WeiboThe Company (NASDAQ: WB) today announced its unaudited financial report for the second quarter ended June 30, 2020.
“As the COVID-19 pandemic in China was basically brought under control, we saw that the brand advertising business began a steady recovery in the second quarter. More and more brand customers reached a wider audience through Weibo's differentiated social marketing programs.” Wang Gaofei, CEO of Weibo, said, “In terms of performance advertising business, we are committed to improving advertising effectiveness and delivery efficiency by upgrading advertising systems and optimizing advertising products to gain a higher share of the performance advertising market.”
Focus on results for the second quarter of 2020
Net revenue was US$387.4 million, down 10% year on year, and down 7% year on year based on the exchange rate for the same period last year [1].
Advertising and marketing revenue was US$340.6 million, down 8% year over year.
Revenue from value-added services was US$46.8 million, down 23% year over year.
Net profit attributable to Weibo was US$198.4 million, or 86 cents of diluted net profit per share.
Non-GAAP net profit attributable to Weibo was US$114.5 million, or 50 cents of diluted net profit per share.
The number of monthly active users in June 2020 was 523 million, a net increase of about 37 million over the same period last year. About 94% of monthly active users are mobile users.
The average number of daily active users in June 2020 was 229 million, a net increase of about 18 million over the same period last year.
[1] According to non-US GAAP, we assume that the exchange rate of RMB against the US dollar in the second quarter of 2020 is the same as in the second quarter of 2019, that is, it is calculated at 6.81 yuan to 1 US dollar.
Corporate performance for the second quarter of 2020
Net revenue for the second quarter of 2020 was US$387.4 million, down 10% from US$431.8 million in the same period last year.
Advertising and marketing revenue for the second quarter of 2020 was US$340.6 million, down 8% from US$370.7 million in the same period last year. Advertising and marketing revenue from major clients and SMEs was US$304.8 million, down 12% from US$346.5 million in the same period last year. The year-on-year decline in revenue is mainly related to the negative impact of the COVID-19 pandemic on advertisers' demand in some industries, the decline in replacement transaction revenue, and the negative impact of exchange rate conversion.
Value-added service revenue for the second quarter of 2020 was 46.8 million US dollars, down 23% from 61.2 million US dollars in the same period last year. This was mainly due to the decline in live streaming business revenue, and this impact was partially offset by the increase in member business revenue.
Costs and expenses for the second quarter of 2020 totaled $281.2 million, compared to $280.6 million for the same period last year. The slight year-on-year increase in costs and expenses is mainly related to a slight increase in marketing expenses, an increase in the calculation of bad debt expenses, and the comprehensive impact of cost reductions due to the reduction and refunds of construction expenses for cultural undertakings this year. Non-GAAP costs and expenses for the second quarter of 2020 were $265.5 million, compared to $265.6 million for the same period last year.
Operating profit for the second quarter of 2020 was US$106.2 million, compared to US$151.3 million in the same period last year. Non-GAAP operating profit for the second quarter of 2020 was US$121.9 million, compared to US$166.2 million in the same period last year.
Non-operating profit for the second quarter of 2020 was US$132.5 million, and non-operating loss for the same period last year was US$24 million. Non-operating profit for the second quarter of 2020 mainly included: (i) net income of $121 million from changes in the fair value of investments. This net income was not included in non-operating profit and loss calculated according to non-US GAAP; (ii) net interest and other income of $15.1 million.
Income tax expenses for the second quarter of 2020 were US$40.7 million, compared to US$26.1 million for the same period last year. The increase in income tax expenses is mainly related to deferred tax expenses confirmed in the second quarter of this year due to changes in the fair value of investments.
Net profit attributable to Weibo for the second quarter of 2020 was US$198.4 million, compared to US$103 million for the same period last year. Net profit per diluted share attributable to Weibo for the second quarter of 2020 was 86 cents, compared to 46 cents in the same period last year. Non-GAAP net profit attributable to Weibo for the second quarter of 2020 was US$114.5 million, compared to US$156.4 million for the same period last year. Non-GAAP net profit per diluted share for the second quarter of 2020 was 50 cents, compared to 68 cents for the same period last year.
As of June 30, 2020, Weibo's total cash, cash equivalents and short-term investments were US$2.33 billion. Cash from operating activities for the second quarter of 2020 was $121.7 million, capital expenses were $8.4 million, and depreciation and amortization expenses were $6.9 million.
Other matters
On July 8, 2020, Weibo completed the issuance of senior bonds (hereinafter referred to as “bonds”) with a total principal amount of US$750 million due in 2030. The annual interest rate of the bond is 3.375%, and interest is paid every six months, on January 8 and July 8 of each year, respectively. The first dividend date is January 8, 2021. Bonds expire on July 8, 2030, unless they are repurchased or redeemed in advance by agreement before maturity.
Performance outlook
Weibo expects net revenue for the third quarter of 2020 to fall between 5% and 7% from year to year based on the exchange rate for the same period last year. The above expectations reflect Weibo's current preliminary judgment, and adjustments may be made in the future.