Social media specialist Weibo (NASDAQ: WB) reported second-quarter results earlier this week. The so-called "Twitter of China" posted solid user growth but relatively flat revenue, resulting in lower earnings as the fixed cost structure underlying its services continued to expand.
Here's a closer look at this international tech stock's latest report.
Weibo's second-quarter results: The raw numbers
Net income attributable to Weibo
GAAP earnings per share (diluted)
Data source: Weibo. GAAP = generally accepted accounting principles.
What happened with Weibo this quarter?
- It added 21 million active monthly users, landing at 486 million accounts. That's a 13% increase over the year-ago period's 431 million active users.
- CEO Gaofei Wang expected limited sales growth in this period as the Chinese market for online advertising is going through a period of intense pricing pressure. That worked out as predicted, pairing Weibo's rising user numbers with modestly lower revenue per user. In the end, top-line revenue was exactly in line with management's sales guidance.
- 94% of Weibo's monthly users accessed its services at least partly through mobile apps. That ratio stood at 93% a year ago and 89% in the second quarter of 2016.
Weibo's corporate logo. Image source: Weibo.
What management had to say
In the earnings call, Wang noted that the Chinese market for online advertising still labors under a supply-and-demand imbalance where ad spots are plentiful and average ad prices are trending lower. The company is taking steps to adjust to this uncomfortable situation.
"As such, while maintaining sufficient ad inventory to offer, we will still have to mitigate the changes on the demand side," Wang said. "In such a scenario, we will have to go through a transitional period with structural changes on our customer composition, as well as the comprehensive optimization on ad products to gradually earn recognition from more customers and thus meaningfully impact our top-line growth."
Weibo's management expects a constant-currency revenue growth of roughly 7.5% in the third quarter. Given the dollar-to-yuan exchange rate trends over the last year, that should work out to a relatively flat year-over-year comparison as measured in dollars. The year-ago top-line tally stopped at $460 million.
More From The Motley Fool
- 10 Best Stocks to Buy Today
- The $16,728 Social Security Bonus You Cannot Afford to Miss
- 20 of the Top Stocks to Buy (Including the Two Every Investor Should Own)
- What Is an ETF?
- 5 Recession-Proof Stocks
- How to Beat the Market
This article was originally published on Fool.com