Weibo Reports Third Quarter 2019 Unaudited Financial Results

News provided by

Nov 14, 2019, 04:30 ET

BEIJING, Nov. 14, 2019 /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, 2019.

"We are pleased with the sustained momentum in our user and engagement growth," said Gaofei Wang, CEO of Weibo. "Leveraging stronger network effect, ongoing product innovation and robust content ecosystem, Weibo continued to reinforce its leadership as a social media platform and further explore opportunities to deliver value to our community. On monetization, despite market competition and macro headwinds, we continued to tap into customers' social ad wallet with differentiated ad products and KOL's rising influence."

Third Quarter 2019 Highlights

Net revenues increased 2% year-over-year to $467.8 million, representing an increase of 6% on a constant currency basis ^[1].
Advertising and marketing revenues increased 1% year-over-year to $412.5 million.
Value-added service ("VAS") revenues increased 9% year-over-year to $55.3 million.
Net income attributable to Weibo was $146.2 million, compared to $165.3 for the same period last year, and diluted net income per share was $0.64, compared to $0.73 for the same period last year.
Non-GAAP net income attributable to Weibo was $176.1 million, compared to $171.8 for the same period last year, and non-GAAP diluted net income per share was $0.77, compared to $0.75 for the same period last year.
Monthly active users ("MAUs") were 497 million in September 2019, a net addition of approximately 51 million users year-over-year. Mobile MAUs represented approximately 94% of MAUs.
Average daily active users ("DAUs") were 216 million in September 2019, a net addition of approximately 21 million users year-over-year.

^[1] On a constant currency (non-GAAP) basis, we assume that the exchange rate in the third quarter of 2019 had been the same as it was in the third quarter of 2018, or RMB 6.80=US$1.00.

Third Quarter 2019 Financial Results

For the third quarter of 2019, Weibo's total net revenues were $467.8 million, an increase of 2% compared to $460.2 million for the same period last year.

Advertising and marketing revenues for the third quarter of 2019 were $412.5million, an increase of 1% compared to $409.3 million for the same period last year. Advertising and marketing revenues from key accounts ("KAs") and small & medium-sized enterprises ("SMEs") were $393.3 million, representing an increase of 3% compared to $380.7 million for the same period last year.

VAS revenues for the third quarter of 2019 were $55.3 million, an increase of 9% year-over-year compared to $50.9 million for the same period last year. The increase was mainly attributable to the revenues derived from the live streaming business acquired in the fourth quarter of 2018.

Costs and expenses for the third quarter of 2019 totaled $295.2 million, compared to $298.2 million for the same period last year. Non-GAAP costs and expenses were $277.5 million, compared to $272.2 million for the same period last year.

Income from operations for the third quarter of 2019 was $172.5 million, compared to $162.0 million for the same period last year. Non-GAAP income from operations was $190.2 million, compared to $188.0 million for the same period last year.

Non-operating income for the third quarter of 2019 was $5.3 million, compared to an income of $42.9 million for the same period last year. The decrease was mainly due to the recognition of a $41.9 million investment related fair value mark to market gain in the third quarter of 2018.

Income tax expenses for the third quarter were $31.4 million, compared to $37.9 million for the same period last year.

Net income attributable to Weibo for the third quarter of 2019 was $146.2 million, compared to $165.3 million for the same period last year. Diluted net income per share attributable to Weibo for the third quarter of 2019 was $0.64, compared to $0.73 for the same period last year. Non-GAAP net income attributable to Weibo for the third quarter of 2019 was $176.1 million, compared to $171.8 million for the same period last year. Non-GAAP diluted net income per share attributable to Weibo for the third quarter of 2019 was $0.77, compared to $0.75 for the same period last year.

As of September 30, 2019, Weibo's cash, cash equivalents and short-term investments totaled $2.37 billion. For the third quarter of 2019, cash provided by operating activities was $164.8 million, capital expenditures totaled $4.4 million, and depreciation and amortization expenses amounted to $6.3 million.

Annual General Meeting

On November 12, 2019, the Company held its annual general meeting of shareholders, where the shareholders re-elected each of Mr. Daniel Zhang and Mr. Pehong Chen as a director of Weibo.

Business Outlook

For the fourth quarter of 2019, Weibo estimates its net revenues to increase 0% year-over-year to 3% year over year on a constant currency basis. This forecast reflects Weibo's current and preliminary view, which is subject to change.

Conference Call

Weibo's management team will host a conference call from 6AM – 7AM Eastern Time on November 14, 2019 (or 7PM – 8PM Beijing Time on November 14, 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.weibo.com.

The conference call can be accessed as follows:
US Toll Free: +1 866-519-4004
Hong Kong Toll Free: 800-906-601
Mainland China: 400-620-8038
International: +65 6713-5090
Passcode for all regions: 3286074

A replay of the conference call will be available from 22:00 China Standard Time on November 14, 2019 to 20:59 China Standard Time on November 22, 2019. The dial-in number is +61 2-8199-0299. The passcode for the replay is 3286074.

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, goodwill and acquired intangibles impairment, net results of impairment on, gain/loss on sale of and fair value change of investments, non-GAAP to GAAP reconciling items on the share of equity method investments, non-GAAP to GAAP reconciling items for the income/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 and senior notes 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. Weibo 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. Designed with a "mobile first" philosophy, Weibo displays content in a simple information feed format and offers native advertisement that conform to the information feed on our platform. To support the mobile format, we have developed and continuously refining our social interest graph recommendation engine, which enables our 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 5898-3336
Email: [email protected]

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,

2019

2018

2019

2018

Net revenues:

Advertising and marketing

$ 412,489

$ 409,273

$ 370,660

$ 1,124,290

$ 1,082,164

Value-added service

55,264

50,898

61,176

174,476

154,479

Net revenues

467,753

460,171

431,836

1,298,766

1,236,643

Costs and expenses:

Cost of revenues ⁽¹⁾

73,471

70,016

81,972

238,260

194,708

Sales and marketing ⁽¹⁾

129,411

141,059

106,405

341,967

386,899

Product development⁽¹⁾

69,036

66,222

70,368

209,257

187,358

General and administrative⁽¹⁾

23,323

10,361

21,825

62,435

30,890

Goodwill and acquired intangibles impairment

10,554

Total costs and expenses

295,241

298,212

280,570

851,919

810,409

Income from operations

172,512

161,959

151,266

446,847

426,234

Non-operating income (loss):

Impairment on, gain/loss on sale of and
fair value change of investments, net

644

31,683

(41,954)

(3,513)

28,649

Interest and other income , net

4,665

11,218

17,999

33,445

32,827

5,309

42,901

(23,955)

29,932

61,476

Income before income tax expenses

177,821

204,860

127,311

476,779

487,710

Income tax expenses

(31,362)

(37,882)

(26,073)

(78,508)

(81,327)

Net income

146,459

166,978

101,238

398,271

406,383

Less: Net income (loss) attributable to
non-controlling interests

290

1,661

(1,758)

(1,336)

1,067

Net income attributable to Weibo

$ 146,169

$ 165,317

$ 102,996

$ 399,607

$ 405,316

Basic net income per share attributable to Weibo

$ 0.65

$ 0.74

$ 0.46

$ 1.77

$ 1.81

Diluted net income per share attributable to Weibo

$ 0.64

$ 0.73

$ 0.46

$ 1.76

$ 1.79

Shares used in computing basic

net income per share attributable to Weibo

225,610

224,060

225,262

225,268

223,506

Shares used in computing diluted

net income per share attributable to Weibo

233,126

232,660

226,277

233,019

232,719

(1) Stock-based compensation in each category:

Cost of revenues

$ 1,533

$ 1,684

$ 1,118

$ 3,763

$ 4,140

Sales and marketing

2,899

3,243

2,129

7,067

8,042

Product development

7,828

7,829

6,618

20,504

18,944

General and administrative

4,637

2,598

4,269

12,592

7,490

WEIBO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

				September 30,	December 31,
				2019	2018

Assets
	Current assets:
			Cash and cash equivalents	$ 1,776,634	$ 1,234,596
			Short-term investments	593,272	591,269
			Accounts receivable, net	476,484	369,093
			Prepaid expenses and other current assets	314,589	168,821
			Amount due from SINA⁽¹⁾	350,966	105,319
			Current assets subtotal	3,511,945	2,469,098

	Property and equipment, net			43,135	45,623
	Goodwill and intangible assets, net			46,117	50,449
	Long-term investments			944,815	694,586
	Other assets⁽²⁾			55,787	14,926
	Total assets			$ 4,601,799	$ 3,274,682

Liabilities and Shareholders' Equity
	Liabilities:
		Current liabilities:
			Accounts payable	$ 131,969	$ 123,730
			Accrued expenses and other current liabilities⁽²⁾	411,955	317,437
			Deferred revenues	136,609	99,994
			Income tax payable	98,139	88,683
			Current liabilities subtotal	778,672	629,844

		Long-term liabilities:
			Convertible debt	887,230	884,123
			Senior notes	793,682	-
			Other long-term liabilities⁽²⁾	18,245	12,577
			Total liabilities	2,477,829	1,526,544

	Shareholders' equity :
		Weibo shareholders' equity		2,124,929	1,745,459
		Non-controlling interests		(959)	2,679
			Total shareholders' equity	2,123,970	1,748,138

	Total liabilities and shareholders' equity			$ 4,601,799	$ 3,274,682
				-	-
	(1) Included short-term loans to SINA of $228.1 million as of September 30, 2019 and $43.6 million as of December 31, 2018.

	(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. The adoption of new leasing guidance resulted in recognition of $10.5 million of right-of-use asset and a total of $10.8 million of leasing liability as of September 30, 2019.

WEIBO CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS

(In thousands, except per share data)

Three months ended

September 30, 2019

September 30, 2018

June 30, 2019

Non-GAAP

Actual

Adjustments

Results

Actual

Adjustments

Results

Actual

Adjustments

Results

Advertising and marketing

$ 412,489

$ 409,273

$ 370,660

Value-added service

55,264

50,898

61,176

Net revenues

$ 467,753

$ 460,171

$ 431,836

(15,354)

(a)

(16,897)

(a)

(90)

(b)

(14,134)

(a)

(825)

(b)

(10,554)

(c)

(849)

(b)

Total costs and expenses

$ 295,241

$ (17,722)

$ 277,519

$ 298,212

$ (25,998)

$ 272,214

$ 280,570

$ (14,983)

$ 265,587

15,354

(a)

16,897

(a)

(b)

14,134

(a)

825

(b)

10,554

(c)

849

(b)

Income from operations

$ 172,512

$ 17,722

$ 190,234

$ 161,959

$ 25,998

$ 187,957

$ 151,266

$ 14,983

$ 166,249

16,897

(a)

15,354

(a)

14,134

(a)

825

(b)

849

(b)

(644)

(d)

10,554

(c)

41,954

(d)

11,596

(e)

(31,683)

(d)

(2,820)

(e)

(21)

(f)

1,560

(f)

(1,588)

(f)

(122)

(g)

9,582

(g)

(127)

(g)

1,360

(h)

1,035

(h)

1,037

(h)

Net income attributable to Weibo

$ 146,169

$ 29,891

$ 176,060

$ 165,317

$ 6,492

$ 171,809

$ 102,996

$ 53,439

$ 156,435

Diluted net income per share attributable to Weibo

$ 0.64

$ 0.77

$ 0.73

$ 0.75

$ 0.46

$ 0.68

Shares used in computing diluted

net income per share attributable to Weibo

233,126

232,660

226,277

6,754

(i)

233,031

Adjusted EBITDA:

Non-GAAP net income attributable to Weibo

$ 176,060

$ 171,809

$ 156,435

Interest income,net

(16,785)

(11,733)

(15,648)

Income tax expenses

31,484

28,300

26,200

Depreciation expenses

5,503

4,437

5,891

Adjusted EBITDA

$ 196,262

$ 192,813

$ 172,878

WEIBO CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS

(In thousands, except per share data)

Nine months ended

September 30, 2019

September 30, 2018

Non-GAAP

Actual

Adjustments

Results

Actual

Adjustments

Results

Advertising and marketing

$ 1,124,290

$1,082,164

Value-added service

174,476

154,479

Net revenues

$ 1,298,766

$1,236,643

(38,616)

(a)

(43,926)

(a)

(423)

(b)

(2,534)

(b)

(10,554)

(c)

Total costs and expenses

$ 851,919

$ (46,460)

$ 805,459

$ 810,409

$ (49,593)

$ 760,816

38,616

(a)

43,926

(a)

423

(b)

2,534

(b)

10,554

(c)

Income from operations

$ 446,847

$ 46,460

$ 493,307

$ 426,234

$ 49,593

$ 475,827

43,926

(a)

38,616

(a)

2,534

(b)

423

(b)

3,513

(d)

10,554

(c)

10,025

(e)

(28,649)

(d)

(1,654)

(f)

1,719

(f)

(375)

(g)

9,499

(g)

3,432

(h)

3,105

(h)

Net income attributable to Weibo

$ 399,607

$ 61,401

$ 461,008

$ 405,316

$ 35,267

$ 440,583

Diluted net income per share attributable to Weibo

$ 1.76

$ 2.01

$ 1.79

$ 1.93

Shares used in computing diluted

net income per share attributable to Weibo

233,019

232,719

Adjusted EBITDA:

Non-GAAP net income attributable to Weibo

$ 461,008

$ 440,583

Interest income, net

(46,641)

(35,246)

Income tax expenses

78,883

71,828

Depreciation expenses

16,699

13,584

Adjusted EBITDA

$ 509,949

$ 490,749

(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 the non-GAAP to GAAP reconciling items on the share of equity method investments.

(f) To exclude non-GAAP to GAAP reconciling items for the income/loss attributable to non-controlling interests.

(g) 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.

(h) To exclude the amortization of convertible debt and senior notes issuance cost.

(i) To adjust the number of shares for dilution resulted from convertible debt which were anti-dilutive under GAAP measures.

* 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,
		2019	2018	2019	2019	2018

Net revenues
	Advertising and marketing
	Key accounts and small & medium-sized enterprises	$ 393,331	$ 380,745	$ 346,541	$ 1,064,378	$ 996,020
	Alibaba	19,158	28,528	24,119	59,912	86,144
	Subtotal	412,489	409,273	370,660	1,124,290	1,082,164

	Value-added service	55,264	50,898	61,176	174,476	154,479
		$ 467,753	$ 460,171	$ 431,836	$ 1,298,766	$ 1,236,643