Weibo Corp announced 22Q2 results, Q2 net income of US $450 million,-22% year-on-year, calculated according to the fixed exchange rate-19% year-on-year; net profit of return to the mother of US $28.3 million, compared with-65% of the same period last year; net profit of $110 million, or-40% of the same period last year. Under the influence of weak demand, advertising and marketing business is under pressure, some industries in Q3 have recovered obviously, and the company's flow and marketing competitiveness are still strong. Maintain the overweight rating.
Support the main points of rating
Affected by the external environment, advertising marketing revenue declined. In terms of business, affected by the Q2 epidemic outbreak and prevention and control measures, as well as the overall macroeconomic uncertainty, 22Q2's advertising marketing business revenue was 386 million US dollars,-23% compared with the same period last year; of which, BABA's advertising revenue came from 23.73 million US dollars,-41% from the same period last year, and 362 million yuan except Ali, 22% from the same period last year. The revenue from value-added services is US $64.6 million,-10% compared with the same period last year, mainly due to the decline in revenue from member services and game-related services.
Stable user traffic, continuously update products and strengthen content operations. In June, the number of monthly active users of Weibo Corp platform was 582 million, an increase of 16 million over the same period last year, with mobile accounts for 95%; daily active users were 252 million, an increase of 7 million over the same period last year; and user stickiness remained at 43%. Based on the large and stable flow inventory, the company still has a strong foundation in advertising cash. The company continues to improve the social attributes of its products, strengthen the integration of hyperphone and core consumption scenarios, and give full play to the advantages of topic operation and user marketing.
Get customers with high efficiency, and the rate of sales expenses has declined compared with the same period last year. According to the statement of the management of the performance meeting, at present, most of the core delivery channels can recover the customer cost within 6 months, and the customer acquisition efficiency is better than the industry average.
Q2 non-GAAP gross profit margin of 79.4%, year-on-year-4.8ppts, month-on-month + 0.6ppt. The total cost and expenses are US $356 million, which is-7% compared with the same period last year. The sales expense rate is 24.4%. Compared with the same period last year-1.9ppts.
The Q3 new energy vehicle industry has recovered well, and the demand for promotional advertising in the consumer industry has increased. After the improvement of the epidemic, under the stimulation of the state policies such as promoting consumption and reducing car purchase tax, the advertising of new energy vehicles and luxury goods has recovered better, and the trend of new product release from offline to online continues. The large-scale investment of FMCG, e-commerce and other industries is not obvious in July-August, but the demand for price reduction promotion and inventory clearance advertising is increasing. Weibo Corp will undertake more effective advertising, and the budget is expected to recover gradually.
Valuation
We expect that advertising will recover significantly in the second half of the year compared with the first half of the year as the macro environment improves; at the same time, taking into account the impact of the US dollar exchange rate, we basically maintain our previous profit forecast, with a net profit of US $597 million for non-GAAP in 2022-23-24. Maintain the overweight rating.
Main risks faced by rating
The demand of advertisers is reduced; the regulation of the industry is higher than expected; competition intensifies; user traffic declines.