Weibo Reports Second Quarter 2022 Unaudited Financial Results

Author: Weibo Corporation / 2023-07-24 00:48 / Source: Weibo Corporation

Weibo Reports Second Quarter 2022 Unaudited Financial Results

BEIJING,Sept. 1,2022 --Weibo Corporation ("Weibo" or the "Company") (NASDAQ: WB and HKEX: 9898),a leading social media in China,today announced its unaudited financial results for the second quarter ended June 30,2022.

"We navigated through the challenges from COVID-19 resurgence in the second quarter," said Gaofei Wang,CEO of Weibo. "Our user community and engagement continued with healthy trend despite cutback in channel investment,leveraging our unique positioning and competitive advantage in the social media sector. On monetization,although broad-based headwinds weighed on advertising demand in the near term,we are encouraged to see resilient performance of certain sectors and the gradual pick-up of the overall advertising business after the pandemic. Weibo also delivered a non-GAAP operating margin of 32% in the second quarter,which further improved from the first quarter of 2022,as we executed against our efficiency initiatives to optimize costs and expenses. Looking ahead,we remain confident in our differentiated value proposition and long-term monetization opportunities."

Second Quarter 2022 Highlights

Net revenues were $450.2 million,a decrease of 22% year-over-year or a decrease of 19% year-over-year on a constant currency basis [1].

Advertising and marketing revenues were $385.6 million,a decrease of 23% year-over-year.

Value-added services ("VAS") revenues were $64.6 million,a decrease of 10% year-over-year.

Income from operations was $93.9 million,representing an operating margin of 21%.

Net income attributable to Weibo's shareholders was $28.3 million and diluted net income per share was $0.12.

Non-GAAP income from operations was $145.3 million,representing a non-GAAP operating margin of 32%.

Non-GAAP net income attributable to Weibo's shareholders was $109.7 million and non-GAAP diluted net income per share was $0.46.

Monthly active users ("MAUs") were 582 million in June 2022,a net addition of approximately 16 million users on a year-over-year basis. Mobile MAUs represented 95% of MAUs.

Average daily active users ("DAUs") were 252 million in June 2022,a net addition of approximately 7 million users on a year-over-year basis.

[1]On a constant currency (non-GAAP) basis,we assume that the exchange rate in the second quarter of 2022 had been the same as it was in the second quarter of 2021,or RMB6.45=US$1.00.

Second Quarter 2022 Financial Results

For the second quarter of 2022,Weibo's total net revenues were $450.2 million,a decrease of 22% compared to $574.5 million for the same period last year.

Advertising and marketing revenues for the second quarter of 2022 were $385.6 million,a decrease of 23% compared to $502.3 million for the same period last year. Advertising and marketing revenues excluding ad revenues from Alibaba were $361.8 million,a decrease of 22% compared to $462.4 million for the same period last year. The decrease was primarily resulted from challenges from COVID-19 resurgence and restriction and lockdown in major areas of China,as well as macro uncertainties which have a broad-based negative impact on the advertising industry in China.

VAS revenues for the second quarter of 2022 were $64.6 million,a decrease of 10% year-over-year compared to $72.1 million for the same period last year. The decrease of VAS revenues was mainly due to less revenue contribution from membership service and game-related services.

Costs and expenses for the second quarter of 2022totaled $356.2 million,a decrease of 7% compared to $381.2 million for the same period last year. The decrease was primarily resulted from a 25% year-over-year decrease of sales and marketing expenses,due to our disciplined channel investments.

Income from operations for the second quarter of 2022 was $93.9 million,compared to $193.2 million for the same period last year. Operating margin was 21%,compared to 34% last year. Non-GAAP income from operations was $145.3 million,compared to $223.2 million for the same period last year. Non-GAAP operating margin was 32%,compared to 39% last year.

Non-operating loss for the second quarter of 2022 was $47.4 million,compared to a loss of $65.3 million for the same period last year. Non-operating loss for the second quarter of 2022 mainly included (i) a $21.7 million net interest and other loss; (ii) an $18.7 million net loss from fair value change of investments,which was excluded under non-GAAP measures; (iii) a $7.0 million investment related impairment,which was excluded under non-GAAP measures.

Income tax expenses were $17.5 million,compared to $46.9 million for the same period last year.

Net income attributable to Weibo's shareholders for the second quarter of 2022 was $28.3 million,compared to $81.0 million for the same period last year. Diluted net income per share attributable to Weibo's shareholders for the second quarter of 2022 was $0.12,compared to $0.35 for the same period last year. Non-GAAP net income attributable to Weibo's shareholders for the second quarter of 2022 was $109.7 million,compared to $182.8 million for the same period last year. Non-GAAP diluted net income per share attributable to Weibo's shareholders for the second quarter of 2022 was $0.46,compared to $0.79 for the same period last year.

As of June 30,2022,Weibo's cash,cash equivalents and short-term investments totaled $3.0 billion. For the second quarter of 2022,cash provided by operating activities was $83.0 million,capital expenditures totaled $14.8 million,and depreciation and amortization expenses amounted to $14.1 million.

Environmental,Social and Governance ("ESG")

Weibo released its first annual ESG report in August 2022,which details Weibo's initiatives and performance in the respect of environmental,social and governance,with focuses on the concerns of stakeholders (http://ir.weibo.com/esg).

Conference Call

Weibo's management team will host a conference call from 7:00 AM to 8:00 AM Eastern Time on September 1,2022 (or 7:00 PM – 8:00 PM Beijing Time on September 1,2022) to present an overview of the Company's financial performance and business operations.

Participants who wish to dial in to the teleconference must register through the below public participant link. Dial in and instruction will be in the confirmation email upon registering.

Participants Registration Link: https://register.vevent.com/register/BIafafec22bbd342a7aa40d105c47d0e6b

This call will be webcast live and the replay will be available for 12 months. Both will be available through the Company's corporate website at http://ir.weibo.com.

Non-GAAP Financial Measures

This release contains the following non-GAAP financial measures: non-GAAP income from operations,non-GAAP net income attributable to Weibo's shareholders,non-GAAP diluted net income per share attributable to Weibo's shareholders and adjusted EBITDA. These non-GAAP financial measures should be considered in addition to,not as a substitute for,measures of the Company's financial performance prepared in accordance with U.S. GAAP.

The Company's non-GAAP financial measures excludestock-based compensation,amortization of intangible assets resulting from business acquisitions,non-cash compensation cost to non-controlling interest shareholders,impairment of intangible assets,net results of impairment on,gain/loss on sale of and fair value change of investments,non-GAAP to GAAP reconciling items on the share of equity method investments,non-GAAP to GAAP reconciling items for the income/loss attributable to non-controlling interests,income tax expense related to the amortization and impairment of intangible assets resulting from business acquisitions and fair value change of investments (other non-GAAP to GAAP reconciling items have no tax effect),and amortization of convertible debt and senior notes issuance cost. Adjusted EBITDA excludes interest income,net,income tax expenses,and depreciation expenses.

The Company's management uses these non-GAAP financial measures in their financial and operating decision-making,because management believes these measures reflect the Company's ongoing operating performance in a manner that allows more meaningful period-to-period comparisons. The Company believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: (i) in comparing the Company's current financial results with the Company's past financial results in a consistent manner,and (ii) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does,if they so choose. The Company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses,gains (losses) and other items (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of the Company's core operating results and business outlook.

Use of non-GAAP financial measures has limitations. The Company's non-GAAP financial measures do not include all income and expense items that affect the Company's operations. They may not be comparable to non-GAAP financial measures used by other companies. Accordingly,care should be exercised in understanding how the Company defines its non-GAAP financial measures. Reconciliations of the Company's non-GAAP financial measures to the nearest comparable GAAP measures are set forth in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."

About Weibo

Weibois a leading social media for people to create,share and discover content online. Weibo combines the means of public self-expression in real time with a powerful platform for social interaction,content aggregation and content distribution. Any user can create and post a feed and attach multi-media and long-form content. User relationships onWeibomay be asymmetric; any user can follow any other user and add comments to a feed while reposting. This simple,asymmetric and distributed nature ofWeiboallows an original feed to become a live viral conversation stream.

Weiboenables its advertising and marketing customers to promote their brands,products and services to users.Weibooffers a wide range of advertising and marketing solutions to companies of all sizes. The Company generates a substantial majority of its revenues from the sale of advertising and marketing services,including the sale of social display advertisement and promoted marketing offerings.Designed with a "mobile first" philosophy,Weibo displays content in a simple information feed format and offers native advertisement that conform to the information feed on our platform. To support the mobile format,wehave developed and continuously refining our social interest graph recommendation engine,which enables our customers to perform people marketing and target audiences based on user demographics,social relationships,interests and behaviors,to achieve greater relevance,engagement and marketing effectiveness.

Safe Harbor Statement

This press release contains forward-looking statements that relate to,among other things,Weibo's expected financial performance and strategic and operational plans (as described,without limitation,in the "Business Outlook" section and in quotations from management in this press release. Weibo may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission ("SEC"),in announcements,circulars or other publications made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"),in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements. These forward-looking statements can be identified by terminology,such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "confidence," "estimates" and similar statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include,but are not limited to,Weibo's limited operating history in certain new businesses; failure to grow active user base and the level of user engagement; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly operating results; the Company's reliance on advertising and marketing sales for a majority of its revenues; failure to successfully develop,introduce,drive adoption of or monetize new features and products; failure to compete effectively for advertising and marketing spending; failure to successfully integrate acquired businesses; risks associated with the Company's investments,including equity pick-up and impairment; failure to compete successfully against new entrants and established industry competitors; the continued impact of the COVID-19 pandemic on the Company's operations and on general economic conditions; risks associated with weak or uncertain global economic conditions and their impact on the level of expenditures on advertising; risks associated with unrest,terrorist threats and the war in Ukraine and the associated global effects; changes in the macro-economic environment,including the depreciation of the Renminbi; and adverse changes in economic and political policies of the PRC government and its impact on the Chinese economy. Further information regarding these and other risks is included in Weibo's annual report on Form 20-Fs and other filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is current as of the date hereof,and Weibo assumes no obligation to update such information,except as required under applicable law.

Contact:

Investor Relations

Weibo Corporation

Phone: +86 10 5898-3336

Email: ir@staff.weibo.com

WEIBO CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars,except per share data)

Three months ended

Six months ended

June 30,

March 31,

June 30,

2022

2021

2022

2021

Net revenues:

Advertising and marketing

$ 385,559

$ 502,338

$ 427,121

$ 812,680

$ 892,349

Value-added services

64,593

72,128

57,501

122,094

141,013

Net revenues

450,152

574,466

484,622

934,774

1,033,362

Costs and expenses:

Cost of revenues (1)

95,314

92,548

104,801

200,115

172,318

Sales and marketing (1)

115,512

154,393

125,311

240,823

298,368

Product development (1)

106,403

101,419

112,434

218,837

197,985

General and administrative (1)

28,809

32,869

39,227

68,036

62,850

Impairment of intangible assets

10,176

Total costs and expenses

356,214

381,229

381,773

737,987

731,521

Income from operations

93,938

193,237

102,849

196,787

301,841

Non-operating loss:

Impairment on,gain/loss on sale of and fair value change of

investments,net

(25,676)

(76,814)

(177,950)

(203,626)

(135,014)

Interest and other income (loss),net

(21,721)

11,474

14,416

(7,305)

24,978

(47,397)

(65,340)

(163,534)

(210,931)

(110,036)

Income (loss) before income tax expenses

46,541

127,897

(60,685)

(14,144)

191,805

Income tax expenses

(17,502)

(46,910)

(11,716)

(29,218)

(61,855)

Net income (loss)

29,039

80,987

(72,401)

(43,362)

129,950

Less: Net income (loss) attributable to non-controlling interests

739

(41)

(4,877)

(4,138)

(898)

Net income (loss) attributable to Weibo's shareholders

$ 28,300

$ 81,028

$ (67,524)

$ (39,224)

$ 130,848

Basic net income (loss) per share attributable to Weibo's

shareholders

$ 0.12

$ 0.36

$ (0.29)

$ (0.17)

$ 0.57

Diluted net income (loss) per share attributable to Weibo's

shareholders

$ 0.12

$ 0.35

$ (0.29)

$ (0.17)

$ 0.57

Shares used in computing basic net income (loss) per share

attributable to Weibo's shareholders

235,521

228,099

235,206

235,364

227,936

Shares used in computing diluted net income (loss) per share

attributable to Weibo's shareholders

237,025

229,555

235,364

229,429

(1) Stock-based compensation in each category:

Cost of revenues

$ 2,716

$ 1,827

$ 2,337

$ 5,053

$ 3,240

Sales and marketing

5,502

3,298

4,615

10,117

5,549

Product development

16,760

10,137

13,336

30,096

18,213

General and administrative

6,483

5,206

6,763

13,246

9,219

WEIBO CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

June 30,

December 31,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$ 2,336,454

$ 2,423,703

Short-term investments

680,675

711,062

Accounts receivable,net

519,029

723,089

Prepaid expenses and other current assets

481,738

450,726

Amount due from SINA(1)

492,330

494,200

Current assets subtotal

4,510,226

4,802,780

Property and equipment,net

61,185

68,396

Goodwill and intangible assets,net

260,975

297,335

Long-term investments

1,102,548

1,207,651

Other non-current assets

1,268,566

1,143,360

Total assets

$ 7,203,500

$ 7,519,522

Liabilities,Redeemable Non-controlling Interests and Shareholders' Equity

Liabilities:

Current liabilities:

Accounts payable

$ 175,754

$ 197,643

Accrued expenses and other current liabilities

756,960

828,952

Deferred revenues

91,397

91,136

Income tax payable

78,052

144,747

Convertible debt

898,612

896,541

Current liabilities subtotal

2,000,775

2,159,019

Long-term liabilities:

Unsecured senior notes

1,539,538,415

Other long-term liabilities

130,561

134,068

Total liabilities

3,670,902

3,831,502

Redeemable non-controlling interests

69,496

66,622

Shareholders' equity :

Weibo shareholders' equity

3,441,610

3,593,821

Non-controlling interests

21,492

27,577

Total shareholders' equity

3,463,102

3,621,398

Total liabilities,redeemable non-controlling interests and

shareholders' equity

$ 7,522

(1) Included short-term loans to and interest receivable from SINA of $465.4 million as of June 30,2022 and

$479.6 million as of December 31,2021.

WEIBO CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS

(In thousands of U.S. dollars,

2022

2021

2022

2021

Income from operations

93,938

193,237

102,849

196,787

301,841

Add:

Stock-based compensation

31,461

20,468

27,051

58,512

36,221

Amortization of intangible assets resulting from business

acquisitions

4,895

4,876

5,751

10,646

9,395

Non-cash compensation cost to non-controlling interest

shareholders

4,824

4,649

6,074

10,898

13,280

Impairment of intangible assets

10,176

Non-GAAP income from operations

145,294

223,230

141,725

287,019

360,737

Net income (loss) attributable to Weibo's shareholders

28,300

81,028

(67,524)

(39,224)

130,848

Add:

Stock-based compensation

31,176

Net results of impairment on,gain/loss on sale of and fair value

change of investments

25,676

76,814

177,950

203,626

135,014

Non-GAAP to GAAP reconciling items on the share of equity

method investments

8,571

(8,091)

(2,654)

5,917

(9,166)

Non-GAAP to GAAP reconciling items for the income/loss

attributable to non-controlling interests

(278)

(198)

(4,631)

(4,909)

161

Tax effects on non-GAAP adjustments(1)

(5,541)

1,648

(10,771)

(16,312)

(5,500)

Amortization of convertible debt and unsecured senior notes

issuance cost

1,611

3,222

3,223

Non-GAAP net income attributable to Weibo's shareholders

109,695

182,805

132,857

242,552

313,476

Non-GAAP diluted net income per share attributable to Weibo's

shareholders

0.46

0.79

0.56

1.02

1.35 *

Shares used in computing GAAP diluted net income (loss) per share

attributable to Weibo's shareholders

237,025

229,555

235,206

235,364

229,429

Add:

The number of shares for dilution resulted from convertible debt(2)

6,753

The number of shares for dilution resulted from unvested restricted

share units(2)

447

976

Shares used in computing non-GAAP diluted net income per share

attributable to Weibo's shareholders

243,778

236,308

242,406

243,093

236,182

Adjusted EBITDA:

Net income (loss) attributable to Weibo's shareholders

28,848

Non-GAAP adjustments

81,395

101,777

200,381

281,776

182,628

Non-GAAP net income attributable to Weibo's shareholders

109,695

182,805

132,857

242,552

313,476

Interest income,net

(8,443)

(3,848)

(10,986)

(19,429)

(7,787)

Income tax expenses

23,043

45,262

22,487

45,530

67,355

Depreciation expenses

8,616

8,204

8,730

17,346

16,113

Adjusted EBITDA

132,911

232,423

153,088

285,999

389,157

(1)

To exclude the income tax expenses primarily related to amortization and impairment of intangible assets resulting from business acquisitions and fair

value change of investments. The Company considered the tax implication arising from the reconciliation items. Part of these items were recorded in

entities established in tax free jurisdictions and there were no relevant tax implications. For impairment on investments,valuation allowances were made

for those differences as the Company does not expect they can be realized in the foreseeable future.

(2)

To adjust the number of shares for dilution resulted from convertible debt and unvested restricted share units which were anti-dilutive under GAAP measures.

Net income attributable to Weibo's shareholders is adjusted for interest expense of convertible debt for calculating diluted EPS.

WEIBO CORPORATION

UNAUDITED ADDITIONAL INFORMATION

(In thousands of U.S. dollars)

Three months ended

Six months ended

June 30,

2022

2021

2022

2021

Net revenues