2022Q2 Weibo Corp advertising revenue declined, operating profit margin increased month-on-month. Weibo Corp's 2022Q2 revenue was $450 million, down 22% from the same period last year and 19% at the exchange rate for the same period last year. Of this total, advertising revenue was US $390 million, down 23% from the same period last year, mainly due to the pressure on the overall advertising demand during the period. Value-added services totaled US $65 million, down 10% from the same period last year, mainly due to a decline in revenue from members and games.
2022Q2's gross profit margin was 78.8 per cent, compared with 83.9 per cent in the same period last year, while sales, R & D and administrative expenses fell 13 per cent year-on-year to $250 million. Mainly due to the optimization of channel investment, the sales cost decreased by 25% compared with the same period last year. Non-GAAP 's operating profit margin was 32%, up from 29% of Q1, and non-GAAP 's home net profit rate was 24.4%, compared with 31.8% in the same period last year.
Strengthen product operation and improve the quality of customers. In June, Weibo Corp's MAU reached 582 million, an increase of 16 million over the same period last year and unchanged from the previous month, of which 95% were mobile users. DAU reached 252 million, an increase of 7 million over the same period last year and unchanged from the previous month.
Weibo Corp pays attention to control the cost of getting customers, and focuses more on the improvement of user frequency and stickiness. 1) in terms of channels, Q2 continued to implement the channel ROI optimization strategy, and the cost of getting customers per channel unit decreased by about 1x3 compared with the same period last year. 2) in terms of social activity, Weibo Corp further strengthens the social attribute of the product, and the relationship flow increases the interaction efficiency by more than 10% while ensuring the steady growth of traffic. 3) improve the community product mechanism, and launch an independent community consumption portal on the platform in June. Compared with the previous quarter, the number of users, the number of posts and the number of posts continued to maintain double-digit growth in June.
4) in terms of content ecology, focusing on vertical areas such as games and sports, accounts and traffic have achieved double-digit growth compared with October last year. In addition, the video number launch scale and playback volume continue to increase, and the video playback volume in June increased by double digits compared with December last year.
Advertising demand is under pressure and has yet to be repaired. The advertising revenue of 2022Q2 Weibo Corp and non-BABA was US $360 million, down 22% from the same period last year, mainly affected by the demand of advertisers. From the perspective of the advertiser industry, Q2 e-commerce and daily cosmetics industry advertising demand reduction. Cars are also affected by the industry, but new energy vehicles are promoted by supportive policies to achieve gradual recovery. Q2 in the game industry is still growing rapidly compared with the same period last year.
Looking forward to Q3, it is expected that the recovery of demand from advertisers is still under pressure, but some industries have a warming trend. Among them, the willingness of customers in e-commerce and daily cosmetics industry is still conservative, and the full recovery of advertising budget still takes time. The advertising budget of automobile and luxury goods industry tends to pick up in Q3, and the income of the two industries from July to August is significantly higher than that of Q2 in the same period. In the game industry, Weibo Corp's continuous investment in the game field has achieved certain results, maintaining a share in the case that the version number has not been fully restored.
Full-year income is still under pressure to promote cost reduction and efficiency. On the revenue side, we expect that the second half of the year may be higher than the first half of the year. On the profit side, Weibo Corp will continue to reduce costs and increase efficiency in the second half of the year, focusing resources on channels, partners and key content areas that can improve efficiency. We expect profit margins to remain stable on a month-on-month basis.
Investment suggestion: we expect Weibo Corp's income from 2022 to 2024 to be 1.94, 21.2 and non-GAAP net profit of 2.27 billion and 580 million respectively. We give Weibo Corp Hong Kong shares (9898.HK) a target price of HK $173 and US stocks (WB.O) a target price of US $22, corresponding to 9x 2023e P Bank E, maintaining an "overweight" rating.
Risk hint: the demand of advertisers may be weaker than expected, and the advertising competition of traffic platform may exceed expectations.