Weibo Profit Triples in Second Quarter on Strong Growth in Advertising, Users

Weibo Corp., China’s Twitter-like social media platform, reported that second-quarter profit nearly tripled to a record $73.5 million, reflecting strong growth in the country’s social media-based advertising and marketing businesses.

Unaudited revenue for the second quarter rose 72% from a year earlier to $253.4 million, Weibo said Wednesday. Net profit jumped 184%, exceeding analysts’ estimates. Nasdaq-listed Weibo declined more than 4% to $82.70 in early U.S. trading before rebounding.

Weibo projected that third-quarter revenue would rise by at least 64% to $290 million to $300 million from $176.9 million a year earlier.

"We continue to see great momentum in our business,” said Wang Gaofei, CEO of Weibo. The company’s profit and user base reached new highs in the second quarter, Wang said.

Monthly active users of Weibo reached 361 million in June, an increase of 28% year-over-year. Ninety-two percent of them were mobile users, the company said.

Weibo will focus on developing a unique and expansive content ecosystem, launching engaging features such as Weibo Stories and attracting key opinion leaders, celebrities and other influencers to increase the social and viral nature of the platform, Guo said.

Weibo’s revenue from advertising and marketing rose 72% to $218.3 million, including $205 million from key accounts and small and medium-sized enterprises. Other revenue increased 78% to $35 million, the company said. As of June 30, Weibo's cash, cash equivalents and short-term investments totaled $609.2 million.

In June, China’s broadcasting regulator ordered Weibo, the news portal ifeng.com and the popular video site AcFun to suspend video and audio streaming services for rule violations. The three companies didn’t have licenses for online video and audio and provided “rule-breaking” content on political and social issues and commentaries that “advocate negative voices,” according to the State Administration of Press, Publication, Radio, Film and Television.

Weibo was fined over the matter and has since worked closely with government authorities to correct its operation, the company said. The impact of the notice has been limited to Weibo’s video operation, said Weibo Chief Financial Officer Herman Yu on a conference call for the earnings report.

As a privately owned company, Weibo is not qualified to obtain a license for internet video and audio transmission under current law, but the company is prepared to apply for the license when it is feasible to do so, Yu said.

On the same day, Weibo’s parent Sina Corp, a leading media company, reported 47% year-on-year growth in second-quarter revenue to $358.9 million. But the company’s profit fell by almost half to $23.4 million from $43.3 million the second quarter last year.

Contact reporter Han Wei (weihan@caixin.com)