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SINA Q4 Earnings In Line With Estimates, Revenues Surpass

Zacks Equity Research
Updated

SINA Corporation’s SINA fourth-quarter 2017 non-GAAP earnings of 79 cents per share surged 25.4% from the year-ago quarter and matched the Zacks Consensus Estimate.

Net revenues grew 61% to $503.7 million and beat the Zacks Consensus Estimate of $487 million. Non-GAAP net revenues increased 61% to $501.1 million.

Quarter Details

Advertising revenues surged 58% year over year to $424.8 million, driven by the momentum in the Weibo segment. Non-advertising (non GAAP) revenues increased 85% year over year to $76.4 million driven by growth in fintech and live broadcasting business as well as increased membership fees for Weibo.

Revenues from Weibo business surged 77.4% year over year to $377.4 million. Monthly active users increased 79 million from the year-ago quarter to 392 million, driven by an increasing number of mobile users. At the end of the quarter, daily active users went up to 172 million, up 23.7% from the year-ago quarter.

Weibo non-ad revenues grew a whopping 81% to $45.1 million, mainly attributable to the hike in membership fees and live broadcasting business.

Weibo's ad and marketing revenues grew 77% to $332.3 million in the reported quarter, backed by robust growth in mobile advertisements. Heavy ad spending by FMCG, Internet service and automobile industries is a key catalyst.

Portal advertising revenues were up 16.5% year over year to $95.3 million. Portal non-advertising revenues increased 91% to $31.2 million driven by fintech business. However, revenues from micro loan facilitating business were hit by stricter regulation in micro-lending sector.

Sina Corporation Price, Consensus and EPS Surprise

Sina Corporation Price, Consensus and EPS Surprise | Sina Corporation Quote

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Margins

Non-GAAP operating income was $149.8 million, which surged 82% year over year. Non-GAAP operating margin of 30% expanded 400 basis points from the year-ago quarter on the back of Weibo’s operating leverage as well as increase in margin from non-Weibo business.

However, increase in sales and marketing expenses to increase Weibo and SINA news app users and a rise in product development cost remain dampeners.

Balance Sheet and Cash Flow

SINA exited the quarter with cash & cash equivalents (including short-term investments & restricted cash) of $3.6 billion compared with $2.6 billion as of Sep 30, 2017.

Cash provided by operating activities in the quarter was $76.3 million. Capital expenditure was $29.3 million.

Outlook

For fiscal 2018, SINA expects net revenues in the range of $2.23-$2.38 billion. Increased regulation on fintech business, mainly on micro lending, is a concern as it is anticipated to adversely impact revenue growth of the sector.

Given the rise in channel cost to acquire and retain users amid stiffening competition, the company plans to increase channel marketing spend in 2018, which will remain an overhang on margins.

Zacks Rank & Stocks to Consider

SINA carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Micron Technology Inc. MU, Lam Research Corporation LRCX and Paycom Software Inc. PAYC all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Micron, Lam Research and Paycom Software is projected to be 10%, 14.9% and 25.8%, respectively.

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