Weibo profits more than double in latest quarter to US$43m

Advertising and marketing revenue soar an impressive 45pc to US$187.9 million

PUBLISHED : Thursday, 23 February, 2017, 12:46pm
UPDATED : Thursday, 23 February, 2017, 10:58pm

Weibo, the Chinese micro-blogging social network often referred to as the country’s Twitter, has reported better-than-expected earnings for the quarter ending December as its social and video advertising revenue continued to gain traction.

Its net revenues increased 43 per cent year-over-year to US$212.7 million, beating the US$208 million consensus estimate of analysts surveyed by Bloomberg.

Net profit increased 125 per cent year over year to US$43 million, and diluted net profit per share was 19 US cents, compared with 9 US cents for the same period last year.

Its advertising and marketing revenue in the quarter, however, increased an impressive 45 per cent year-over-year to US$187.9 million.

San Francisco-based Twitter missed its revenue and profit estimates in the fourth quarter as user growth stalled.

But Weibo saw its monthly active users grow 33 per cent year-on-year to 313 million, 90 per cent of which were mobile users. Average daily active users in December grew 30 per cent year over year to 139 million.

Shares in Weibo, which is part-owned by Chinese e-commerce giant Alibaba Group, climbed to US$58.21 at the close of trading on Wednesday before the financial report was announced.

Weibo boasts a market capitalisation of US$12.35 billion which recently overtook Twitter’s value of around US$11.5 billion.

“Our growth in the fourth quarter was exceptional, with ad revenue from key accounts and SMEs doubling year over year.” said Wang Gaofei, Weibo’s CEO, on Thursday.

“Weibo’s user scale, breadth of ad offering and leadership as a social media platform in China put us in a unique position to take advantage of the marketing budget shift toward mobile, social and video

“Our focus to grow scale in users, content creators, customers on our platform is translating into significant operating leverage,” he said in a statement.

Started in 2009 as a social media providing services akin to Twitter, Weibo has shown strong ability to not only engage with its users but also monetise them

Positioning itself as a combination of Twitter, Instagram and YouTube, it has rapidly narrowed the gap with its Western internet giants on various measures or even overtaking them in terms of the offerings to users.

Weibo’s 313 million monthly active users can not only access serious news published by traditional media but also user-generated content from A-listers, self-media and other content creators.

The Beijing-based company has most-recently been gearing up its efforts to keep users on its platform via short videos and live streaming, and has made huge effort to help its influencers and content creators earn from the site too.

“Weibo helps content creators to get a return when they post premium content on our platform. This is an very important part of Weibo’s ecosystem,” said Herman Yu, its chief financial officer.

Analyst Tian Hou from TH Capital, said in latest report that Weibo is being heavily driven now by its new Yi Live Video and other live broadcastings on Weibo’s platform as well as its mobile traffic.

“We believe the Weibo platform is in the middle of its upward trend as that it has become a standard must-have media platform,” she said.

Celebrities view Weibo as a top platform to announce their marriages or in some cases admit their divorce or adultery. The public particularly enjoys discussing hot issues on Weibo, as the platform offers the most “freedom of speech” people can get in the media-censored mainland China.

“Benefitting from its city penetration strategy and its broad Web Red content ecology, Weibo continues to attract young users,” said Wen Tianli, founder and CEO at Blue Lotus Capital Advisors.

“Advertising demand from sponsors remains strong…As sponsors are transferring budgets to mobile and social terminals, Weibo as a unique social platform remains popular.”

Alibaba Groups owns the South China Morning Post.