Q2 revenue falls short of expectations, advertising revenue declines year-on-year, Weibo drops more than 3% | Financial Report Insights

Weibo released its financial report for the second quarter of 2024 on August 22, showing that the total revenue in the second quarter fell short of analysts' expectations. The adjusted net profit was $126.3 million, exceeding analysts' expectations, while advertising revenue decreased by 3% year-on-year. Weibo's US stocks rose more than 2% in pre-market trading, but fell over 3% after the market opened.

1) Key Financial Data

• Revenue was $437.9 million, a 1% decrease from the same period last year's $440.2 million, falling short of the average analyst expectation of $446 million.

• Total costs and expenses amounted to $302.5 million, a 5% decrease from $316.8 million in the same period last year. Excluding the impact of exchange rates, the decrease was mainly due to a reduction in personnel-related costs.

• Operating profit was $135.4 million, with an operating profit margin of 31%.

• Net profit attributable to Weibo shareholders was $111.9 million, compared to $81.4 million in the same period last year, with diluted earnings per share of $0.43.

• Non-GAAP operating profit was $157.6 million, with a non-GAAP operating profit margin of 36%.

• Non-GAAP net profit attributable to Weibo shareholders was $126.3 million, with non-GAAP diluted earnings per share of $0.48, higher than analysts' expected $0.46.

2) Business Revenue Data

• Advertising and marketing revenue was $375.3 million, a 3% decrease from $385.7 million in the same period last year.

• Advertising and marketing revenue (excluding revenue from Alibaba) was $342.9 million, a 4% decrease from $358.9 million in the same period last year.

• Marketing services primarily driven by hot IP/celebrity KOL/effect ads accounted for over 50% of total advertising revenue.

• Value-added service revenue was $62.6 million, a 15% increase from $54.6 million in the same period last year, mainly due to the growth in membership service revenue.

3) User Data:

• The monthly active users in June 2024 were 583 million.

• The daily active users in June 2024 were 256 million.

• The scale of Gold V bloggers grew by over 80% compared to the same period last year, with Gold V traffic and interaction scale increasing by over 30%.

4) Cash Flow Situation:

• As of June 30, 2024, Weibo's total cash, cash equivalents, and short-term investments amounted to $2.8 billion.

• Cash generated from operating activities in the second quarter of 2024 was $132.1 million, total capital expenditures were $10.3 million, and depreciation and amortization expenses were $14.5 million.

The company stated that with the gradual expansion of its user base and the increasing maturity of user product awareness, Weibo has made adjustments in user acquisition and growth strategies this year. The channel budget has been tilted more towards acquiring high-quality users and increasing user engagement. This quarter, Weibo's DAU/MAU ratio has increased both sequentially and year-on-year, reflecting a further improvement in platform user engagement The financial report shows that advertising revenue in the second quarter decreased by 3% year-on-year. At the financial report meeting, Weibo CEO Wang Gaofei stated that despite the overall weak demand environment in the advertising market, Weibo's advantageous industry advertising revenue continues to grow positively, mainly due to customer recognition of Weibo's hot topic marketing model.

He mentioned that under the current market competition landscape, Weibo's main marketing service model has shifted from the previous brand + performance marketing service to a marketing service model driven by hot IPs/celebrity KOLs/effectiveness advertising. These three types of products directly account for over 50% of the overall advertising revenue.

After the financial report was released, Weibo's stock price rose by over 2% in pre-market trading on the 22nd in the U.S., but fluctuated and fell after the market opened, dropping by over 3% at midday to $7.65.