Core Viewpoint - Weibo Corporation reported solid performance in the fourth quarter of 2024, focusing on high-quality user acquisition and engagement, optimizing its content ecosystem, and maintaining strong operating efficiency while announcing an annual dividend payout of US$200 million for fiscal year 2024 [2][22][23]. Fourth Quarter 2024 Highlights - Total net revenues for Q4 2024 were US$456.8 million, a decrease of 1% year-over-year [6][17]. - Advertising and marketing revenues were US$385.9 million, down 4% compared to the same period last year, primarily due to the underperformance in the online game sector [7][17]. - Value-added services (VAS) revenues increased by 18% year-over-year to US$71.0 million, driven by growth in membership services and game-related revenues [8][17]. - Operating margin for Q4 2024 was 26%, consistent with the previous year, while non-GAAP operating margin was 30%, down from 31% [9][17]. - Net income attributable to Weibo's shareholders was US$8.9 million, a significant decrease from US$83.2 million in the same quarter last year [12][17]. Fiscal Year 2024 Highlights - Total net revenues for fiscal year 2024 were US$1.75 billion, relatively flat compared to US$1.76 billion in 2023 [14][17]. - Advertising and marketing revenues for 2024 were US$1.50 billion, a decrease of 2% year-over-year [14][17]. - VAS revenues for 2024 increased by 13% to US$256.0 million [15][17]. - Income from operations for 2024 was US$494.3 million, with an operating margin of 28%, up from 27% in 2023 [16][17]. - Net income attributable to Weibo's shareholders for 2024 was US$300.8 million, down from US$342.6 million in 2023 [20][17]. Dividend Declaration - The board of directors adopted a cash dividend policy, declaring a cash dividend of US$0.82 per ordinary share for fiscal year 2024, amounting to approximately US$200 million [22][23]. Cash Flow and Financial Position - As of December 31, 2024, Weibo's cash, cash equivalents, and short-term investments totaled US$2.4 billion [13][17]. - Cash provided by operating activities for 2024 was US$639.9 million, compared to US$672.8 million in 2023 [21][17]. User Engagement Metrics - Monthly active users (MAUs) reached 590 million in December 2024, with average daily active users (DAUs) at 260 million [17].

Core Viewpoint - The article discusses the rise of AI-generated misinformation and the measures being taken by social media platforms in China to combat this issue, including the implementation of AI content labeling and stricter content moderation policies [1][5]. Group 1: AI Misinformation and Regulation - On March 11, Weibo announced a governance initiative targeting unmarked AI-generated content, focusing on areas such as social welfare, emergencies, medical science, and personal rights [1]. - Weibo will label content suspected to be AI-generated and may restrict account visibility or even ban accounts that repeatedly post unmarked AI content causing significant harm [1]. - Today's headlines reveal that platforms like Toutiao have also faced challenges with low-quality AI content, having removed over 930,000 such posts and penalized nearly 30,000 accounts for spreading false information [3]. Group 2: AI Content Production and Challenges - The emergence of "AI content farms" has been noted, with reports of individuals generating up to 19,000 AI-written articles daily, distributing them across thousands of accounts for profit [4]. - The cost of generating AI content is extremely low, with estimates showing that one article can be produced for as little as 0.000138 RMB, making it economically viable to flood the internet with AI-generated material [4]. - The challenge now lies in distinguishing between low-quality AI content and genuine articles, as the volume of AI-generated content increases [3][4]. Group 3: Implementation of AI Content Labeling - The requirement for AI content labeling is part of broader regulatory efforts, with new guidelines mandating that both AI service providers and social media platforms must clearly indicate AI-generated content [5]. - Major platforms like Douyin, Kuaishou, WeChat, Xiaohongshu, and Bilibili have begun requiring users to declare whether their content is AI-generated, although compliance has been inconsistent [5]. - The Cyberspace Administration of China has announced plans for a series of actions in 2025 aimed at addressing the misuse of AI technology and enhancing the identification of AI-generated content [5].

Financial Data and Key Metrics Changes - Weibo's total revenue for Q3 2024 reached $464.5 million, up 5% year-over-year, with ad revenue at $398.6 million, up 2% year-over-year, and VAS revenue at $65.9 million, up 25% year-over-year [13][49][56] - Non-GAAP operating income was $164.5 million, representing a non-GAAP operating margin of 35% [13][49] - Net income attributable to Weibo was $139.2 million, with a net margin of 30% [58] Business Line Data and Key Metrics Changes - Advertising and marketing revenues were $398.6 million, with mobile ad revenues contributing approximately 94% of total ad revenue [50] - VAS revenue growth was primarily driven by membership and games-related services, with a 25% increase [56] - The FMCG sector showed strong momentum in food and beverage and apparel, while the automotive sector continued to grow due to the shift towards electric vehicles [51][52] Market Data and Key Metrics Changes - In September 2024, Weibo's MAUs reached 587 million and average DAUs reached 257 million, reflecting a pullback from the Olympics peak [12][47] - The ad revenue from the food and beverage sector showed strong year-over-year growth, driven by the Olympics [33] - The automotive sector's ad revenue was bolstered by the transition to electric vehicles and effective content ecosystem cultivation [52][35] Company Strategy and Development Direction - Weibo is focusing on enhancing its hot trend marketing capabilities and content marketing to sustain high operating efficiency [43][44] - The company aims to optimize brand and performance-ad offerings to improve competitiveness and expand market share [44] - Weibo's strategy includes leveraging event-driven marketing models, particularly around major events like the Olympics, to attract advertisers [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the advertising market, anticipating a gradual recovery due to government stimulus measures [54][66] - There are expectations for double-digit growth in certain sectors due to national subsidy policies targeting consumer electronics [66] - Despite challenges in the luxury products and real estate sectors, management sees potential for growth in the food and beverage and automotive sectors [66][70] Other Important Information - The Paris Olympic Games significantly boosted Weibo's ad revenue, surpassing that of the Tokyo Olympics [20][33] - Weibo's cash, cash equivalents, and short-term investments totaled $2.2 billion as of September 30, 2024 [59] Q&A Session Summary Question: Fourth quarter advertisement outlook in light of macro stimulus - Management noted a slight decrease in consumer demand but remains optimistic about Q4 due to government policies aimed at boosting demand, particularly in the 3C and consumer electronics sectors [62][66] Question: Drivers behind VAS services growth and future expectations - Management highlighted the continuous growth of membership services and the focus on high-quality user acquisition as key drivers for VAS revenue growth [73][75] Question: Updates on AI progress in content production and operational efficiencies - Management reported significant improvements in operational efficiency through AI applications, including intelligent search functions and AI-assisted content generation for key accounts [80][82]

Investment Rating - The report maintains a "BUY" rating for Weibo, with a target price of US$15.00, reflecting a potential upside of 76.3% from the current price of US$8.51 [2][16]. Core Insights - Weibo's 3Q24 results exceeded expectations, with net revenue increasing by 5% YoY to US$465 million, driven by stabilization in advertising revenue and strong growth in VAS revenue [1][2]. - The company is cautiously optimistic about macroeconomic policy stimulus but anticipates a delayed impact on consumption and advertising demand [1][2]. - Advertising revenue in 3Q24 rose by 2% YoY to US$399 million, primarily due to growth in the food & beverage and automobile sectors, while some sectors like cosmetics and handsets faced challenges [1][2]. - VAS revenue grew significantly by 25% YoY in 3Q24, supported by enhanced membership services [1][2]. - The forecast for 4Q24 indicates a potential decline in advertising revenue by 4% YoY, attributed to a high-base effect and soft demand in certain verticals [1][2]. Financial Performance Summary - For FY24E, total revenue is projected at US$1,755 million, with adjusted net profit expected to be US$466.9 million [5][9]. - The non-GAAP operating profit margin (OPM) for 3Q24 was 35.4%, a decrease of 1.6 percentage points YoY, mainly due to increased sales and marketing expenses [1][2]. - The adjusted EPS for FY24E is estimated at US$1.97, with a gradual increase expected in subsequent years [5][9]. User Engagement Metrics - Monthly Active Users (MAUs) decreased by 3% YoY to 587 million as of September 2024, but the Daily Active Users (DAU) to MAU ratio improved to 43.8% [1][2]. - Total interactions on Weibo's front page increased significantly on a quarter-over-quarter basis, indicating improved user engagement [1][2].

Investment Rating - The report maintains a "BUY" rating for the company with a target price of US$15.00, down from the previous target of US$15.50, indicating a potential upside of 76.3% from the current price of US$8.51 [9]. Core Insights - The company reported a 5% year-over-year increase in net revenue for Q3 2024, reaching US$465 million, which exceeded Bloomberg consensus estimates by 7% [6]. - Advertising revenue grew by 2% year-over-year to US$399 million, primarily driven by strong performance in the food and beverage sector due to the Paris Olympics [7]. - The management remains cautiously optimistic about macroeconomic policy stimulus, although they believe the effects will take time to materialize [8]. Financial Performance Summary - For FY24E, the company expects revenue of US$1,755 million, with adjusted net profit projected at US$467 million and adjusted EPS at US$1.97 [12]. - The non-GAAP operating profit margin for Q3 2024 was 35.4%, a decline of 1.6 percentage points year-over-year, attributed to increased sales and marketing investments [8]. - The company anticipates a 4% decline in advertising revenue for Q4 2024 due to high base effects and weak demand in certain consumer-related verticals [8]. Revenue Breakdown - The company’s revenue for Q3 2024 was supported by a 25% increase in value-added services (VAS) revenue, which reached US$66 million [7]. - Monthly active users (MAUs) decreased by 3% year-over-year to 587 million, but the daily active users to monthly active users ratio improved to 43.8% [7]. Future Outlook - The management expects that the advertising business recovery will require more time, particularly in sectors like cosmetics and luxury goods, where demand has not shown significant improvement [8]. - The company is projected to benefit from policy stimulus and a gradual recovery in consumer spending, with a non-GAAP P/E ratio of 5x for FY25, indicating a favorable margin of safety [8].

Core Insights - Weibo Corporation reported revenue of $464.48 million for the quarter ended September 2024, reflecting a year-over-year increase of 5.1% and a positive surprise of 6.68% over the Zacks Consensus Estimate of $435.42 million [1] - The earnings per share (EPS) for the quarter was $0.53, down from $0.57 in the same quarter last year, but exceeded the consensus estimate of $0.46 by 15.22% [1] Financial Performance Metrics - Average daily active users (DAUs) were reported at 257 million, slightly below the estimated 257.95 million [3] - Monthly active users (MAUs) totaled 587 million, compared to the average estimate of 593.9 million [3] - Net revenues from value-added services reached $65.87 million, surpassing the average estimate of $57.82 million, marking a year-over-year increase of 24.6% [3] - Net revenues from advertising and marketing amounted to $398.62 million, exceeding the average estimate of $377.60 million, with a year-over-year growth of 2.4% [3] Stock Performance - Over the past month, Weibo's shares have declined by 5.6%, while the Zacks S&P 500 composite has increased by 0.6% [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]

Group 1 - Analysts project Weibo Corporation (WB) will announce quarterly earnings of $0.46 per share, a decline of 19.3% year over year [1] - Revenues are expected to reach $435.42 million, declining 1.5% from the same quarter last year [1] - There has been no revision in the consensus EPS estimate over the last 30 days, indicating analysts' reconsideration of their initial forecasts [1] Group 2 - The estimate for 'Net revenues- Value-added service' is projected at $57.82 million, reflecting a year-over-year change of -3.9% [4] - 'Net revenues- Advertising and marketing' are expected to be $377.60 million, indicating a change of -4% from the prior-year quarter [4] Group 3 - The average prediction for 'Average daily active users (DAUs)' is 257.95 million, down from 260 million in the same quarter last year [5] - 'Monthly active users (MAUs)' are expected to be 593.90 million, compared to 605 million a year ago [5] - Weibo shares have returned -11.8% over the past month, contrasting with the Zacks S&P 500 composite's +3.1% change [5]

Company Overview - Weibo Corporation (WB) shares increased by 7.1% to close at $10.80, with notable trading volume compared to typical sessions [1] - The stock has gained 34.8% over the past four weeks, driven by increased user engagement and partnerships enhancing advertising revenue and content ecosystem [1] Earnings Expectations - The upcoming quarterly earnings are expected to be $0.46 per share, reflecting a year-over-year decline of 19.3% [1] - Revenue is projected at $435.42 million, which is a decrease of 1.5% from the same quarter last year [1] Market Sentiment - The consensus EPS estimate for Weibo has remained unchanged over the last 30 days, indicating a lack of upward trend in earnings estimate revisions [2] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [2] Industry Context - Weibo is part of the Zacks Internet - Content industry, which includes other companies like Airbnb, Inc. (ABNB) [2] - Airbnb's consensus EPS estimate has decreased by 2.1% over the past month, with a year-over-year change of -7.1% [2]

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].

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]