SINA Reports Second Quarter 2019 Unaudited Financial Results
BEIJING, Aug. 19, 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 second quarter ended June 30, 2019.
Second Quarter 2019 Highlights
-- Net revenues decreased 1% year-over-year to $533.1 million. Non-GAAP net
revenues decreased 1% year-over-year to $530.4 million, representing an
increase of 5% on a constant currency basis( [1]).
-- Advertising revenues decreased 5% year-over-year to $433.6 million.
-- Non-advertising revenues increased 19% year-over-year to $99.4 million.
Non-GAAP non-advertising revenues increased 20% year-over-year to $96.8
million.
-- Net income attributable to SINA was $51.4 million, or $0.73 for diluted
net income per share attributable to SINA's ordinary shareholders.
Non-GAAP net income attributable to SINA was $54.0 million, or $0.76 for
non-GAAP diluted net income per share attributable to SINA's ordinary
shareholders.
[1] On a constant currency (non-GAAP) basis,
we assume that the exchange rate in the second
quarter of 2019 had been the same as it was in
the second quarter of 2018, or
RMB6.40=US$1.00.
Second Quarter 2019 Financial Results
For the second quarter of 2019, SINA reported net revenues of $533.1 million, a decrease of 1% compared to $537.4 million for the same period last year. Non-GAAP net revenues for the second quarter of 2019 were $530.4 million, a decrease of 1% compared to $534.8 million for the same period last year.
Advertising revenues for the second quarter of 2019 were $433.6 million, a decrease of 5% compared to $454.1 million for the same period last year, primarily due to a decline in portal advertising revenues and negative currency translation impact.
Non-advertising revenues for the second quarter of 2019 were $99.4 million, an increase of 19% compared to $83.3 million for the same period last year. Non-GAAP non-advertising revenues for the second quarter of 2019 were $96.8 million, an increase of 20% compared to $80.7 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 second quarter of 2019 was 77%, compared to 80% for the same period last year. Advertising gross margin for the second quarter of 2019 was 80%, compared to 82% for the same period last year. Non-advertising gross margin for the second quarter of 2019 was 61%, down from 69% for the same period last year, resulted from the relatively lower gross margin of the acquired live streaming business of Weibo.
Operating expenses for the second quarter of 2019 totaled $282.7 million, compared to $294.7 million for the same period last year. Non-GAAP operating expenses for the second quarter of 2019 totaled $256.0 million, compared to $272.1 million for the same period last year. The year-over-year decrease in operating expenses was primarily attributable to a reduction in sales and marketing expenses through cost efficiency achieved in channel marketing campaigns.
Income from operations for the second quarter of 2019 was $126.0 million, compared to $136.2 million for the same period last year. Operating margin was 24%, compared to 25% for the same period last year. Non-GAAP income from operations for the second quarter of 2019 was $152.8 million, compared to $159.1 million for the same period last year. Non-GAAP operating margin was 29%, compared to 30% for the same period last year.
Non-operating income for the second quarter of 2019 was $19.7 million, compared to $1.2 million for the same period last year. Non-operating income for the second quarter of 2019 included (i) a $15.7 million net interest and other income; (ii) a $4.3 million net earning from equity method investments, which is reported one quarter in arrears; and (iii) a $0.3 million net loss on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measures. Non-operating income for the second quarter of 2018 included (i) a $20.1 million net interest and other income; (ii) a $16.4 million net loss on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measures; and (iii) a $2.5 million net loss from equity method investments, which is reported one quarter in arrears.
Income tax expenses for the second quarter of 2019 were $46.7 million, compared to $27.9 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 second quarter of 2019 was $51.4 million, compared to $35.1 million for the same period last year. Diluted net income per share attributable to SINA's ordinary shareholders for the second quarter of 2019 was $0.73, compared to $0.47 for the same period last year. Non-GAAP net income attributable to SINA's ordinary shareholders for the second quarter of 2019 was $54.0 million, compared to $66.5 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA's ordinary shareholders for the second quarter of 2019 was $0.76, compared to $0.89 for the same period last year.
As of June 30, 2019, SINA's cash, cash equivalents and short-term investments totaled $2.0 billion, compared to $2.3 billion as of December 31, 2018. For the second quarter of 2019, net cash provided by operating activities was $128.6 million, capital expenditures totaled $5.0 million, and depreciation and amortization expenses amounted to $11.6 million.
Non-GAAP Measures
This release contains the following non-GAAP financial measures: non-GAAP net revenues, non-GAAP advertising 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, 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, adjustment for non-GAAP to GAAP reconciling items for the income attributable to non-controlling interests, amortization of convertible debt issuance cost, and income tax effects of above non-GAAP to GAAP reconciling items. 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 August 19, 2019 (or 8:10 p.m. - 8:40 p.m. Beijing Time on August 19, 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 0437
Hong Kong: +852 3018 6771
China:
400 620 8038
International:
+65 6713 5090
Passcode for all regions: 8595969
A replay of the conference call will be available through morning Eastern Time August 27, 2019. The dial-in number is +61 2 8199 0299. The passcode for the replay is 8595969.
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
Six months ended
June 30,
March 31,
June 30,
2019 2018 2019 2019 2018
Net revenues:
Advertising $433,633 $454,091 $388,025 $821,658 $821,172
Non-advertising 99,421 83,269 87,114 186,535 156,940
533,054 537,360 475,139 1,008,193 978,112
Cost of revenues(1):
Advertising 85,589 80,583 84,379 169,968 163,698
Non-advertising 38,722 25,890 31,144 69,866 51,482
124,311 106,473 115,523 239,834 215,180
Gross profit 408,743 430,887 359,616 768,359 762,932
Operating expenses:
Sales and marketing(1) 147,721 183,589 145,478 293,199 323,276
Product development(1) 91,981 83,877 94,049 186,030 169,014
General and administrative(1) 43,016 27,242 33,160 76,176 61,174
282,718 294,708 272,687 555,405 553,464
Income from operations 126,025 136,179 86,929 212,954 209,468
Non-operating income:
Earning (loss) from equity method investments, net 4,316 (2,527) (16,253) (11,937) (4,299)
Gain (loss) on sale of investments, fair value changes and impairment (315) (16,396) 80,806 80,491 (9,170)
on investments, net
Interest and other income, net 15,744 20,116 13,102 28,846 37,214
19,745 1,193 77,655 97,400 23,745
Income before income taxes 145,770 137,372 164,584 310,354 233,213
Income tax expenses (46,720) (27,858) (65,235) (111,955) (46,608)
Net income 99,050 109,514 99,349 198,399 186,605
Less: Net income attributable to non-controlling interests 47,626 74,462 66,266 113,892 122,859
Net income attributable to SINA's ordinary shareholders $51,424 $35,052 $33,083 $84,507 $63,746
===
Basic net income per share $0.74 $0.49 $0.48 $1.21 $0.89
===
Diluted net income per share(2) $0.73 $0.47 $0.46 $1.20 $0.85
===
Shares used in computing basic net income per share 69,709 71,210 69,461 69,586 71,324
Shares used in computing diluted net income per share 69,944 73,553 69,759 69,852 73,793
(1) Stock-based compensation in each category:
Cost of revenues $2,620 $2,890 $2,536 $5,156 $5,431
Sales and marketing 6,031 6,474 5,620 11,651 11,354
Product development 8,415 7,735 9,654 18,069 15,222
General and administrative 11,200 6,915 10,978 22,178 14,323
(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)
June 30,
December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $1,432,065 $1,545,800
Short-term investments 599,048 799,534
Restricted cash 117,065 97,032
Accounts receivable, net 613,796 527,897
Financing receivables, net(1) 216,090
Prepaid expenses and other current assets 570,784 362,435
Subtotal 3,548,848 3,332,698
Property and equipment, net 256,837 262,846
Operating lease right-of-use assets, net(2) 32,820 -
Goodwill and intangible assets, net 315,867 319,575
Long-term investments 2,300,967 1,889,843
Other assets 67,708 81,127
Total assets $6,523,047 $5,886,089
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $180,150 $172,562
Amount due to customers 89,445 97,032
Accrued expenses and other current liabilities 665,302 540,807
Short-term bank loan 70,838 78,229
Deferred revenues 153,609 139,306
Short-term operating lease liabilities(2) 14,675
Funding debts(1) 137,056
Income taxes payable 96,289 115,725
Subtotal 1,407,364 1,143,661
Convertible debt 886,195 884,123
Long-term funding debts(1) 43,688 -
Long-term deferred revenues 38,435 43,652
Long-term operating lease liabilities(2) 20,026 -
Other long-term liabilities 109,741 51,781
Total liabilities 2,505,449 2,123,217
Shareholders' equity
SINA shareholders' equity 2,835,718 2,717,791
Non-controlling interests 1,181,880 1,045,081
Total shareholders' equity 4,017,598 3,762,872
Total liabilities and shareholders' equity $6,523,047 $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
Six months ended
June 30,
March 31,
June 30,
2019 2018 2019 2019 2018
Net revenues
Portal:
Portal Advertising $62,973 $84,173 $46,896 $109,869 $148,305
Other 43,740 30,631 34,916 78,656 57,405
Subtotal 106,713 114,804 81,812 188,525 205,710
Weibo:
Advertising and marketing 370,660 369,942 341,141 711,801 672,891
Weibo VAS 61,176 56,647 58,036 119,212 103,581
Subtotal 431,836 426,589 399,177 831,013 776,472
Elimination (5,495) (4,033) (5,850) (11,345) (4,070)
$533,054 $537,360 $475,139 $1,008,193 $978,112
Cost of revenues
Portal:
Portal Advertising $25,011 $28,546 $21,660 $46,671 $57,919
Other 22,823 20,146 16,884 39,707 36,615
Subtotal 47,834 48,692 38,544 86,378 94,534
Weibo 81,972 61,790 82,817 164,789 124,692
Elimination (5,495) (4,009) (5,838) (11,333) (4,046)
$124,311 $106,473 $115,523 $239,834 $215,180
Gross margin
Portal 55% 58% 53% 54% 54%
Weibo 81% 86% 79% 80% 84%
77% 80% 76% 76% 78%
SINA CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(U.S. Dollars in thousands, except per share data)
Three months ended
---
June 30, 2019
June 30, 2018
March 31, 2019
Non-GAAP
Non-GAAP
Non-GAAP
Actual
Adjustments
Results
Actual
Adjustments
Results
Actual
Adjustments
Results
Advertising revenues $433,633 $433,633 $454,091 $454,091 $388,025 $388,025
Non-advertising revenues 99,421 (2,609) (a) 96,812 83,269 (2,609) (a) 80,660 87,114 (2,609) (a) 84,505
Net revenues $533,054 $(2,609) $530,445 $537,360 $(2,609) $534,751 $475,139 $(2,609) $472,530
===
(2,609) (a) (2,609) (a) (2,609) (a)
2,620 (b) 2,890 (b) 2,536 (b)
Gross profit $408,743 $11 $408,754 $430,887 $281 $431,168 $359,616 $(73) $359,543
===
(25,646) (b) (21,124) (b) (26,252) (b)
(1,107) (c) (1,523) (c) (1,124) (c)
Operating expenses $282,718 $(26,753) $255,965 $294,708 $(22,647) $272,061 $272,687 $(27,376) $245,311
===
(2,609) (a) (2,609) (a) (2,609) (a)
28,266 (b) 24,014 (b) 28,788 (b)
1,107 (c) 1,523 (c) 1,124 (c)
Income from operations $126,025 $26,764 $152,789 $136,179 $22,928 $159,107 $86,929 $27,303 $114,232
===
(2,609) (a) (2,609) (a) (2,609) (a)
28,266 (b) 24,014 (b) 28,788 (b)
1,107 (c) 1,523 (c) 1,124 (c)
(4,881) (d) 40 (d) 15,307 (d)
315 (e) 16,396 (e) (80,806) (e)
(39,281) (f) (8,849) (f) (7,436) (f)
1,037 (g) 1,035 (g) 1,035 (g)
18,605 (h) (85) (h) 40,367 (h)
Net income attributable to SINA's ordinary shareholders $51,424 $2,559 $53,983 $35,052 $31,465 $66,517 $33,083 $(4,230) $28,853
===
Diluted net income per share * $0.73 $0.76 $0.47 $0.89 $0.46 $0.40
===
Shares used in computing diluted net income per share 69,944 69,944 73,553 73,553 69,759 69,759
Gross margin - advertising 80% 1% 81% 82% 1% 83% 78% 1% 79%
Gross margin - non-advertising 61% -1% 60% 69% -1% 68% 64% -1% 63%
Operating margin 24% 5% 29% 25% 5% 30% 18% 6% 24%
Six months ended
June 30, 2019
June 30, 2018
Non-GAAP
Non-GAAP
Actual
Adjustments
Results
Actual
Adjustments
Results
Advertising revenues $821,658 $821,658 $821,172 $821,172
Non-advertising revenues 186,535 (5,218) (a) 181,317 156,940 (5,218) (a) 151,722
Net revenues $1,008,193 $(5,218) $1,002,975 $978,112 $(5,218) $972,894
(5,218) (a) (5,218) (a)
5,156 (b) 5,431 (b)
Gross profit $768,359 $(62) $768,297 $762,932 $213 $763,145
(51,898) (b) (40,899) (b)
(2,231) (c) (3,158) (c)
Operating expenses $555,405 $(54,129) $501,276 $553,464 $(44,057) $509,407
(5,218) (a) (5,218) (a)
57,054 (b) 46,330 (b)
2,231 (c) 3,158 (c)
Income from operations $212,954 $54,067 $267,021 $209,468 $44,270 $253,738
(5,218) (a) (5,218) (a)
57,054 (b) 46,330 (b)
2,231 (c) 3,158 (c)
10,426 (d) (411) (d)
(80,491) (e) 9,170 (e)
(46,717) (f) (17,032) (f)
2,072 (g) 2,070 (g)
58,972 (h) (64) (h)
Net income attributable to SINA's ordinary shareholders $84,507 $(1,671) $82,836 $63,746 $38,003 $101,749
Diluted net income per share * $1.20 $1.16 $0.85 $1.35
Shares used in computing diluted net income per share 69,852 69,852 73,793 73,793
Gross margin - advertising 79% 1% 80% 80% 1% 81%
Gross margin - non-advertising 63% -2% 61% 67% -1% 66%
Operating margin 21% 6% 27% 21% 5% 26%
(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 non-GAAP to GAAP reconciling items on the share of equity method investments, net of share of amortization of intangibles not on their books.
(e) To exclude (gain) loss on sale of investments, (gain) loss on deemed disposal, fair value changes and impairment on investments, net.
(f) To exclude non-GAAP to GAAP reconciling items for the income attributable to non-controlling interests.
(g) To exclude the amortization of convertible debt issuance cost.
(h) To exclude the provision (benefit) for income tax related to item (c) and (e). Other non-GAAP to GAAP reconciling items have no income tax effect.**
*
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
---
June 30, 2019
June 30, 2018
March 31, 2019
Actual
Adjustments
Non-GAAP Results
Actual
Adjustments
Non-GAAP Results
Actual
Adjustments
Non-GAAP Results
To exclude stock-based compensation $178 $833 $287
To exclude amortization of intangible assets resulting
from business acquisitions 1,048 1,115 1,062
To exclude loss on disposal and impairment on investments 90 75 6,713
To exclude (gain) loss resulting from the fair value changes in
investments, net (5,525) (1,313) 7,915
To exclude tax impacts related to amortization of intangible assets (244) (253) (248)
Earning (loss) from equity method investments, net $3,888 $(4,453) $(565) $(2,944) $457 $(2,487) $(16,675) $15,729 $(946)
Share of amortization of equity investments' intangibles
not on their books 365 (365) 351 (351) 358 (358)
Share of tax impacts related to amortization of
equity investments' intangibles not on their books 63 (63) 66 (66) 64 (64)
$4,316 $(4,881) $(565) $(2,527) $40 $(2,487) $(16,253) $15,307 $(946)
Six months ended
June 30, 2019
June 30, 2018
Non-GAAP
Non-GAAP
Actual
Adjustments
Results
Actual
Adjustments
Results
To exclude stock-based compensation $465 $1,417
To exclude amortization of intangible assets resulting
from business acquisitions 2,110 2,238
To exclude loss on disposal and impairment on investments, net 6,803 1,744
To exclude (gain) loss resulting from the fair value changes in
investments, net 2,390 (4,652)
To exclude tax impacts related to amortization of intangible assets (492) (431)
Loss from equity method investments, net $(12,787) $11,276 $(1,511) $(5,026) $316 $(4,710)
Share of amortization of equity investments' intangibles
not on their books 723 (723) 575 (575)
Share of tax impacts related to amortization of
equity investments' intangibles not on their books 127 (127) 152 (152)
$(11,937) $10,426 $(1,511) $(4,299) $(411) $(4,710)
* Earning (loss) from equity method investments is recorded one quarter in arrears.
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SOURCE SINA Corporation
