Financial Performance - Weibo Corporation reported its annual performance for the fiscal year ending December 31, 2023, with a comprehensive financial statement available for shareholders[3]. - Total revenue for the year ended December 31, 2023, was $1,759.836 million, a decrease from $1,836.332 million in 2022, representing a decline of approximately 4.2%[55]. - Net profit attributable to Weibo shareholders for the year ended December 31, 2023, was $342.598 million, compared to $85.555 million in 2022, indicating a significant increase of approximately 300%[56]. - Third-party revenue for the year ended December 31, 2023, was $1,531.675 million, down from $1,540.585 million in 2022, reflecting a decrease of about 0.9%[55]. - The total cost and expenses for the year ended December 31, 2023, amounted to $1,286.902 million, slightly lower than $1,355.864 million in 2022, showing a reduction of approximately 5.1%[55]. - The company reported a profit before income tax expense of $502.782 million for the year ended December 31, 2023, compared to a profit of $128.086 million in 2022, marking an increase of approximately 292%[56]. - The company’s share of profits from subsidiaries for the year ended December 31, 2023, was $529.304 million, up from $305.672 million in 2022, representing an increase of approximately 73.5%[56]. - The effective tax rate for the company was impacted by a 10% withholding tax on dividends distributed to foreign holding companies, which may affect future cash flows[55]. - The company’s operating expenses decreased by approximately 5.1% year-over-year, indicating improved cost management strategies[55]. User Engagement and Growth - The company reported a significant increase in daily active users, reaching an average of 250 million, representing a 10% year-over-year growth[16]. - Monthly active users also saw an increase, totaling 550 million, which is a 5% increase compared to the previous year[17]. - User engagement metrics improved, with a 20% increase in content creation on the platform[16]. - The company acknowledges that user growth rates are expected to continue to fluctuate and slow down due to market saturation[73]. - The company has implemented various features such as trending topics, search, and recommendation feeds to enhance user engagement and attract new users[75]. - The reliance on content creators is critical, as they contribute significantly to the platform's most popular content, and any decline in their contributions could adversely affect user engagement[77]. - The company emphasizes the importance of providing engaging and practical content to retain users and attract new ones[76]. - The company faces intense competition in user traffic and engagement, particularly from major Chinese internet companies like Tencent and ByteDance[81]. Regulatory and Compliance Risks - The company is subject to various restrictions and potential penalties from the Chinese government regarding its VIE structure, which could impact its operations and financial performance[31]. - New regulations regarding data security and privacy in China, including the Data Security Law and Personal Information Protection Law, pose additional compliance challenges for the company[34]. - The China Securities Regulatory Commission issued new rules for overseas listings, effective March 31, 2023, requiring companies to comply with filing requirements for any securities offerings outside of China[35]. - The evolving regulatory landscape in China may lead to significant adverse changes in the company's operations and the value of its securities, limiting its ability to raise capital[37]. - The company cannot guarantee compliance with all aspects of the rapidly changing legal and regulatory environment in China, which may affect its business operations[39]. - The company faces potential fines and penalties if found non-compliant with the new antitrust laws and regulations in China[36]. - The company is subject to potential fines and enforcement actions due to non-compliance with data protection regulations, which could adversely affect business performance[115]. Financial Structure and Investments - As of December 31, 2023, the company had 242,610,942 shares of common stock outstanding, comprising 154,788,918 Class A shares and 87,822,024 Class B shares[10]. - The total liabilities increased to $3,762,742,000 in 2023 from $3,738,914,000 in 2022, indicating a rise of approximately 0.6%[57][59]. - Shareholders' equity totaled $3,448,888,000 in 2023, compared to $3,344,745,000 in 2022, marking an increase of around 3.1%[57][59]. - The company reported a net gain of $10.9 million from fair value changes in investments in 2023, highlighting the volatility and risks associated with its investment portfolio[136]. - The company has completed a share purchase agreement on March 1, 2023, acquiring 100% of ShowWorld HongKong Limited for approximately RMB 2.16 billion (paid in USD), resulting in a 26.57% ownership stake in Tianxiaxiu Digital Technology Group Co., Ltd.[132]. - The company anticipates ongoing stock-based compensation expenses as a strategy to attract and retain key personnel, which may significantly impact operating performance[131]. Strategic Initiatives and Future Outlook - The company plans to launch new features aimed at enhancing user engagement, expected to roll out in Q2 2024[19]. - A strategic partnership with a leading technology firm was announced, aimed at expanding market reach and improving service offerings[20]. - Future guidance indicates expected revenue growth of 12-15% for the upcoming quarter[18]. - The company continues to explore market expansion opportunities and new product development to drive future growth[55]. - The company is investing $200 million in research and development for new technologies over the next fiscal year[19]. - The company is exploring potential acquisitions to bolster its market position and diversify its product offerings[20]. Operational Challenges - The company faces significant risks related to its business operations in China, which may impact its financial performance[68]. - The company relies heavily on online advertising and marketing services for revenue, and any failure to generate sustainable income could adversely affect its operating results[69]. - The company must expand its active user base; failure to do so may lead to a significant negative impact on its business and financial condition[69]. - The company faces challenges in maintaining effective partnerships with programmatic buying partners, as fluctuating inventory prices may reduce cost-effectiveness[79]. - The company is actively combating spam on its platform, which could affect user experience and engagement, potentially increasing operational costs[107]. - The company faces significant competition for qualified talent in China, which could adversely affect business growth and operational performance if key personnel are not retained[130]. Governance and Management - The board of directors includes prominent members such as Chairman Cao Guowei and independent directors, ensuring a diverse governance structure[4]. - The company is committed to retaining key personnel and attracting new talent[24]. - The company has established a series of contractual agreements with its Chinese subsidiaries and VIEs, including loan agreements and exclusive technology assistance agreements[27]. - The company is classified as a "controlled company" under NASDAQ rules due to Sina holding over 50% of voting power[183]. - Potential conflicts of interest exist due to the control by Sina, which may lead to strategic decisions that do not align with the interests of other shareholders[185].

Core Points - Weibo Corporation filed its annual report on Form 20-F for the fiscal year ended December 31, 2023, with the U.S. Securities and Exchange Commission on April 25, 2024 [1] - The annual report is available on Weibo's investor relations website and can be requested in hard copy by shareholders and ADS holders [1] Company Overview - Weibo is a leading social media platform in China that allows users to create, discover, and distribute content [2] - The platform supports real-time public self-expression and social interaction, enabling users to follow others, comment, and repost content [2] Advertising and Marketing - Weibo generates a substantial majority of its revenues from advertising and marketing services, including social display advertisements and promoted marketing offerings [3] - The company employs a "mobile first" philosophy, displaying content in a simple information feed format and offering native advertisements that align with this format [3] - Weibo has developed a social interest graph recommendation engine to enhance marketing effectiveness by targeting audiences based on demographics, social relationships, interests, and behaviors [3]

Financial Performance - Net income attributable to Weibo's shareholders for the year ended December 31, 2022, was $10,000, down from $214,709 in 2021[3] - The company reported a net income of $351,340 for the year ended December 31, 2023, compared to $198,267 in 2021[3] Costs and Expenses - Total costs and expenses for the year ended December 31, 2021, were reported at $1,587,290, an increase from $1,370,286 in 2022[2] - Interest expense for the year ended December 31, 2023, was $(122,498), compared to $(56,462) in 2021[3] - The cost of revenues for the year ended December 31, 2023, was $369,321, a decrease from $406,643 in 2021[3] - Sales and marketing expenses for the year ended December 31, 2023, were $456,648, down from $480,010 in 2022[3] - Product development costs for the year ended December 31, 2023, were $320,258, a decrease from $441,539 in 2021[3] - General and administrative expenses for the year ended December 31, 2023, were $100,913, a decrease from $142,090 in 2021[3] Investments and Fair Value - Fair value changes through earnings on investments for the year ended December 31, 2022, were reported at $(252,475), a significant decrease from $(266,472) in 2021[2] - The company reported a fair value change of $63,336 through earnings on investments for the year ended December 31, 2023[3] - Long-term investments increased to $1,320,386, reflecting a fair value adjustment of $55,921[4] - The fair value of investments measured at fair value through profit or loss was adjusted to reflect market conditions[4] Balance Sheet Highlights - Total assets as of December 31, 2023, reported under U.S. GAAP were $7,280,358, with total liabilities of $3,762,742[4] - Total shareholders' equity amounted to $3,448,888, with a decrease in accumulated other comprehensive loss to $(217,817)[4] - The redeemable non-controlling interest was recorded at $68,728, indicating a significant change in ownership structure[4] - The company reported a total of $317,625 in convertible senior notes, with a fair value adjustment of $38,920[4] - Retained earnings for Weibo shareholders reached $2,187,556, after accounting for various adjustments[4] - The total liabilities, redeemable non-controlling interests, and shareholders' equity combined were $7,280,358[4] - The company recognized a financial liability of $79,623 related to lease obligations[4] - The company’s additional paid-in capital was reported at $1,428,935, with adjustments for share-based compensation[4]

User Engagement and Growth - Weibo's MAUs increased from 573 million in December 2021 to 598 million in December 2023, while average DAUs rose from 249 million to 257 million during the same period, maintaining a DAU to MAU ratio of 43%[700]. - The company plans to enhance user experience and engagement by improving product features and refining its SIG recommendation engine[707]. - Weibo aims to increase monetization through user base growth, improved user engagement, and effective management of advertisement inventory[710]. - Weibo's brand recognition strategy focuses on user scale and engagement, optimizing channel investments to enhance user acquisition efficiency[713]. Financial Performance - Revenues for Weibo were reported at US$2,257.1 million in 2021, US$1,836.3 million in 2022, and US$1,759.8 million in 2023, with net income attributable to shareholders of US$428.3 million, US$85.6 million, and US$342.6 million respectively[703]. - Total net revenues decreased by 4% from US$1,836.3 million in 2022 to US$1,759.8 million in 2023, primarily due to the depreciation of RMB against the U.S. dollar[730]. - Advertising and marketing revenues decreased by 4% from US$1,596.7 million in 2022 to US$1,534.0 million in 2023, with the total number of advertisers dropping from 1.0 million to 0.7 million[731]. - Value-added services revenues decreased by 6% from US$239.7 million in 2022 to US$225.8 million in 2023, mainly due to RMB depreciation[733]. Cost Management - Total costs and expenses decreased by 5% from US$1,355.9 million in 2022 to US$1,286.9 million in 2023[739]. - Cost of revenues decreased by 7% from US$400.6 million in 2022 to US$374.3 million in 2023, attributed to lower labor and bandwidth costs[740]. - Sales and marketing expenses decreased by 3% from US$477.1 million in 2022 to US$461.4 million in 2023[741]. - Product development expenses decreased by 20% from US$415.2 million in 2022 to US$333.6 million in 2023, mainly due to reduced personnel-related expenses[742]. - General and administrative expenses increased by 123% from US$52.8 million in 2022 to US$117.6 million in 2023, largely due to the reversal of compensation costs[743]. Tax and Regulatory Environment - The company is entitled to a preferential tax rate of 15% due to its qualification as a "High and New Technology Enterprise," which will expire in 2025 unless renewed[719]. - Research and development expenses can be claimed at a rate of 200% for tax deductions since January 1, 2023, enhancing the company's investment in innovation[720]. - Weibo's advertising revenues are subject to a cultural business construction fee reduced to 1.5% until December 31, 2024, following a temporary exemption during the COVID-19 pandemic[721]. Cash Flow and Investments - Net cash provided by operating activities was US$672.8 million in 2023, compared to US$564.1 million in 2022[758][765]. - Cash and cash equivalents at the end of 2023 were US$2,584.6 million, down from US$2,690.8 million at the end of 2022[758]. - Net cash used in investing activities in 2023 was US$736.8 million, mainly due to cash paid on long-term investments of US$602.7 million and purchases of bank time deposits and wealth management products totaling US$755.3 million[768]. - Capital expenditures were US$35.1 million in 2021, US$43.1 million in 2022, and US$36.8 million in 2023, indicating ongoing investment to support business growth[776]. Shareholder Returns - A special cash dividend of US$0.85 per ordinary share and ADS was approved in May 2023, totaling US$200.1 million for the year[897]. - A subsequent special cash dividend of US$0.82 per ordinary share and ADS was approved in March 2024, expected to total approximately US$200 million[898]. - For the years ended December 31, 2021 and 2022, dividends to shareholders were nil, indicating a significant increase in 2023[897]. Corporate Governance and Management - The company has the right to seek damages if a duty owed by its directors is breached, reflecting its commitment to corporate governance[833]. - The board of directors consists of seven members, with one female director and six male directors as of March 31, 2024[835]. - The audit committee is composed of two independent directors, Mr. Pochin Christopher Lu and Mr. Pehong Chen, with Mr. Lu serving as the chair[831]. - The compensation committee, chaired by Mr. Pehong Chen, is responsible for reviewing and approving the total compensation packages for executive officers and non-employee directors[832]. Employment and Compensation - The company had 5,268 employees as of December 31, 2023, with the largest function being product development, which accounted for 2,284 employees[836]. - The company paid an aggregate of approximately US$3.9 million in cash and benefits to its executive officers for the year ended December 31, 2023[817]. - The company has not set aside or accrued any amount to provide pension, retirement, or other similar benefits to its executive officers and directors[817]. - The company has entered into employment agreements with its senior executive officers, allowing termination for cause without remuneration[818].

Group 1 - Weibo is currently deeply undervalued, trading at only 5x its earnings, the lowest among China's social media operators, indicating potential for a reversal [2] - The company issued a special dividend with an 8.7% yield, which may act as a catalyst for market interest [5] - Analysts have lowered their price targets significantly, with the consensus figure down more than 50% in the last 12 months, yet the market is trading below the low end of the analyst range [6] Group 2 - Weibo's Q4 results showed a 3% growth in ad sales and a 5% increase in Value-added Services, with daily active users (DAUs) advancing by 2% [4] - The company's earnings were weaker than consensus expectations, down about $0.19, but it maintains a solid balance sheet with a cash position of $3.2 billion [5] - Institutional activity has been positive, with institutions buying Weibo stock for five consecutive quarters, and Goldman Sachs increasing its position by 200% [7] Group 3 - The technical outlook suggests Weibo is bottoming after a 95% contraction in share price over six years, with a potential reversal pattern forming [8] - The stock is poised to move towards the $10.50 region, with a critical resistance target near $11.25 if another catalyst emerges [8] - Despite the current "Hold" rating among analysts, there are indications that the market may see upward movement if conditions improve [6][9]

Investment Rating - The report maintains a rating of "Buy" for the company [1][4]. Core Views - The company has shown a recovery in revenue growth in Q4 2023, with a net income of $464 million, representing a year-on-year increase of 3.5% [4]. - The advertising marketing business is gradually recovering, with expectations that the upcoming Olympic Games will stimulate brand advertising spending [4]. - The overall operating profit margin remained stable in 2023, despite an increase in marketing expenses in Q4 [4]. Financial Performance Summary - Q4 2023 net revenue was $464 million, with a GAAP operating profit of $119 million, resulting in an operating profit margin of 26% [4]. - For the full year 2023, net revenue was $1.76 billion, a decrease of 4.2% year-on-year, while GAAP net profit was $343 million, an increase of 300% year-on-year [4][5]. - The company reported a cash flow from operating activities of $673 million for 2023, indicating healthy cash flow management [4]. Revenue Breakdown - Q4 2023 advertising revenue was $404 million, up 3.4% year-on-year, with significant contributions from Alibaba [4]. - Value-added services revenue for Q4 2023 was $60 million, reflecting a 4.3% increase, primarily driven by gaming-related income [4]. - For the full year 2023, advertising revenue totaled $1.53 billion, down 3.9% year-on-year, while value-added services revenue was $226 million, down 5.8% [4]. Future Outlook - The report anticipates that advertising revenue growth will accelerate in the second half of 2024 due to the Olympic Games [4]. - The forecast for non-GAAP net profit has been adjusted to $421 million for 2024 and $484 million for 2025, with a projected PE ratio of 5.8 for 2024 [5][6].

Investment Rating - The report assigns a "Buy" rating for the company, with a current price of $9.51 and a fair value of $15.52 [1][2]. Core Insights - The company reported Q4 2023 revenue of $464 million, which is a year-over-year increase of 3% and a quarter-over-quarter increase of 5%, exceeding consensus expectations of $454 million. The constant currency revenue grew by 5% year-over-year [2]. - The gross margin reached 78%, up 2.1 percentage points year-over-year, although it declined by 0.3 percentage points quarter-over-quarter. This is 1 percentage point above the consensus expectation of 77% [2]. - GAAP net profit attributable to shareholders was $83.23 million, down 41% year-over-year but up 7% quarter-over-quarter, surpassing the consensus estimate of $78.99 million. Non-GAAP net profit was $76.37 million, down 57% year-over-year and down 44% quarter-over-quarter, falling short of the consensus estimate of $122 million due to tax adjustments affecting non-recurring items [2]. - The company declared a special cash dividend of $200 million to enhance shareholder returns [2]. - Advertising revenue for Q4 was $404 million, reflecting a year-over-year increase of 3% and a quarter-over-quarter increase of 4%, with constant currency growth of 5%, compared to the consensus estimate of $394 million [2]. - The company expects to increase investments in community vertical content and user acquisition in 2024, as well as infrastructure for AIGC, which may lead to a slight increase in operating expenses [2]. Financial Projections - Revenue is projected to reach $1.75 billion in 2024 and $1.80 billion in 2025, with year-over-year changes of -1% and +3% respectively. Adjusted net profit is expected to be $437 million in 2024 and $486 million in 2025, with growth rates of -3% and +11% respectively [2][8]. - The report estimates a fair value of $15.52 per ADS based on a 1x PEG valuation, corresponding to a PE ratio of 8.4 times the adjusted net profit for 2024 [11][12].

Investment Rating - The report maintains a BUY rating for Weibo, indicating a potential return of over 15% over the next 12 months [2][13]. Core Insights - Weibo's total revenue for 4Q23 grew by 3% YoY to US$464 million, slightly above estimates, while FY23 revenue declined by 4% YoY to US$1.76 billion [2]. - Non-GAAP operating income for 4Q23 decreased by 4% YoY to US$146 million, but was 7% ahead of consensus due to stringent control over product development expenses [2]. - The company plans to increase investment in content and user acquisition to drive top-line growth in 2024, with expected revenue flat YoY at US$1.77 billion [2]. - The target price has been lowered to US$18.80 from US$23.50, reflecting a discount to peers' average valuation [2]. Revenue and Profitability - For FY24, total revenue is projected at US$1.77 billion, with adjusted net profit forecasted at US$451 million, down 16-19% from previous estimates [2][7]. - The adjusted net profit margin is expected to decline to 25.5% in FY24E, reflecting increased investments [2][11]. - Advertising revenue in 4Q23 grew by 3% YoY to US$404 million, with specific verticals like automobiles and online games showing strong performance [2]. User Engagement and Community Development - Monthly Active Users (MAUs) increased by 2% YoY to 598 million as of December 2023 [2]. - Weibo is focusing on enhancing user stickiness through investments in key content verticals and optimizing social products [2]. Shareholder Returns - Weibo announced a special cash dividend of US$0.82 per share, translating to an approximate 8% dividend yield, aimed at supporting valuation recovery [2].

Investment Rating - The investment rating for the company is "Buy" with a target price of $15.52 per ADS (121.35 HKD) [1][2]. Core Views - The company reported Q4 2023 revenue of $464 million, which is a year-over-year increase of 3% and a quarter-over-quarter increase of 5%, exceeding consensus expectations of $454 million. The revenue growth at constant exchange rates was 5% year-over-year [2]. - The gross margin reached 78%, up 2.1 percentage points year-over-year, although it declined 0.3 percentage points quarter-over-quarter. This was 1 percentage point above the consensus expectation of 77% [2]. - GAAP net profit attributable to shareholders was $83.23 million, down 41% year-over-year but up 7% quarter-over-quarter, surpassing the consensus estimate of $78.99 million. Non-GAAP net profit was $76.37 million, down 57% year-over-year and down 44% quarter-over-quarter, falling short of the consensus estimate of $122 million due to tax adjustments affecting non-recurring items [2]. - The company declared a special cash dividend of $200 million to enhance shareholder returns [2]. - Advertising revenue for Q4 was $404 million, reflecting a year-over-year increase of 3% and a quarter-over-quarter increase of 4%, with a constant exchange rate growth of 5%, compared to the consensus estimate of $394 million [2]. - The company is expected to increase investments in community vertical content and user acquisition in 2024, as well as expand infrastructure in AIGC, which may lead to a slight increase in operating expenses [2]. Financial Summary - The company’s revenue for 2024 and 2025 is projected to be $1.75 billion and $1.80 billion, respectively, with year-over-year growth rates of -1% and 3% [2][8]. - Adjusted net profit for 2024 and 2025 is expected to be $437 million and $486 million, reflecting year-over-year growth rates of -3% and 11% [2][8]. - The company maintains a cautious outlook on revenue due to the mixed performance across different industries, particularly with beauty products declining while sectors like automotive and gaming show growth [2][8]. Valuation - The valuation is based on a PEG ratio of 1x, leading to a target price of $15.52 per ADS, which corresponds to a PE ratio of 8.4 times the adjusted net profit for 2024 [2][11].

Financial Data and Key Metrics Changes - In Q4 2023, total revenue reached $463.7 million, an increase of 3% year-over-year and 5% quarter-over-quarter [7] - Total ad revenues in Q4 2023 were $403.7 million, also up 3% year-over-year and 4% quarter-over-quarter [7] - For the full year 2023, total revenues were $1.76 billion, a decrease of 4% year-over-year, while total ad revenues were $1.53 billion, also down 4% year-over-year [8] - Non-GAAP operating income for Q4 2023 was $145.9 million, with a non-GAAP operating margin of 31% [7] - Full year 2023 non-GAAP operating income reached $592.1 million, representing a non-GAAP operating margin of 34% [8] Business Line Data and Key Metrics Changes - Mobile ad revenue contributed approximately 94% of total ad revenue in both Q4 2023 and full year 2023 [28] - The handset sector showed double-digit growth year-over-year and quarter-over-quarter in Q4 2023 [29] - The beauty and personal care industry faced challenges, leading to a decline in ad volume share [17][30] Market Data and Key Metrics Changes - Weibo's MAUs reached 598 million and average daily users reached 257 million in Q4 2023, adding approximately 11 million and 5 million users year-over-year, respectively [9][26] - The healthcare and online games industries experienced double-digit growth year-over-year in Q4 2023 [16] - Ad revenues from Alibaba increased by 6% in Q4 2023, reflecting a modest recovery in the consumption market [32] Company Strategy and Development Direction - The company aims to enhance its content ecosystem and improve operating efficiency in 2024, focusing on user community growth and engagement [20][21] - Strategies include reinforcing the competitive edge of hot trends and IPs, revitalizing the vertical ecosystem, and optimizing content marketing and performance-based ad products [20][24] - The company plans to increase the share of vertical content traffic to over 60% in the next 2 to 3 years to enhance user stickiness and monetization efficiency [50] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for advertising revenue growth in 2024, with expectations for a better second half of the year [41][42] - The company acknowledged challenges in the beauty and cosmetics industry, with expectations for stabilization in ad budget allocation [46] - Overall, management emphasized the importance of leveraging unique value propositions and diversified content ecosystems to capture market opportunities [33] Other Important Information - The company announced a special cash dividend of $0.82 per ordinary share, totaling approximately $200 million, with payment expected in May [40] - A convertible bond offering of $330 million was completed in December 2023, aimed at refinancing existing debt and enhancing financial flexibility [39] Q&A Session Summary Question: Advertising revenue growth outlook for 2024 - Management remains cautious about providing specific expectations for 2024 due to uncertainties in the consumption market, but sees recovery across most industries in Q1 [41] - The company expects a better second half of 2024, particularly in gaming and sports sectors due to upcoming events like the Olympics [42] Question: Strategies regarding users and content ecosystem - The company plans to maintain marketing budgets similar to 2023, focusing on user acquisition through strategic collaborations and enhancing user engagement [49] - There is an emphasis on shifting traffic towards verticals to improve monetization efficiency [50] Question: Capital allocation and shareholder return plans - Management confirmed the continuation of dividend payouts and potential stock repurchases, aligning with business growth and competitive advantages [54]