Weibo (WB): Gaming and online education boost SME business

Shares of Weibo Corp. (NASDAQ: WB) were up 4% in morning hours on Tuesday. The stock has gained 18% over the past three months. The company reported its third quarter 2020 earnings results a day ago which came in better than analysts’ projections.

Quarterly performance

Net revenues remained flat year-over-year at $465.7 million and adjusted EPS fell 14% to $0.66 but both numbers managed to surpass market expectations. Value-added service revenues declined 11% year-over-year, mainly due to a drop in live streaming revenues. The company also saw increases in monthly active users (MAUs) and daily active users (DAUs) during the quarter.

Advertising

During the quarter, advertising and marketing revenues inched up by 1% compared to the same period last year, with 90% of the ad revenues coming from mobile. On a sequential basis, advertising revenues rose 22%.

Ad revenues from key accounts (KAs) and small & medium-sized enterprises (SMEs) dropped 1% to $387.5 million. KA revenues rose 12% YoY and 33% QoQ to $221.2 million, driven by a growth in brand customers. The entertainment industry, which was hit by the pandemic, saw a pickup during the quarter although not up to pre-pandemic levels.

SME revenues fell 15% YoY but rose 20% QoQ to reach $166.4 million, driven mainly by gaming and online education sectors. Ad revenues from these two sectors recorded triple-digit growth on an annual basis, helped by demand for new game release marketing as well as solutions related to high school and college examinations.

User growth

Weibo’s MAUs totaled 511 million in September, reflecting a YoY growth of 3% while DAUs rose 4% to 224 million. 94% of MAUs came from mobile. Both numbers, however, fell 2% QoQ, as they were negatively impacted by lower investment within the entertainment industry as well as back-to-school seasonality.

Since the launch of its video account program in July, Weibo has been working on improving traffic and garnering fans around its video accounts. As of November, there were 750,000 content creators on the video account program and over 13,000 of these had a fan base of over 1 million. The number of daily video submissions and daily video viewership both increased over 30% YoY for these monthly active video accounts.  

Outlook

For the fourth quarter of 2020, Weibo expects net revenues to increase 1-3% year-over-year on a constant currency basis. This outlook includes revenues from an interactive entertainment company acquired in November. The acquisition is expected to contribute approx. 2% of revenues in Q4.

Click here to read the full transcript of Weibo Q3 2020 earnings conference call