Before the opening bell on May 10, Weibo Corp. (WB, Financial) announced its first-quarter 2021 financial results. The Chinese social media company reported earnings and revenue that were higher than analysts' expectations, courtesy of strong marketing and advertising revenue.
A rundown of the quarter
Weibo recorded net income of $49.8 million, translating to diluted earnings per share of 22 cents. That compares with net income of $52.1 million, or 22 cents per share, reported in the same period last year. Adjusted earnings came in at 57 cents per share, which topped FactSet's consensus estimate of 48 cents.
The company booked revenue of $458.9 million, up from $323.4 million in the year-ago period. Analysts had anticipated revenue to be $431.37 million.
CEO Gaofei Wang commented on the company's performance:
"We started the year of 2021 with a strong quarter. Weibo's user base and engagement continued to grow from prior quarter, leveraging our effective channel investments, enriched video offerings and our strength in social distribution and hot trends. On the monetization front, we are glad to see broad-based year-over-year growth across industries and robust momentum with certain differentiated ad products, demonstrating our competitiveness in fulfilling advertiser's increasing brand plus performance needs."
Expenses rose from $265.4 million in the year-ago quarter to $350.3 million, which the company attributed to high product development costs. In addition, higher bad-debt provisions and 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 $390 million in the reported quarter, which reflected 42% growth on a year-over-year basis. The segment's revenue increased 44% to $356.7 million, barring ad revenues from Alibaba.
Value-added services' revenue stood at $68.9 million in the first quarter, up from $48 million for the prior-year period. The increase in membership revenue was only partially offset by the decline in livestreaming revenue.
Monthly active users for the month of March totalled 530 million. This represents a 4% decline in the number of active users when compared with March 2020. On the other hand, average daily users were 230 million for the same period, down 5% year-over-year.
Financials
For the quarter ended March 31, the company's balance of cash and cash equivalents and short-term investments stood at a combined $3.41 billion.
Weibo generated cash of $244.3 million from operating activities during the quarter. Capital spending came in at $6 million.
Looking ahead
For the second 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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