Company Update (NASDAQ:SINA): SINA Corp Reports Second Quarter 2016 Financial Results


SINA Corp (NASDAQ:SINA), a leading online media company serving China and the global Chinese communities, today announced its unaudited financial results for the second quarter ended June 30, 2016.

Second Quarter 2016 Highlights

  • Net revenues increased 14% year over year to $244.0 million. Non-GAAP net revenues increased 14% year over year to $241.4 million.
  • Advertising revenues grew 16% year over year to $205.0 million.
  • Income from operations was $20.8 million. Operating margin was 9%, up from negative 3% for the same period last year. Non-GAAP income from operations increased 475% year over year to $34.5 million. Non-GAAP operating margin was 14%, up from 3% for the same period last year.
  • Net income attributable to SINA was $43.3 million, or $0.59 diluted net income per share attributable to SINA. Non-GAAP net income attributable to SINA was $19.9 million, or $0.27 non-GAAP diluted net income per share attributable to SINA.
  • Weibo’s monthly active users (“MAUs”) in June 2016 grew 33% year over year to 282 million, 89% of which were mobile users. Average daily active users (“DAUs”) in June 2016 grew 36% year over year to 126 million.

“We are delighted that SINA continued to firmly execute its mobile strategy and delivered solid results in the second quarter.” said Charles Chao, Chairman and CEO of SINA. “For our portal business, we witness sustainable growth of mobile traffic, with the daily active users of SINA News application increasing significantly quarter over quarter. Mobile monetization for portal has further elevated, with 48% of total portal advertising revenues contributed from the mobile devices.” Mr. Chao added.

“Our Weibo continued its strong user growth momentum, thanks to the effective channels we have built for user penetration and the optimized user experience we cultivated in short video and live contents consumption.” said Mr. Chao. “On the other hand, Weibo has demonstrated strong platform value proposition to a diversified customer base with significant growth in advertising revenues from key accounts and small and medium enterprises. We are also delighted to see continuing operating margin expansion for Weibo, strongly demonstrating operating leverage of the platform.” Mr. Chao concluded.

Second Quarter 2016 Financial Results

For the second quarter of 2016, SINA reported net revenues of $244.0 million, compared to $213.6 millionfor the same period last year. Non-GAAP net revenues for the second quarter of 2016 totaled $241.4 million, compared to $211.0 million for the same period last year.

Online advertising revenues for the second quarter of 2016 were $205.0 million, compared to $176.3 million for the same period last year. The year-over-year growth in online advertising revenues resulted from an increase of $38.4 million in Weibo advertising and marketing revenues, partially offset by a decline of $9.7 million in portal advertising revenues.

Non-advertising revenues for the second quarter of 2016 were $38.9 million. Non-GAAP non-advertising revenues for the second quarter of 2016 were $36.3 million, compared to $34.7 million for the same period last year.

Gross margin for the second quarter of 2016 was 64%, compared to 60% for the same period last year. Advertising gross margin for the second quarter of 2016 was 64%, compared to 61% for the same period last year. The growing revenue proportion contributed by small and medium enterprises customers in both portal and Weibo business is the key factor that resulted in a higher gross margin for our advertising business. Non-advertising gross margin for the second quarter of 2016 was 59%, compared to 54% for the same period last year. The increase in non-advertising margin was primarily due to increase in revenues contributed by higher margin business, such as Weibo’s membership revenues.

Operating expenses for the second quarter of 2016 totaled $134.2 million, compared to $134.4 million for the same period last year. Non-GAAP operating expenses for the second quarter of 2016 totaled $119.7 million, compared to $120.1 million for the same period last year.

Income from operations for the second quarter of 2016 was $20.8 million, compared to a loss of $6.8 millionfor the same period last year. Operating margin was 9%, up from negative 3% for the same period last year. Non-GAAP income from operations for the second quarter of 2016 was $34.5 million, compared to $6.0 million for the same period last year. Non-GAAP operating margin was 14%, up from 3% for the same period last year.

Non-operating income for the second quarter of 2016 was $35.0 million, compared to a non-operating income of $22.8 million for the same period last year. Non-operating income for the second quarter of 2016 mainly included: (i) a $34.9 million net gain on sale of and impairment on investments, which is excluded under non-GAAP measure; and (ii) a $6.2 million loss pick-up from equity-method investments, which are accounted for under the equity-method and reported one quarter in arrears, mainly resulted from loss pick-up from the Company’s investment in E-House. Non-operating income for the second quarter of 2015 included: (i) a $19.0 million gain mainly from sale of marketable securities, which is excluded under non-GAAP measure; and (ii) a $2.7 million loss from equity method investment in a number of our equity investees which was reported one-quarter in arrears.

Net income attributable to SINA for the second quarter of 2016 was $43.3 million, compared to $11.7 million for the same period last year. Diluted net income per share attributable to SINA for the second quarter of 2016 was $0.59, compared to $0.19 for the same period last year. Non-GAAP net income attributable to SINA for the second quarter of 2016 was $19.9 million, compared to $4.0 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA for the second quarter of 2016 was $0.27, compared to $0.06 for the same period last year.

As of June 30, 2016, SINA’s cash, cash equivalents and short-term investments totaled $2.1 billion, compared to $2.2 billion as of December 31, 2015. For the second quarter of 2016, net cash provided by operating activities was $76.6 million, capital expenditures totaled $4.9 million, and depreciation and amortization expenses amounted to $7.0 million.

Business Outlook

For the year 2016, SINA currently estimates that its non-GAAP net revenues are between $950 million and $1 billion, which is updated from the range of $850 million to $950 million and represents a 9% to 15% year over year increase from the year 2015. This estimate assumes that RMB depreciates to US dollar at an average rate of 5% in 2016 and excludes the recognition of $10.4 million in deferred license revenues fromE-House. This forecast reflects SINA’s current and preliminary view, which is subject to change. (Original Source)

Shares of Sina are up over 4% to $60.99 in pre-market trading. SINA has a 1-year high of $58.62 and a 1-year low of $32.61. The stock’s 50-day moving average is $52.59 and its 200-day moving average is $48.70.

On the ratings front, Sina has been the subject of a number of recent research reports. In a report issued on August 3, Brean Murray Carret analyst Fawne Jiang reiterated a Buy rating on SINA. Separately, on July 22, Jefferies Co.’s Karen Chan upgraded the stock to Buy and has a price target of $64.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Fawne Jiang and Karen Chan have a total average return of 5.4% and 0.5% respectively. Jiang has a success rate of 59% and is ranked #430 out of 4102 analysts, while Chan has a success rate of 59% and is ranked #2459.

SINA Corp. engages in the provision of online and mobile media services. It operates through the following segments: Advertising, Mobile Value-Added Services (MVAS), and Other Non-Advertising Information. Its services include MVAS, online video, music streaming, online games, photo sharing, blog, email, classified listings, fee-based services, ecommerce and enterprise services.