Chinese microblogging giant Weibo beats estimates with strong third quarter

Chinese social media titan Weibo Corp plans to ramp up its short video and live content streaming initiatives after it posted third-quarter financial results that soundly beat market estimates.

“Our efforts to build a content ecosystem that attracts premium user-generated content and our relentless focus on user experience have led to strong traffic growth,” Weibo chief executive Wang Gaofei said in a conference call on Tuesday.

“Short video and live streaming represent a very big market opportunity for Weibo since content creation is moving in that direction.”

Beijing-based Weibo reported a 147 per cent jump in net profit for the third quarter to US$54.59 million, up from US$22.14 million in the same period last year, as adverting and marketing revenue increased 48 per cent year on year to US$156.69 million.

That beat the US$43.8 million analysts’ consensus estimate for third-quarter net profit as of November 7.

Revenue climbed 42 per cent to US$176.88 million from US$124.73 million a year ago, ahead of the US$173.5 million market estimate.

Nasdaq-listed Weibo’s share price rose 3 per cent to US$45.61 at the close of trading on Monday in the United States.

The company estimated that its revenue in the quarter to December 31 would be between US$205 million and US$210 million.

Jefferies equity analyst Karen Chan said in a report on Tuesday that Weibo’s third-quarter results and guidance were well ahead of market estimates, as the company “benefited from continued operating leverage”.

“The mid-point of [fourth-quarter] guidance is 0.7 per cent above our current estimates of US$206 million, and 5.4 per cent above current consensus estimates of US$197 million,” Chan said.

Weibo reported its advertising and marketing revenue from so-called key accounts and small and medium-sized enterprises (SME) reached US$147.44 million in the third quarter, compared to US$73.33 million for the same period last year.

Wang said Weibo’s key account and SME advertising revenue doubled year on year “for the third consecutive quarter, as we benefited from our brand, breadth of product offering and ad spending shifting toward mobile, social and video”.

Revenue from the company’s so-called value-added services business segment totaled US$20.18 million, up from US$18.87 million a year earlier.

Chan pointed out that “rising video and live broadcasting content consumption continues to drive user activity” on Weibo, the Twitter-like microblogging service controlled by Shanghai-based online media giant Sina Corp.

Monthly active users of Weibo as of September 30 swelled 34 per cent year on year to 297 million, 89 per cent of which were mobile users, according to the company.

Average daily active users in the same period grew 32 per cent year on year to 132 million.

The solid third-quarter performance of Weibo gave a significant boost to Nasdaq-traded parent Sina’s own third-quarter results, which were reported on the same day in the US.

Sina saw its third-quarter net profit surge to US$146.52 million, up from US$9.77 million in the same period last year, on advertising revenue that jumped 21 per cent year on year to US$233.63 million.

Total revenue increased 21 per cent to US$274.87 million from US$226.29 million a year earlier.

“With strong growth in user base, revenue and profitability, Weibo has demonstrated its platform’s value,” Sina chairman and chief executive Charles Chao Guowei said.