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Weibo Corp (WB) Q3 Earnings Top Estimates, Revenues Rise Y/Y

Aniruddha Ganguly

Weibo Corporation WB reported third-quarter 2019 adjusted earnings of 77 cents per share, which beat the Zacks Consensus Estimate by 2.7% and grew at the same rate year over year.

Revenues of $467.8 million beat the Zacks Consensus Estimate by 0.1% and increased 1.6% year over year. At constant currency (cc), the top line improved 6%.

Quarterly Details

Advertising and Marketing revenues (88.2% of total revenues) increased 0.8% year over year to $412.5 million.

Notably, Advertising and Marketing revenues from small and medium enterprises (SMEs) and Key Accounts (KAs) were $393.3 million, up 3%.

KA ad revenues grew 6% year over year to $197.2 million on strong performance of the FMCG sector. SME ad revenues increased 1% year over year to $196.1 million driven by an increase in ad inventory.
 

Weibo Corporation Price, Consensus and EPS Surprise

Weibo Corporation Price, Consensus and EPS Surprise

Weibo Corporation price-consensus-eps-surprise-chart | Weibo Corporation Quote

 

Value Added Services (VAS) revenues (11.8% of total revenues) increased 8.6% year over year to $55.3 million on revenues earned from the live streaming business acquired in the last quarter of 2018.

Weibo improved its trend and topic products which enabled users to discover trends and hot topics more efficiently and participate in discussions. This has been instrumental in expanding the user base and enhancing user engagement.

Month Active Users (MAUs) were 497 million in the reported quarter. The company added roughly 51 million users on a year-over-year basis. Mobile MAUs accounted for 94% of total MAUs.

Average Daily Active Users (DAUs) were 216 million in the quarter under review. The company added nearly 21 million DAUs from the year-ago quarter.

Additionally, Weibo’s collaborations with handset manufacturers to include content on the handset interface have helped it lower user acquisition costs.

Operating Details

Non-GAAP total costs and expenses increased 2% year over year to $277.5 million.

While sales & marketing expenses contracted 8.3% to $129.4 million, general & administrative expenses surged 125.1% to $23.2 million.

Additionally, product development expenses increased 4.2% year over year to $69 million.

Adjusted EBITDA was $196.3 million, up 1.8% year over year. Adjusted EBITDA margin expanded 10 basis points (bps) year over year to 42%.

Weibo’s non-GAAP operating income was $190.2 million, up 1.2% year over year. However, operating margin contracted 20 bps to 40.7%.

Balance Sheet & Cash Flow

Total cash, cash equivalents and short-term investments as of Sep 30, 2019, were $2.37 billion compared with $1.56 billion as of Jun 30, 2019.

Net cash from operating activities was $164.8 million in the third quarter compared with $132.8 million in the preceding quarter.

Fourth-Quarter Guidance

Weibo expects revenue growth in the range of 0-3% year over year for the fourth quarter, on a constant-currency basis. The conservative growth outlook reflects macroeconomic headwinds and stiff market competition in the near term.

Zacks Rank & Stocks to Consider

Weibo currently has a Zacks Rank #3 (Hold).

Alteryx AYX, Cirrus Logic CRUS and Marchex MCHX are a few better-ranked stocks in the broader computer and technology sector. All three sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

While long-term earnings growth rate for Alteryx is pegged at 39.9%, both Cirrus Logic and Marchex’s earnings are expected to grow 15%.


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