What Investors Should Know About Weibo's 4th-Quarter Earnings

The social media company beat earnings and revenue projections

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Mayank Marwah
Mar 18, 2021
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Before the opening bell on March 18, Weibo Corp. (

WB, Financial) announced its fourth-quarter financial results. The Chinese social media company reported earnings and revenue that were higher than analysts' expectations, courtesy of strong marketing and advertising revenue.

Overview of the quarter

Weibo recorded net income of $29 million, translating to diluted earnings per share of 13 cents. That compares with net income of $95.1 million, or 42 cents per share, reported in the same period last year. Adjusted earnings came in at 92 cents per share, which topped FactSet's consensus estimate of 71 cents.

The company booked revenue of $513.4 million, up from $468.1 million in the year-ago period. Analysts had anticipated revenue to be $497.56 million.

CEO Gaofei Wang commented on the company's performance:

"We ended the year of 2020 on a solid note. During the unprecedented times in 2020, Weibo has demonstrated its indispensable value as China's leading social media platform to serve public conversations, and further enriched our video and community product offerings. On monetization, we are pleased to see our revenue and profit return to a solid growth trajectory in the fourth quarter. Entering into 2021, Weibo is well positioned to capture incremental ad wallet, leveraging the accelerated digitalization of brick-and-mortar, our differentiated social ad offerings and revamped bidding system."

Expenses rose from $317.4 million in the year-ago quarter to $331.8 million, which the company attributed to high product development costs. In addition, higher bad-debt provisions and a non-deductible impairment charges associated with equity and loan investments elevated overall costs. Partially offsetting the decline was a reduction in general and administrative expenses.

Segment results

Revenue in the advertising and marketing segment amounted to $453.5 million in the reported quarter, which reflected 12% growth on a year-over-year basis. Within the segment, revenue from key accounts and small and medium-sized enterprises surged a combined 7% to $393.9 million.

Value-added services' revenue stood at $59.9 million in the fourth quarter, down from $62.2 million for the prior-year period. The increase in membership revenue was more than offset by the decline in livestreaming revenue.

Monthly active users for the month of December totalled 521 million. This represents a net addition of roughly 5 million users when compared with December 2019. On the other hand, average daily users were 225 million for the same period, reflecting a net addition of about 3 million customers.

Financials

For the quarter ended Dec. 31, the company's balance of cash and cash equivalents and short-term investments stood at a combined $3.50 billion.

Weibo generated cash of $321.2 million from operating activities during the quarter. Capital spending came in at $8.4 million.

Looking forward

For the first quarter of 2021, the social media company foresees revenue to grow in the 25% to 30% range on a constant-currency basis. The revenue guidance includes contributions from an interactive entertainment company, which was acquired and consolidated in November.

Disclosure: I do not hold any positions in the stocks mentioned.

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A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.