Weibo Reports Third Quarter 2020 Unaudited Financial Results

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Dec 28, 2020, 05:12 ET

BEIJING, Dec, 28, 2020 /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, 2020.

"We are pleased with Weibo's recovery trend, despite challenges still persisted," said Gaofei Wang, CEO of Weibo. "Weibo's KA business delivered broad-based recovery, with a record high number of brand customers marketing with us. We are glad to see brands increasingly recognize Weibo's unique value proposition in reaching young audience, leveraging KOL's influence and serving brand plus performance needs. For performance ad business, we continued to drive value for customers, with team's solid execution on advertising system upgrade, ad product optimization and ROI improvement," said Mr. Wang.

Third Quarter 2020 Highlights

Net revenues were $465.7 million, flat year-over-year or a decrease of 4% year-over-year on a constant currency basis ^[1].
Advertising and marketing revenues were $416.7 million, an increase of 1% year-over-year.
Value-added service ("VAS") revenues were $49.1 million, a decrease of 11% year-over-year.
Net income attributable to Weibo was $33.8 million and diluted net income per share was $0.15.
Non-GAAP net income attributable to Weibo was $152.9 million and non-GAAP diluted net income per share was $0.66.
Monthly active users ("MAUs") were 511 million in September 2020, a net addition of approximately 14 million users on year-over-year basis. Mobile MAUs represented approximately 94% of MAUs.
Average daily active users ("DAUs") were 224 million in September 2020, a net addition of approximately 8 million users on year-over-year basis.

^[1] On a constant currency (non-GAAP) basis, we assume that the exchange rate in the third quarter of 2020 had been the same as it was in the third quarter of 2019, or RMB 7.02=US$1.00.

Third Quarter 2020 Financial Results

For the third quarter of 2020, Weibo's total net revenues were $465.7 million, compared to $467.8 million for the same period last year.

Advertising and marketing revenues for the third quarter of 2020 were $416.7 million, an increase of 1% compared to $412.5 million for the same period last year. Advertising and marketing revenues from key accounts ("KAs") and small & medium-sized enterprises ("SMEs") were $387.5 million, a decrease of 1% compared to $393.3 million for the same period last year.

VAS revenues for the third quarter of 2020 were $49.1 million, a decrease of 11% year-over-year compared to $55.3 million for the same period last year, which was primarily resulted from the decrease of live streaming revenues, and was partially offset by the increase in membership revenues.

Costs and expenses for the third quarter of 2020 totaled $304.8 million, an increase of 3% compared to $295.2 million for the same period last year. The increase was primarily due to higher bad debt provision and personnel related costs, partially offset by decreased marketing spend. Non-GAAP costs and expenses were $286.4 million, compared to $277.5 million for the same period last year.

Income from operations for the third quarter of 2020 was $161.0 million, compared to $172.5 million for the same period last year. Non-GAAP income from operations was $179.4 million, compared to $190.2 million for the same period last year.

Non-operating loss for the third quarter of 2020 was $97.5 million, compared to an income of $5.3 million for the same period last year. Non-operating loss for the third quarter of 2020 mainly included (i) a $110.0 million non-deductible impairment charge on equity and loan investments in an investee in e-commerce business, which is excluded under non-GAAP measures; (ii) a $10.1 million net gain from fair value change of investments, which is excluded under non-GAAP measures; and (iii) a $6.3 million net interest and other income.

Income tax expenses were $30.0 million, compared to $31.4 million for the same period last year.

Net income attributable to Weibo for the third quarter of 2020 was $33.8 million, compared to $146.2 million for the same period last year. Diluted net income per share attributable to Weibo for the third quarter of 2020 was $0.15, compared to $0.64 for the same period last year. Non-GAAP net income attributable to Weibo for the third quarter of 2020 was $152.9 million, compared to $176.1 million for the same period last year. Non-GAAP diluted net income per share attributable to Weibo for the third quarter of 2020 was $0.66, compared to $0.77 for the same period last year.

As of September 30, 2020, Weibo's cash, cash equivalents and short-term investments totaled $3.18 billion. For the third quarter of 2020, cash provided by operating activities was $235.2 million, capital expenditures totaled $10.7 million, and depreciation and amortization expenses amounted to $7.7 million.

Business Outlook

For the fourth quarter of 2020, Weibo estimates its net revenues to increase by 1% to 3% year-over-year on a constant currency basis. This forecast includes revenues estimate of an interactive entertainment company which was acquired and consolidated to the Company in November 2020 and represents approximately 2% of our revenues estimate this quarter. 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 6:00 AM to 7:00 AM Eastern Time on December 28, 2020 (or 7:00 PM – 8:00 PM Beijing Time on December 28, 2020) to present an overview of the Company's financial performance and business operations.

Please register in advance of the conference call using the link provided below. Upon registering, you will be provided with dial-in numbers, passcode and unique registrant ID by email. To join the conference, please use the conference access information provided in the email received at the point of registering.

PRE-REGISTER LINK: http://apac.directeventreg.com/registration/event/5558304

Additionally, a live webcast of the call will be available through the Company's corporate website at http://ir.weibo.com.

A telephone replay will be available from 22:00 PM China Standard Time on December 28, 2020 to 20:59 PM China Standard Time on January 5, 2021. To access the recording, please use the following dial-in information listed below:

United States:	+1 855 452 5696
Hong Kong:	800 963 117
Mainland China:	400 602 2065
International:	+61 2 8199 0299
Replay PIN:	5558304

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 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 represents non-GAAP net income attributable to Weibo, excluding 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,

2020

2019

2020

2019

Net revenues:

Advertising and marketing

$ 416,672

$ 412,489

$ 340,584

$ 1,032,678

$ 1,124,290

Value-added service

49,067

55,264

46,809

143,843

174,476

Net revenues

465,739

467,753

387,393

1,176,521

1,298,766

Costs and expenses:

Cost of revenues ⁽¹⁾

77,198

73,471

63,584

214,892

238,260

Sales and marketing ⁽¹⁾

105,263

129,411

112,118

316,483

341,967

Product development⁽¹⁾

83,511

69,036

75,961

233,881

209,257

General and administrative⁽¹⁾

38,813

23,323

29,545

86,111

62,435

Total costs and expenses

304,785

295,241

281,208

851,367

851,919

Income from operations

160,954

172,512

106,185

325,154

446,847

Non-operating income (loss):

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

(103,787)

644

117,379

10,654

(3,513)

Interest and other income , net

6,311

4,665

15,085

34,301

33,445

(97,476)

5,309

132,464

44,955

29,932

Income before income tax expenses

63,478

177,821

238,649

370,109

476,779

Income tax expenses

(30,003)

(31,362)

(40,744)

(86,630)

(78,508)

Net income

33,475

146,459

197,905

283,479

398,271

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

(323)

290

(511)

(843)

(1,336)

Net income attributable to Weibo

$ 33,798

$ 146,169

$ 198,416

$ 284,322

$ 399,607

Basic net income per share attributable to Weibo

$ 0.15

$ 0.65

$ 0.88

$ 1.25

$ 1.77

Diluted net income per share attributable to Weibo

$ 0.15

$ 0.64

$ 0.86

$ 1.25

$ 1.76

Shares used in computing basic

net income per share attributable to Weibo

227,110

225,610

226,678

226,728

225,268

Shares used in computing diluted

net income per share attributable to Weibo

227,793

233,126

233,983

227,352

233,019

(1) Stock-based compensation in each category:

Cost of revenues

$ 1,407

$ 1,533

$ 1,155

$ 3,909

$ 3,763

Sales and marketing

2,623

2,899

2,047

6,886

7,067

Product development

8,438

7,828

7,543

22,890

20,504

General and administrative

5,129

4,637

4,149

14,100

12,592

WEIBO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

				September 30,	December 31,
				2020	2019

Assets
	Current assets:
			Cash and cash equivalents	$ 1,411,929	$ 1,452,985
			Short-term investments	1,764,535	951,235
			Accounts receivable, net	440,495	422,225
			Prepaid expenses and other current assets	408,055	424,905
			Amount due from SINA⁽¹⁾	615,928	384,828
			Current assets subtotal	4,640,942	3,636,178

	Property and equipment, net			57,052	46,729
	Goodwill and intangible assets, net			45,139	46,513
	Long-term investments			1,201,593	1,027,459
	Other assets			34,057	47,307
	Total assets			$ 5,978,783	$ 4,804,186

Liabilities and Shareholders' Equity
	Liabilities:
		Current liabilities:
			Accounts payable	$ 114,545	$ 126,247
			Accrued expenses and other current liabilities	452,613	465,580
			Deferred revenues	153,935	108,783
			Income tax payable	110,414	100,245
			Current liabilities subtotal	831,507	800,855

		Long-term liabilities:
			Convertible debt	891,364	888,266
			Senior notes	1,535,537	793,985
			Other long-term liabilities	48,040	39,261
			Total liabilities	3,306,448	2,522,367

	Shareholders' equity :
		Weibo shareholders' equity		2,673,615	2,283,267
		Non-controlling interests		(1,280)	(1,448)
			Total shareholders' equity	2,672,335	2,281,819

	Total liabilities and shareholders' equity			$ 5,978,783	$ 4,804,186

	(1) Included short-term loans to and interest receivable from SINA of $537.9 million as of September 30, 2020 and $236.6 million as of December 31, 2019.

WEIBO CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS

(In thousands, except per share data)

Three months ended

September 30, 2020

September 30, 2019

June 30, 2020

Non-GAAP

Actual

Adjustments

Results

Actual

Adjustments

Results

Actual

Adjustments

Results

Advertising and marketing

$ 416,672

$ 412,489

$ 340,584

Value-added service

49,067

55,264

46,809

Net revenues

$ 465,739

$ 467,753

$ 387,393

(17,597)

(a)

(16,897)

(a)

(14,894)

(a)

(836)

(b)

(825)

(b)

(816)

(b)

Total costs and expenses

$ 304,785

$ (18,433)

$ 286,352

$ 295,241

$ (17,722)

$ 277,519

$ 281,208

$ (15,710)

$ 265,498

17,597

(a)

16,897

(a)

14,894

(a)

836

(b)

825

(b)

816

(b)

Income from operations

$ 160,954

$ 18,433

$ 179,387

$ 172,512

$ 17,722

$ 190,234

$ 106,185

$ 15,710

$ 121,895

17,597

(a)

16,897

(a)

14,894

(a)

836

(b)

825

(b)

816

(b)

103,787

(c)

(644)

(c)

(117,379)

(c)

(3,658)

(d)

11,596

(d)

3,389

(d)

(21)

(e)

(21)

(e)

112

(e)

(1,062)

(f)

(122)

(f)

12,882

(f)

1,595

(g)

1,360

(g)

1,369

(g)

Net income attributable to Weibo

$ 33,798

$ 119,074

$ 152,872

$ 146,169

$ 29,891

$ 176,060

$ 198,416

$ (83,917)

$ 114,499

Diluted net income per share attributable to Weibo

$ 0.15

$ 0.66

$ 0.64

$ 0.77

$ 0.86

$ 0.50

Shares used in computing diluted

net income per share attributable to Weibo

227,793

6,753

(h)

234,546

233,126

233,983

Adjusted EBITDA:

Non-GAAP net income attributable to Weibo

$ 152,872

$ 176,060

$ 114,499

Interest income,net

(4,340)

(16,785)

(12,635)

Income tax expenses

31,065

31,484

27,862

Depreciation expenses

6,894

5,503

6,074

Adjusted EBITDA

$ 186,491

$ 196,262

$ 135,800

WEIBO CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(In thousands, except per share data)

Nine months ended

September 30, 2020

September 30, 2019

Non-GAAP

Actual

Adjustments

Results

Actual

Adjustments

Results

Advertising and marketing

$ 1,032,678

$ 1,124,290

Value-added service

143,843

174,476

Net revenues

$ 1,176,521

$ 1,298,766

(47,785)

(a)

(43,926)

(a)

(2,480)

(b)

(2,534)

(b)

Total costs and expenses

$ 851,367

$ (50,265)

$ 801,102

$ 851,919

$ (46,460)

$ 805,459

47,785

(a)

43,926

(a)

2,480

(b)

2,534

(b)

Income from operations

$ 325,154

$ 50,265

$ 375,419

$ 446,847

$ 46,460

$ 493,307

47,785

(a)

43,926

(a)

2,480

(b)

2,534

(b)

(10,654)

(c)

3,513

(c)

(5,554)

(d)

10,025

(d)

(e)

(1,654)

(e)

11,992

(f)

(375)

(f)

4,333

(g)

3,432

(g)

Net income attributable to Weibo

$ 284,322

$ 50,476

$ 334,798

$ 399,607

$ 61,401

$ 461,008

Diluted net income per share attributable to Weibo

$ 1.25

$ 1.47

$ 1.76

$ 2.01

Shares used in computing diluted

net income per share attributable to Weibo

227,352

6,753

(h)

234,105

233,019

Adjusted EBITDA:

Non-GAAP net income attributable to Weibo

$ 334,798

$ 461,008

Interest income, net

(30,324)

(46,641)

Income tax expenses

74,638

78,883

Depreciation expenses

18,942

16,699

Adjusted EBITDA

$ 398,054

$ 509,949

(a) To exclude stock-based compensation.

(b) To exclude amortization of intangible assets.

(c) To exclude net results of impairment on, gain/loss on sale of and fair value change of investments.

(d) To exclude the non-GAAP to GAAP reconciling items on the share of equity method 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 (c). 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 and senior notes issuance cost.

(h) 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,
		2020	2019	2020	2020	2019

Net revenues
	Advertising and marketing
	Key accounts and small & medium-sized enterprises	$ 387,517	$ 393,331	$ 304,838	$ 940,210	$ 1,064,378
	Alibaba	29,155	19,158	35,746	92,468	59,912
	Subtotal	416,672	412,489	340,584	1,032,678	1,124,290

	Value-added service	49,067	55,264	46,809	143,843	174,476
		$ 465,739	$ 467,753	$ 387,393	$ 1,176,521	$ 1,298,766