media and social media services to its users to create a rich canvas for businesses and advertisers to effectively connect and engage with their targeted audiences.
Safe Harbor Statement
This press release contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described, without limitation, in quotations from management in this press release). SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, 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. SINA assumes no obligation to update the forward-looking statements in this press release and elsewhere. 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 failure to meet internal or external expectations of future performance given the rapidly evolving markets; condition of the global financial and credit market; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly operating results; the Company's reliance on online advertising sales and value-added services for a majority of its revenues; failure to successfully develop, introduce, drive adoption of or monetize new features and products, including portal, Weibo and fin-tech products; failure to enter and develop the small and medium enterprise market by the Company or through cooperation with other parties, such as Alibaba; failure to successfully integrate acquired businesses; risks associated with the Company's investments, including adverse impacts on our financial results from equity pick-up, fair value changes and impairment; and failure to compete successfully against new entrants and established industry competitors. Further information regarding these and other risks is included in SINA's 2018 annual reports on Form 20-F and other filings with the Securities and Exchange Commission.
Contact:
Investor Relations
SINA Corporation
Phone: +86 10 5898 3336
Email: ir@staff.sina.com.cn
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollars in thousands, except per share data)
Three months ended
March 31,
March 31,
December 31,
2019 2018 2018
Net revenues:
Advertising $388,025 $367,081 $484,307
Non-advertising 87,114 73,671 88,707
475,139 440,752 573,014
Cost of revenues(1):
Advertising 84,379 83,115 85,048
Non-advertising 31,144 25,592 37,997
115,523 108,707 123,045
Gross profit 359,616 332,045 449,969
Operating expenses:
Sales and marketing (1) 145,478 139,687 191,208
Product development (1) 94,049 85,137 85,383
General and administrative (1) 33,160 33,932 30,633
Goodwill and acquired intangibles impairment - 12,691
272,687 258,756 319,915
Income from operations 86,929 73,289 130,054
Non-operating income (loss):
Loss from equity method investments (16,253) (1,772) (4,731)
Gain (loss) on sale of investments, fair value changes and 80,806 7,226 (22,960)
impairment on investments, net
Interest and other income, net 13,102 17,098 15,090
77,655 22,552 (12,601)
Income before income taxes 164,584 95,841 117,453
Income tax expense (65,235) (18,750) (14,347)
Net income 99,349 77,091 103,106
Less: Net income attributable to non-controlling interests 66,266 48,397 86,729
Net income attributable to SINA's ordinary shareholders $33,083 $28,694 $16,377
Basic net income per share $0.48 $0.40 $0.24
Diluted net income per share (2) $0.46 $0.38 $0.22
Shares used in computing basic net income per share 69,461 71,440 69,235
Shares used in computing diluted net income per share 69,759 74,036 69,666
(1)Stock-based compensation in each category:
$2,536 $2,541 $922
Cost of revenues
5,620 4,880 3,174
Sales and marketing
9,654 7,487 4,403
Product development
10,978 7,408 8,834
General and administrative
(2)Net income attributable to SINA's ordinary shareholders is adjusted for diluted shares issued by our subsidiary and equity method investments.
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
March 31,
December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $1,404,548 $1,545,800
Short-term investments 666,244 799,534
Restricted cash 148,774 97,032
Accounts receivable, net 601,329 527,897
Financing receivables, net (1) 101,151
Prepaid expenses and other current assets 560,800 362,435
Subtotal 3,482,846 3,332,698
Property and equipment, net 267,801 262,846
Operating lease right-of-use assets, net
(2) 35,539
Goodwill and intangible assets, net 325,322 319,575
Long-term investments 2,122,667 1,889,843
Other assets 160,616 81,127
Total assets $6,394,791 $5,886,089
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $198,159 $172,562
Amount due to customers 116,634 97,032
Accrued expenses and other current liabilities 632,350 540,807
Short-term bank loan 85,420 78,229
Deferred revenues 175,116 139,306
Short-term operating lease liabilities (2) 13,213
Funding debts (1) 24,969
Income taxes payable 87,432 115,725
Subtotal 1,333,293 1,143,661
Convertible debt 885,158 884,123
Long-term funding debts(1) 75,841
Long-term deferred revenues 41,043 43,652
Long-term operating lease liabilities(2) 23,649
Other long-term liabilities 93,190 51,781
Total liabilities 2,452,174 2,123,217
Shareholders' equity
SINA shareholders' equity 2,794,890 2,717,791
Non-controlling interests 1,147,727 1,045,081
Total shareholders' equity 3,942,617 3,762,872
Total liabilities and shareholders' equity $6,394,791 $5,886,089
(1) In 2019, the Company set up few trusts, which were administered by third-party trust company
to invest in consumer loans to the individual borrowers recommended by the Company. The trusts
are considered as variable interest entities under ASC 810. Accordingly, the financing
receivables due from the borrowers and the loan payables to the third party investors of the
trust units are recorded on the Company's consolidated balance sheet as financing receivables
and funding debts, respectively.
(2) The Company adopted the new leasing guidance (ASU 2016-2) started from January 1, 2019,
which requires that a lessee recognize the assets and liabilities that arise from operating
leases. The Company recognized a right-of-use asset and a liability relating to lease payments
(the Lease Liability) in the statements of financial position for lease contracts having terms
beyond 12 months period.
SINA CORPORATION
UNAUDITED ADDITIONAL INFORMATION
(U.S. Dollars in thousands)
Three months ended
March 31,
December 31,
2019 2018 2018
Net revenues
Portal:
Portal Advertising $46,896 $64,132 $67,377
Other 34,916 26,774 27,300
81,812 90,906 94,677
Subtotal
Weibo:
Advertising and
marketing 341,141 302,949 417,016
Weibo VAS 58,036 46,934 64,859
399,177 349,883 481,875
Subtotal
Elimination (5,850) (37) (3,538)
$475,139 $440,752 $573,014
Cost of revenues
Portal:
Portal Advertising $21,660 $29,373 $29,180
Other 16,884 16,469 14,377
38,544 45,842 43,557
Subtotal
Weibo 82,817 62,902 82,940
Elimination (5,838) (37) (3,452)
$115,523 $108,707 $123,045
Gross margin
53% 50% 54%
Portal
79% 82% 83%
Weibo
76% 75% 79%
SINA CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(U.S. Dollars in thousands, except per share data)
Three months ended
---
March 31, 2019
March 31, 2018
December 31, 2018
Non-GAAP
Non-GAAP
Non-GAAP
Actual
Adjustments
Results
Actual
Adjustments
Results
Actual
Adjustments
Results
Advertising revenues $388,025 $388,025 $367,081 $367,081 $484,307 $484,307
Non-advertising revenues 87,114 (2,609) (a) 84,505 73,671 (2,609) (a) 71,062 88,707 (2,609) (a) 86,098
Net revenues $475,139 $(2,609) $472,530 $440,752 $(2,609) $438,143 $573,014 $(2,609) $570,405
(2,609) (a) (2,609) (a) (2,609) (a)
2,536 (b) 2,541 (b) 922 (b)
Gross profit $359,616 $(73) $359,543 $332,045 $(68) $331,977 $449,969 $(1,687) $448,282
(16,411) (b)
(26,252) (b) (19,775) (b) (2,177) (c)
(1,124) (c) (1,635) (c) (12,691) (d)
Operating expenses $272,687 $(27,376) $245,311 $258,756 $(21,410) $237,346 $319,915 $(31,279) $288,636
(2,609) (a)
(2,609) (a) (2,609) (a) 17,333 (b)
28,788 (b) 22,316 (b) 2,177 (c)
1,124 (c) 1,635 (c) 12,691 (d)
Income from operations $86,929 $27,303 $114,232 $73,289 $21,342 $94,631 $130,054 $29,592 $159,646
(2,609) (a)
(2,609) (a) (2,609) (a) 17,333 (b)
28,788 (b) 22,316 (b) 2,177 (c)
1,124 (c) 1,635 (c) 12,691 (d)
15,307 (e) (451) (e) 4,797 (e)
(80,806) (f) (7,226) (f) 22,960 (f)
(7,436) (g) (8,183) (g) (14,929) (g)
1,035 (h) 1,035 (h) 1,035 (h)
40,367 (i) 21 (i) (2,138) (i)
Net income attributable to SINA's ordinary shareholders $33,083 $(4,230) $28,853 $28,694 $6,538 $35,232 $16,377 $41,317 $57,694
Diluted net income per share * $0.46 $0.40 $0.38 $0.47 $0.22 $0.80
Shares used in computing diluted net income per share 69,759 69,759 74,036 74,036 69,666 960 (j) 70,626
Gross margin - advertising 78% 1% 79% 77% 1% 78% 82% 1% 83%
Gross margin - non-advertising 64% -1% 63% 65% -1% 64% 57% -1% 56%
Operating margin 18% 6% 24% 17% 5% 22% 23% 5% 28%
(a) To exclude the recognition of deferred revenue related to the license granted to Leju.
(b) To exclude stock-based compensation.
(c) To adjust amortization of intangible assets.
(d) To exclude goodwill and acquired intangibles impairment.
(e) To exclude non-GAAP to GAAP reconciling items on the share of e
quity method investments, net of share of amortization of intangibles not on their books.
(f) To exclude (gain) loss on sale of investments, (gain) loss on deemed disposal, fair value changes and impairment on investments, net.
(g) To exclude non-GAAP to GAAP reconciling items for the income attributable to non-controlling interests.
(h) To exclude the amortization of convertible debt issuance cost.
(i) To exclude the provision (benefit) for income tax related to item (c), (d) and (f). Other non-GAAP to GAAP reconciling items have no income tax effect.**
(j) To adjust the number of shares for dilution resulted from convertible debt and unvested equity granted.
*
Net income attributable to SINA's ordinary shareholders is adjusted for diluted shares issued by our subsidiary and equity method investments.
** The Company considered the tax implication arising from the reconciliation items, and those 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.
UNAUDITED RECONCILIATION OF SINA'S SHARE OF EQUITY INVESTMENTS' NON-GAAP TO GAAP RESULTS***
Three months ended
---
March 31, 2019
March 31, 2018
December 31, 2018
Actual
Adjustments Non-GAAP Results
Actual
Adjustments Non-GAAP Results
Actual
Adjustments Non-GAAP Results
To exclude stock-based compensation $287 $584 $350
To exclude amortization of intangible
assets resulting from business acquisitions 1,062 1,123 1,062
To exclude loss on disposal and 6,713 1,669
impairment on investments
To exclude (gain) loss resulting from the 7,915 (3,339) 4,062
fa
ir value changes in investments, net
To exclude tax impacts related to (248) (178) (248)
amortization of intangible assets
Earning (loss) from equity method $(16,675) $15,729 $(946) $(2,082) $(141) $(2,223) $(5,160) $5,226 $66
investments, net
Share of amortization of equity investments' intangibles not on their books 358 (358) 224 (224) 367 (367)
Share of tax impacts related to amortization of equity investments' intangibles not on their books 64 (64) 86 (86) 62 (62)
$(16,253) $15,307 $(946) $(1,772) $(451) $(2,223) $(4,731) $4,797 $66
*** Earning (loss) from equity method investments is recorded one quarter in arrears.
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SOURCE SINA Corporation
