2022Q1 Weibo Corp's advertising business has achieved steady growth. Weibo Corp's 2022Q1 revenue was $485 million, up 6 per cent year-on-year and 3 per cent at the exchange rate for the same period last year. Of this total, advertising revenue was $430 million, up 10 per cent from a year earlier.
Value-added services reached US $58 million, down 17% from the same period last year, mainly due to a decline in revenue from members and live streaming.
2022Q1's gross profit margin was 78.4 per cent, compared with 82.6 per cent in the same period last year, while sales, R & D and administrative expenses rose 2 per cent year-on-year to $280 million. Mainly due to the increase in personnel-related costs, the increase in the content cost of the Winter Olympic Games and the increase in the cost of cultural construction. The operating profit margin of Non-GAAP was 29%, compared with 30% in the same period last year.
Strengthen product operation and improve customer ROI. Q1 Weibo Corp has effectively increased traffic and user activity through the Spring Festival and Winter Olympic Games. Weibo Corp's MAU reached 582 million in March, up 51 million from the same period last year and 9 million from the previous month, of which about 95% were mobile users. DAU reached 252 million, an increase of 25 million over the same period last year and 3 million from the previous month.
Weibo Corp will control the cost of getting customers this year, focus more on the increase of user frequency and stickiness. 1) in terms of channels, focus on improving the ROI of getting customers through channels. Q1 optimized products to better promote the accurate matching of users and recommended content, and the per capita consumption from channel users increased by 40% in March compared with the fourth quarter of last year. 2) the core competitiveness dimension of the platform will continue to strengthen the product operation investment of hot spots and social networking to ensure the supply of Weibo Corp hot spots and IP discussions. 3) improve the mechanism of community products and enhance the degree of activity, and the number of community users in March increased by double digits compared with December. 4) continue to promote video, and the number of video accounts has exceeded 30 million by the end of March.
The epidemic has disturbed since March, and Q2 advertising is expected to decline compared with the same period last year. The advertising revenue of 2022Q1 Weibo Corp and non-BABA was US $400 million, an increase of 12% over the same period last year, mainly benefiting from the marketing node of the Spring Festival and Winter Olympic Games and Weibo Corp's continuous improvement in serving customer quality and demand in key industries.
The epidemic that began in March has a great impact on the advertising demand side, and we expect the growth rate of Q2 advertising to decline significantly. From the perspective of advertising types, 1) the trend of information flow advertising is relatively stable, but the advertising unit price has declined. 2) due to the long delivery chain, brand advertising needs cooperative marketing activities among agents, producers and customers, so it is greatly affected by the epidemic and the recovery speed is slow. From the vertical industry, 1) the impact of the game industry is relatively small, Q1 game advertising revenue to achieve year-on-year growth of more than 50%, we expect Q2 will also achieve better growth. 2) for more than 50% of Weibo Corp's income, such as FMCG, luxury goods and cars, although Q2 is greatly affected, with the improvement of the epidemic and the normal development of marketing activities, the budget will recover faster. 3) some offline consumption industries have great influence and long recovery time.
The profit margin is under pressure and the channel cost is strictly controlled. On the revenue side, full-year income growth is expected to be under pressure based on last year's high base and current macroeconomic uncertainty. On the profit side, we expect profit margins to decline for the whole year. Mainly due to the disturbance of the epidemic, the reduction and reduction of cultural construction fees will be stopped this year, and a large amount of content investment will be made in sports and games.
In terms of operating expenses, Weibo Corp will more strictly control channel costs and improve operational efficiency.
Investment advice: we expect Weibo Corp's income from 2022 to 2024 to be 22.5 million, 2.45 billion, and non-GAAP net profit, respectively, to be 22.5 million, 2.48 million, and 810 million, respectively. We give Weibo Corp Hong Kong shares (9898.HK) a target price of HK $200 and US stocks (WB.O) a target price of US $25, corresponding to 10x 2022e P Bank E, maintaining an "overweight" rating.
Risk tips: the demand of advertisers is weaker than expected, the advertising competition of traffic platform is higher than expected, the risks related to Internet regulatory policy, and the impact of the epidemic is higher than expected.