The online advertising and marketing industry, which is rapidly evolving in China, is subject to continuous technological developments and changing customer demands. The development of mobile technology and the increasing penetration of internet have brought China into a new era as people are turning away from traditional portal websites to mobile applications.
Sina experienced slower growth in the portal website due to the shift of brand advertisers’ budget to mobile applications that attract a rising amount of user traffic. Also, the number of Weibo users continue to increase at a fast pace in recent years. The company’s results will depend on its various efforts for catering to such changing user behavior and meet evolving customer demands.
Analysts expect the company’s earnings to plunge by 47.20% to $0.47 per share and revenue to decline by 5.10% to $510.18 million for the second quarter. In comparison, during the previous year quarter, Sina posted a profit of $0.89 per share on revenue of $537.36 million. The company surprised its investors by beating analysts’ expectations in all of the past four quarters.
Read: Baidu Q2 earnings preview
For the first quarter, Sina reported a 15% growth in earnings helped by an 8% increase in net revenues. Advertising revenue rose by 6% year-over-year helped by strong performance at its microblogging website Weibo. The revenue from Weibo’s live streaming business acquired in the previous quarter and higher revenues from Sina’s fin-tech businesses drove non-advertising revenues higher by 18%.
The company provides online content and services for the global Chinese community, including microblogging and social networking services as well as other fee-based services. As the competition gets tough, Sina has been clashing with existing or emerging internet players for gaining a share in the market.
The internet players, who are giving stiff competition to Sina, include Baidu (NASDAQ: BIDU), Tencent, NetEase (NASDAQ: NTES), Sohu (NASDAQ: SOHU), Phoenix News Media, Facebook (NASDAQ: FB), WhatsApp, Facebook Messenger, Instagram, Twitter (NYSE: TWTR), Google’s (NASDAQ: GOOGL) YouTube, Snapchat (NYSE: SNAP), Line, Kakao Talk, and Snow.