2022Q4 Weibo Corp advertising revenue fell, non-GAAP home net interest rate rebounded. Weibo Corp's 2022Q4 revenue was $448 million, down 27 per cent from a year earlier and 20 per cent at a year-on-year exchange rate. Of this total, advertising and value-added services were respectively US $391 million, down 29% and 12% compared with the same period last year. 2022Q4 costs and expenses were US $290 million, down 34% from the same period last year, mainly due to: 1) Mask Technology failed to meet the performance agreement, Weibo Corp withdrew US $59 million in accrued compensation expenses; 2) the company implemented the cost reduction strategy to improve operational efficiency. The net interest rate of 2022Q4 non-GAAP was 39.8%, which was significantly higher than that of the previous year.
Weibo Corp's revenue for the whole year of 2022 was $1.84 billion, down 19 per cent from the same period last year. Excluding the exchange rate, revenue fell 15 per cent from the same period last year. Non-GAAP 's homed net profit was $540 million, down 25 per cent from a year earlier.
Strengthen the product operation, improve the activity of users. Q4 product operation mainly revolves around major events, while relationship flow and recommendation flow products further optimize information and distribution mechanisms to improve consumption efficiency. In December, Weibo Corp's MAU reached 586 million, an increase of 13 million over the same period last year and 2 million compared with the previous month, of which 95% were mobile users. DAU reached 252 million, an increase of 3 million over the same period last year and a decrease of 1 million from the previous month. In 2022, the user activity of the platform increased significantly compared with the same period last year, and the overall traffic maintained a steady growth.
Advertising: January-February advertising initial repair, continue to optimize marketing efficiency. The advertising revenue of 2022Q4 Weibo Corp and non-BABA was US $348 million, down 31% from the same period last year, mainly affected by the demand of advertisers. Although the overall marketing environment is relatively severe, Q4 in some key industries, such as food and beverages, cars, mobile phones and so on, maintained year-on-year growth. Weibo Corp's commercialization in 2023 will strengthen the "product effect + content marketing" model and cover more industries such as luxury goods, fashion and makeup, mobile phones, real estate, home furnishings, etc., so as to optimize marketing efficiency.
Looking forward to 2023, the decline in advertising in January-February has narrowed, such as the recovery of mobile phones and some entertainment industries in January, but major consumer-related industries still need to observe the progress of macroeconomic recovery. It is expected that the automobile and luxury goods industry, which has grown well in the past 22 years, will maintain a sustained growth trend in 23 years. The marketing activities of new products in the beauty industry are expected to resume in the second half of the year, and games will continue to grow.
Value-added services: layout of social e-commerce, membership business is expected to resume. In terms of social e-commerce, Weibo Corp, in addition to maintaining the advertising cooperation model with BABA and JD.com, chose the medical beauty e-commerce industry with high unit price, combined with live broadcast, opened up Weibo Corp's closed-loop e-commerce cash model, and the medical beauty e-commerce GMV doubled in 2022 compared with the same period last year. At present, closed-loop e-commerce contributes little to revenue and profits, but the linkage model of online promotion and offline transformation can be replicated to more industries in the future, or bring more realization possibilities.
In terms of membership business, due to the ecological governance of the entertainment industry, the membership business has declined in 2022, and we expect to return to the growth channel in 2023 with the recovery of the entertainment industry.
Q1 decline narrowed, Q2 hope to meet the inflection point, improve operational efficiency. Weibo Corp's focus in 2023 is 1) to restore revenue growth and traffic growth, and 2) to further improve operational efficiency. On the revenue side, we expect a narrower decline in Q1 revenue and an improvement in Q2 or the second half of the year. On the profit side, we expect non-GAAP operating margins to increase steadily in 2023.
Investment advice: we expect Weibo Corp's income from 2023 to 2025 to be US $2.88 billion and net profit of non-GAAP to be US $2.16 billion and USD 590 million respectively. We give Weibo Corp Hong Kong shares (9898.HK) a target price of HK $163and US stocks (WB.O) a target price of US $21, corresponding to 8x 2024e 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.