Core Viewpoint - Weibo Corporation's stock is considered extremely undervalued, with a market capitalization decline of 95% from over USD 30 billion in 2018 to approximately USD 1.8 billion today [1]. Company Summary - The significant drop in Weibo's market cap indicates a potential investment opportunity, as the company's book value has not been detailed but is implied to be more favorable compared to its current market valuation [1]. Analyst Background - The analysis is provided by a full-time investor with 15 years of experience in Asian and Global markets, previously serving as Head of Financial Markets at Fitch Solutions [1].

Investment Rating - The report does not explicitly state an investment rating for the company Core Insights - The company, Handback Group, is leveraging social media for insurance sales, which has become its primary customer acquisition channel [2][13] - The insurance intermediary industry is facing significant challenges due to tightening regulations and a trend towards "disintermediation" by traditional insurance companies [4][26] - The company's revenue model relies heavily on commissions from insurance sales, with a notable decline in commission rates impacting profitability [19][22] Summary by Sections Company Overview - Handback Group was established in 2015 and has raised significant funding from various institutional investors, with the founder holding a 29.68% stake [2][3] - The company collaborates with over 100 insurance companies, covering more than 65% of the life insurance market in China [3] Business Model - The company operates primarily through online distribution of insurance products, earning commissions based on a percentage of the premiums [3][4] - The revenue from insurance trading services constitutes over 99% of the company's total revenue, with the main platforms being Xiaoyusan, Kachabao, and Niubao 100 [5][6] Market Position - As of 2023, the company ranked eighth in the life insurance intermediary market with a market share of 2.9%, amidst a competitive landscape with 2,592 intermediaries [4][5] - The total premium for the life insurance intermediary market in China was approximately 237 billion yuan in 2023 [4] Customer Acquisition - The company has a weak direct customer acquisition capability, relying significantly on third-party distribution channels, particularly self-media influencers [11][13] - As of May 2024, the total number of insured individuals reached 1.465 million, with 51% coming from the Niubao 100 platform [11] Financial Performance - The company's revenue in 2023 was 1.63 billion yuan, recovering from a significant drop in 2022 due to regulatory changes affecting commission rates [23][28] - The gross profit margin improved to 37.0% in early 2024, indicating a trend towards better cost management [28][33] Regulatory Environment - The tightening of regulations, including the "Report and Action Integration" policy, poses risks to the company's business model, particularly its reliance on self-media for insurance sales [26][27] - The average first-year commission rates for the company's insurance products have significantly decreased, impacting revenue generation [21][22] Future Outlook - The company plans to use IPO proceeds primarily to expand its workforce, indicating a focus on scaling operations despite regulatory challenges [38] - The sustainability of the self-media insurance sales model remains uncertain due to ongoing regulatory scrutiny [27][38]

Financial Data and Key Metrics Changes - Weibo's total revenues for Q2 2024 reached $437.9 million, a decrease of 1% year-over-year, but an increase of 1% on a constant currency basis [27][28] - Advertising revenues were $375.3 million, reflecting a decrease of 3% year-over-year or 1% on a constant currency basis [28] - Non-GAAP operating income was $157.6 million, representing a non-GAAP operating margin of 36%, a modest increase year-over-year [27][32] - Net income attributable to Weibo was $126.3 million, with a net margin of 29%, remaining flat year-over-year [32] Business Line Data and Key Metrics Changes - VAS (Value-Added Services) revenues increased to $62.6 million, a growth of 15% year-over-year or 18% on a constant currency basis, primarily driven by membership services [31] - Mobile ad revenues accounted for approximately 94% of total ad revenue, amounting to $352.3 million [28] Market Data and Key Metrics Changes - MAU (Monthly Active Users) reached 583 million, while average DAUs (Daily Active Users) were 256 million, indicating improved user engagement [6][27] - The entertainment sector showed good momentum, driven by popular TV programs, while the FMCG sector faced challenges [29] Company Strategy and Development Direction - The company is focusing on user acquisition and engagement, particularly targeting high-quality users [6][27] - Weibo aims to enhance its monetization competitiveness by leveraging hot trends and IPs, and driving vertical content ecosystems [19][26] - The strategy includes strengthening partnerships with industries such as automotive and digital products to improve content marketing and ad revenue [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment and its impact on advertising demand for the second half of 2024, particularly in first-tier cities [36][37] - There is a noted stability in ad spending from advertisers, despite challenges in certain sectors like cosmetics and beauty [36][39] - The company anticipates a boost in user engagement and ad placements during the Summer Olympics, but expects a slowdown post-event [31] Other Important Information - The company has developed a large language model (LLM) to enhance content production and user interaction, which has received government approval [44][45] - The AI technology is expected to improve content recommendation and user experience on the platform [49] Q&A Session Summary Question: Overall macro outlook and advertising outlook for the second half of the year - Management noted that ad revenue in Q2 was flat year-over-year, with some sectors like cosmetics experiencing a decline, while others showed growth [36] - There are uncertainties regarding macroeconomic developments, particularly in consumption, which may impact ad spending [37][38] Question: Developments in AIGC and its impact on content production - Management highlighted the approval of their LLM and its application in enhancing user interaction and content understanding [44][45] - The AI is expected to improve content recommendations and user experience, with significant user engagement already observed [49]

Core Insights - Weibo Corporation reported revenue of $437.87 million for the quarter ended June 2024, a decrease of 0.5% year-over-year, with EPS at $0.48 compared to $0.53 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $435.11 million by 0.64%, while the EPS surpassed the consensus estimate of $0.45 by 6.67% [1] User Metrics - Average daily active users (DAUs) were reported at 256 million, slightly below the average estimate of 259.31 million [3] - Monthly active users (MAUs) stood at 583 million, also below the estimated 597.03 million [4] Revenue Breakdown - Net revenues from value-added services reached $62.60 million, exceeding the average estimate of $56.50 million, reflecting a year-over-year increase of 14.7% [5] - Net revenues from advertising and marketing were $375.28 million, falling short of the average estimate of $378.61 million, with a year-over-year decline of 2.7% [6] Stock Performance - Weibo shares have returned 2.5% over the past month, outperforming the Zacks S&P 500 composite's 2.2% change [6] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [6]

Financial Performance - Net revenues for Q2 2024 were $437.9 million, a decrease of 1% year-over-year, but an increase of 1% on a constant currency basis[3]. - Advertising and marketing revenues were $375.3 million, a decrease of 3% year-over-year, while excluding Alibaba, revenues were $342.9 million, a decrease of 4%[5]. - Value-added services (VAS) revenues increased by 15% year-over-year to $62.6 million, driven primarily by growth in membership services[5]. - Net revenues for the six months ended June 30, 2024, were $714,228 thousand, a decrease of 3.5% compared to $740,974 thousand for the same period in 2023[19]. - Net income attributable to Weibo's shareholders for the six months ended June 30, 2024, was $161,369 thousand, down from $181,879 thousand in the same period of 2023, representing a decline of 11.3%[19]. - Net revenues for the second quarter of 2023 reached $440.24 million, a 11.3% increase from $395.50 million in the previous quarter[27]. User Engagement - Monthly active users (MAUs) reached 583 million, and average daily active users (DAUs) were 256 million in June 2024[3]. - The company emphasized improved user engagement and operating efficiency, focusing on high-quality user acquisition and a vertical content strategy[2]. Income and Margins - Income from operations was $135.4 million, with an operating margin of 31%, up from 28% in the previous year[6]. - Non-GAAP income from operations was $157.6 million, representing a non-GAAP operating margin of 36%, compared to 35% last year[6]. - Net income attributable to Weibo's shareholders was $111.9 million, an increase from $81.4 million in the same period last year[8]. - Basic net income per share attributable to Weibo's shareholders for the six months ended June 30, 2024, was $0.68, compared to $0.77 for the same period in 2023, a decrease of 11.7%[19]. Cash and Investments - Cash, cash equivalents, and short-term investments totaled $2.8 billion as of June 30, 2024[9]. - Cash and cash equivalents as of June 30, 2024, were $1,922,371 thousand, down from $2,584,635 thousand as of December 31, 2023, a decline of 25.7%[21]. - The company’s investment-related loss for the six months ended June 30, 2024, was $(4,725) thousand, compared to a loss of $(25,190) thousand for the same period in 2023, indicating an improvement[19]. - Investment related gain for the second quarter of 2023 was $25.19 million, significantly higher than $4.97 million in the previous quarter[24]. Costs and Expenses - Total costs and expenses for the six months ended June 30, 2024, were $598,248 thousand, compared to $634,075 thousand for the same period in 2023, reflecting a decrease of 5.7%[19]. - Stock-based compensation for the second quarter of 2023 was $26.07 million, compared to $21.01 million in the previous quarter[24]. Assets and Liabilities - Total assets as of June 30, 2024, were $7,102,285 thousand, a decrease from $7,280,358 thousand as of December 31, 2023, representing a decline of 2.4%[21]. - Total liabilities as of June 30, 2024, were $3,688,718 thousand, down from $3,762,742 thousand as of December 31, 2023, a decrease of 2.0%[22]. - The company reported a decrease in accounts receivable, net, to $371,291 thousand as of June 30, 2024, from $440,768 thousand as of December 31, 2023, a decline of 15.7%[21]. - The company’s total shareholders' equity increased to $3,375,350 thousand as of June 30, 2024, from $3,448,888 thousand as of December 31, 2023, a decrease of 2.1%[22]. Previous Quarter Comparisons - Non-GAAP diluted net income per share attributable to Weibo's shareholders was $0.53 for the second quarter of 2023, up from $0.41 in the previous quarter[24]. - Adjusted EBITDA for the second quarter of 2023 was $163.88 million, an increase from $133.03 million in the previous quarter[24]. - Non-GAAP operating margin improved to 35% in the second quarter of 2023, compared to 32% in the previous quarter[24]. - Advertising revenue from non-Ali advertisers was $358.89 million for the second quarter of 2023, compared to $316.40 million in the previous quarter, reflecting a 13.4% increase[27]. - Value-added services revenue increased to $54.57 million in the second quarter of 2023, up from $56.55 million in the previous quarter[27].

Financial Performance - Net revenue for Q2 2024 was $437.9 million, a decrease of 1% year-over-year, or an increase of 1% when adjusted for fixed exchange rates[4]. - Advertising and marketing revenue for Q2 2024 was $375.3 million, down 3% year-over-year, or down 1% when adjusted for fixed exchange rates[4]. - Value-added services revenue increased by 15% year-over-year to $62.6 million, primarily driven by growth in membership services[5]. - Operating profit for Q2 2024 was $135.4 million, with an operating margin of 31%, compared to 28% in the same period last year[5]. - Non-GAAP net profit attributable to Weibo shareholders was $126.3 million, with a diluted EPS of $0.48[5]. - The company reported a decrease in total costs and expenses by 5% year-over-year to $302.5 million[5]. - Non-operating profit for Q2 2024 was $11.4 million, compared to a non-operating loss of $13.8 million in the same period last year[5]. - Net income attributable to Weibo shareholders was $81.387 million for the quarter ended June 30, 2023, compared to $49.438 million for the quarter ended March 31, 2024, representing an increase of 64.5%[11]. - Basic net income per share attributable to Weibo shareholders was $0.35 for the quarter ended June 30, 2023, compared to $0.21 for the quarter ended March 31, 2024, indicating a growth of 66.7%[12]. - Operating profit for the quarter ended June 30, 2023, was $123.453 million, compared to $99.737 million for the quarter ended March 31, 2024, showing an increase of 23.8%[11]. - The company reported a total net revenue of $440.240 million for the quarter ended June 30, 2023, compared to $395.497 million for the quarter ended March 31, 2024, marking a growth of 11.3%[11]. - Revenue from advertising and marketing for the six months ended June 30, 2024, was $714,228, compared to $740,974 for the same period in 2023, a decrease of about 3.6%[18]. - The adjusted EBITDA for the six months ended June 30, 2024, was $293,393, compared to $297,625 for the same period in 2023, indicating a slight decrease of 1.1%[16]. - The company reported a net profit of $199,842,000 for the six months ended June 30, 2024, compared to $195,170,000 for the same period last year, reflecting an increase of approximately 1.4%[21]. - Total costs and expenses amounted to $620,997,000, down from $634,075,000 year-over-year, indicating a decrease of about 2.1%[21]. - The company achieved a gross profit of $247,144,000 before income tax expenses, up from $235,947,000, marking an increase of around 4.6%[21]. - The adjusted net profit attributable to shareholders was $210,647,000, compared to $181,879,000, reflecting a growth of about 15.8%[21]. - The company reported a total of $271,650,000 in profit before income tax expenses, an increase from $222,968,000, representing a growth of approximately 21.8%[21]. User Engagement - Monthly active users reached 583 million in June 2024, while daily active users averaged 256 million[4]. - The company emphasized enhancing user engagement and operational efficiency as key strategies for future growth[3]. - The company is continuously improving its social interest graph recommendation engine to enhance marketing effectiveness and user engagement[9]. - Weibo's revenue primarily comes from advertising and marketing services, which are crucial for its financial performance[9]. Assets and Liabilities - Cash, cash equivalents, and short-term investments totaled $2.8 billion as of June 30, 2024[6]. - As of June 30, 2024, total assets decreased to $7,102,285 from $7,280,358 as of December 31, 2023, representing a decline of approximately 2.4%[13][14]. - The company's cash and cash equivalents decreased to $1,922,371 as of June 30, 2024, down from $2,584,635 as of December 31, 2023, a reduction of about 25.7%[13]. - Total liabilities decreased to $3,688,718 as of June 30, 2024, from $3,762,742 as of December 31, 2023, a decline of approximately 2%[14]. - Long-term investments decreased slightly to $1,281,402 as of June 30, 2024, from $1,320,386 as of December 31, 2023, a reduction of about 2.9%[13][14]. Compliance and Accounting - The company’s total assets and liabilities were evaluated under both US GAAP and IFRS, with no significant discrepancies found in the financial reporting[20]. - The company is committed to maintaining compliance with both US GAAP and IFRS standards, ensuring transparency and accuracy in financial reporting[19]. - As of December 31, 2023, total assets reported under US GAAP amounted to $7,280,358, while under IFRS, it was $7,322,919, reflecting a difference of $42,561[22]. - The net goodwill and intangible assets were reported at $300,565 under US GAAP, adjusted to $289,461 under IFRS after accounting for redeemable non-controlling interests[22]. - Long-term investments were valued at $1,320,386 under US GAAP, increasing to $1,376,307 under IFRS after fair value adjustments[22]. - Total liabilities under US GAAP were $3,762,742, while under IFRS, they amounted to $3,892,810, indicating a difference of $130,068[22]. - The total equity attributable to shareholders was $3,398,735 under US GAAP, adjusted to $3,338,694 under IFRS after accounting for convertible bonds and other adjustments[22]. - The company reported a total of $666,833 in accrued expenses and other current liabilities under US GAAP, which adjusted to $666,497 under IFRS[22]. - The convertible preferred stock was valued at $317,625 under US GAAP, with an adjustment to $356,545 under IFRS due to fair value measurement[22]. - The company’s total liabilities and equity under US GAAP were $7,280,358, while under IFRS, it was $7,322,919, showing a difference of $42,561[22]. - The company’s non-controlling interests were reported at $50,153 under US GAAP, adjusted to $91,415 under IFRS after accounting for fair value changes[22]. - The adjustments between US GAAP and IFRS reflect differences in accounting policies, particularly in the treatment of convertible bonds, leases, and equity incentives[23][24][25][26][27]. Acquisition and Financial Liabilities - The company entered into a series of share purchase agreements to acquire a majority stake in Shanghai Mask Information Technology Co., Ltd. on October 31, 2020[28]. - The redeemable non-controlling interests were recognized at fair value on the acquisition date, including the redemption rights as part of the purchase price[28]. - The overall increase in redeemable non-controlling interests was recorded up to the redemption value from the acquisition date[28]. - The fair value of the redeemable non-controlling interests is treated as permanent equity, excluding the redemption rights[28]. - The fair value of the redemption rights is recognized separately as a financial liability on the balance sheet[28]. - The initial recognition of the financial liability reduces the parent company's equity[28]. - Subsequent changes in the carrying amount of the financial liability are recognized as financial expenses in the income statement[28]. - The company has an obligation to purchase the remaining equity interests held by the founder and CEO of Mask Technology at fair value[28]. - The application of acquisition accounting results in lower goodwill due to the separate recognition of the financial liability[28]. - The redeemable non-controlling interests are classified as financial liabilities due to the conditional events not fully controlled by the company[28].

In its upcoming report, Weibo Corporation (WB) is predicted by Wall Street analysts to post quarterly earnings of $0.45 per share, reflecting a decline of 15.1% compared to the same period last year. Revenues are forecasted to be $435.11 million, representing a year-over-year decrease of 1.2%.The current level reflects a downward revision of 1.4% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their init ...

BEIJING, July 31, 2024 /PRNewswire/ -- Weibo Corporation (Nasdaq: WB and HKEX: 9898), a leading social media for people to create, share and discover content, will announce its unaudited financial results for the second quarter 2024 before the U.S. market opens on Thursday, August 22, 2024. Following the announcement, Weibo's management team will host a conference call from 7 AM – 8 AM Eastern Time on August 22, 2024 (or 7 PM – 8 PM Beijing Time on August 22, 2024) to present an overview of the Company's fi ...

Financial Data and Key Metrics Changes - In Q1 2024, Weibo reported revenue of $396 million, a year-over-year decline of 4.4% and a quarter-over-quarter decline of 14.7% [1] - Advertising revenue reached $339 million, down 4.6% year-over-year and down 16.0% quarter-over-quarter [1] - Non-GAAP operating profit was $126 million, exceeding consensus by 18.8%, with an operating profit margin (OPM) of 31.8% [1] - Net profit attributable to shareholders was $107 million, up 24.1% compared to consensus [1] Business Line Data and Key Metrics Changes - Value-added services (VAS) revenue was $57 million, down 3.3% year-over-year and down 5.6% quarter-over-quarter [1] - The gaming and mobile sectors showed significant growth, with both industries maintaining double-digit growth year-over-year [2] - The beauty sector's revenue increased over 50% year-over-year, although overall beauty industry revenue declined due to international market weakness [2] Market Data and Key Metrics Changes - Monthly Active Users (MAU) reached 588 million, a decrease of 0.8% year-over-year and 1.7% quarter-over-quarter [1] - Daily Active Users (DAU) remained stable at 255 million, with no change year-over-year but a slight decline of 0.8% quarter-over-quarter [1] Company Strategy and Development Direction - Weibo is focusing on vertical content generation and distribution, enhancing support for vertical content creators to drive commercialization [2] - The company plans to strengthen partnerships with e-commerce platforms to explore collaborative promotions, aiming for stable revenue growth [2] - Weibo is also expanding the application of AI in vertical content areas, which is expected to provide new growth momentum [3] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery, anticipating a positive performance outlook as the company capitalizes on seasonal trends and marketing opportunities [1] - The company expects advertising revenue to recover in Q2 2024, driven by the low base from Q1 2024 and upcoming events like the Summer Olympics [2] Other Important Information - The beauty sector currently accounts for approximately 10-11% of Weibo's revenue, and the company plans to reduce its reliance on this sector due to its negative impact on overall performance [2] - Weibo's advertising revenue is highly dependent on the performance of the FMCG and e-commerce sectors, which are currently in a cycle of inventory clearance [3] Q&A Session Summary Question: What are the expectations for advertising revenue recovery? - Management expects advertising revenue to recover in Q2 2024, supported by a low base from Q1 2024 and the upcoming Summer Olympics [2] Question: How is Weibo addressing competition from emerging platforms? - The company is focusing on enhancing its vertical content strategy and improving user engagement to retain its user base amidst increasing competition from short video platforms [6]

Investment Rating - The report assigns a "Buy" rating to the company, with a current price of $8.77 and a target value of $15.22 per ADS, equivalent to HKD 118.87 [1][9]. Core Insights - The company's revenue for Q1 2024 was $395 million, slightly above consensus expectations, with stable revenue and profit margins. The advertising revenue from Alibaba grew by 23% year-over-year, while third-party advertising revenue declined by 6% [1][3]. - The report anticipates that the company will benefit from increased advertising budgets during the upcoming summer Olympics, particularly in sectors like apparel, gaming, and food and beverage [1][4]. - The overall advertising business is expected to see a recovery in the second half of the year, with a projected revenue of $1.77 billion for 2024, reflecting a 1% year-over-year growth, and $1.84 billion for 2025, reflecting a 4% growth [3][4]. Financial Summary - The company reported a GAAP net profit of $34 million for Q1 2024, with a non-GAAP net profit of $63 million, indicating a 51% year-over-year decline [1][4]. - The EBITDA for 2024 is projected to be $597 million, with a net profit margin of 27% and an adjusted net profit of $487 million [5][6]. - The report highlights a stable gross margin of 79% for the upcoming years, with operating profit expected to reach $481 million in 2024 [5][6]. Earnings Forecast - The adjusted net profit for 2024 is expected to be $487 million, with a compound annual growth rate (CAGR) of 7.6% projected for 2024-2026 [10][4]. - The report estimates total revenue for 2024 at $1.77 billion, with advertising revenue expected to remain stable at $1.54 billion [3][4]. Valuation Metrics - The report uses a PEG ratio of 1.00 for valuation, leading to a target price of $15.22 per ADS based on a projected adjusted net profit of $487 million for 2024 [9][10]. - The report compares the company with peers, indicating a stable market position and potential for growth in advertising revenue despite macroeconomic challenges [9][10].