On Dec. 28 before the market opened, Weibo Corp. (WB, Financial) announced its third quarter financial results. The Chinese social media company reported earnings and revenue that were higher than analyst' 'expectations courtesy of strong marketing and advertising revenue.
Overview of the quarter
Weibo recorded net income of $33.8 million, translating to diluted earnings per share of 15 cents. That compares with net income of $146.2 million, or 64 cents per share, reported in the same period last year. Adjusted EPS came in at 66 cents per share, which beat FactSet's consensus estimate of 59 cents a share.
The company booked third quarter revenue of $465.7 million, down from revenue of $467.8 million for the year-ago period. Analysts had anticipated revenue to be $451 million.
Weibo's CEO Gaofei Wang commented the following on the company's performance:
"We are pleased with Weibo's recovery trend, despite challenges still persisted. 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."
Expenses rose from $295.2 million in the year-ago quarter to $304.8 million this quarter, which the company attributed to high product development and general and administrative costs. In addition, higher bad-debt provisions and a $110 million non-deductible impairment charge associated with equity and loan investments elevated overall costs. Partially offsetting the decline was a reduction in marketing expense.
Revenue in the advertising and marketing segment amounted to $416.7 million in the reported quarter, which reflected a growth of 1% on a year-over-year basis. Within the segment, however, revenue from key accounts (KAs) and small and medium-sized enterprises (SMEs) plunged a combined 1% to $387.5 million.
Value-added services (VAS) revenue stood at $49.1 million in the third quarter, down from $55.3 million for the year-earlier period. The increase in membership revenue was more than offset by the fall in live streaming revenue.
Monthly active users for the month of September totalled 511 million. This represents a net addition of roughly 14 million users when compared with September of 2019. On the other hand, average daily users were 224 million for the same period, reflecting net addition of about 8 million customers.
For the quarter ended Sept. 30, the company's balance of cash and cash equivalents and short-term investments stood at a combined $3.18 billion.
Weibo generated cash of $235.2 million from operating activities during the quarter. Capital spending for the quarter came in at $10.7 million.
The social media company foresees revenue to grow in the 1% to 3% range on a constant-currency basis. The revenue guidance includes contributions from an interactive entertainment company, which was both acquired and consolidated last month.
Disclosure: I do not hold any positions in the stocks mentioned.
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