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Dragged down by weak advertising revenues, Weibo misses analyst expectations

Meanwhile, Weibo’s parent company and largest shareholder, Sina, saw a 4% year-over-year increase in net revenues.

Weibo became a platform for reliable information on the pandemic, rescuing the company from dwindling advertising spend.

Chinese microblogging social platform Weibo missed analyst expectations and posted USD 468.1 million in net revenues for the fourth quarter ended 2019, down 3% year-on-year (YoY). The firm’s net incomes during the same period also decreased by 42.9% YoY, at USD 95.1 million.

The company’s share price fell by nearly 11% to USD 38.45 premarket after its Q4 earnings report. Weibo’s parent company Sina, which booked  USD 593.3 million in net revenues during the quarter, up 4% YoY, also saw its share price fall 9% to USD 34.14, despite beating analyst expectations.

Weibo’s core division, advertising and marketing, which accounts for more than 86% of the firm’s total revenues, experienced a 3% annual decline in the fourth quarter of 2019, after generating revenues equal to USD 405.9 million. Revenues from its value-added service business meanwhile dropped by 4% YoY to USD 62.2 million.

Weibo claimed to have 222 million daily active users in December 2019, indicating a net addition of 22 million from the same period in 2018.

Commenting on the business impact caused by the coronavirus outbreak in China, the company admitted in its quarterly report to “have limited visibility on the full quarter revenue impact brought upon by the epidemic.” Weibo forecasts its net revenues to decrease by between 15% and 20% YoY for the first quarter of 2020.

On the earnings conference call, Weibo analyst Sandra Zhang mentioned Oasis, Weibo’s Instagram-like lifestyle-sharing platform, which was released last December, saying its monthly active users exceeded 10 million in January. Although the company has suspended some marketing activity amid the coronavirus, it will continue investing in Oasis, Zhang confirmed.

On the same day, Sina, Weibo’s parent company and largest shareholder, also announced its fourth-quarter earnings report.

Sina booked USD 593.3 million in net revenues, up 4% YoY, and ended the quarter with USD 301.7 million in cash, despite its advertising segment and main source of revenues posting a decrease of 5% from USD 484.3 million during the same period last year. This was primarily due to Weibo’s poor performance, lower advertising revenues, as well as the devaluation of the Chinese yuan, Sina said.