Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Weibo Corp (WB, Financial) reported a user base of 583 million MAUs and 256 million DAUs, reflecting strong user engagement.
- Total revenues reached USD 437.9 million, with a non-GAAP operating income of USD 157.6 million, representing a 36% operating margin.
- Weibo Corp (WB) saw significant growth in user interaction within the entertainment vertical, with a 50% year-over-year increase in daily posts and user engagement.
- The company has successfully leveraged AI and large language models to enhance content recommendation and user interaction, improving user experience.
- Weibo Corp (WB) maintained strong partnerships with key industries such as automotive, gaming, and digital products, leading to increased ad revenue and user engagement in these verticals.
Negative Points
- Ad revenues decreased by 1% year-over-year on a constant currency basis, indicating challenges in monetization.
- The cosmetics and beauty sector continued to underperform, negatively impacting overall ad revenue.
- The macroeconomic environment remains uncertain, with potential negative impacts on advertising demand in the second half of 2024.
- Despite improvements, Weibo Corp (WB) faces intense competition in the performance ad market, affecting its revenue growth.
- The company is less competitive in performance-based ads and promotional campaigns compared to other marketing methods, particularly in the stressed industries like cosmetics and luxury brands.
Q & A Highlights
Q: Can management comment on the overall macro-outlook and how it will translate to your advertising outlook for the second half of this year? Have you observed any meaningful change in advertiser sentiment across different industry verticals?
A: (Gaofei Wang, CEO) In Q2, our advertisement revenue was flat year-over-year in renminbi terms. Despite a decline in overall consumption, advertiser willingness to place ads remained stable. However, the cosmetics and beauty products vertical negatively impacted revenue by about 5%. For Q3 and the second half of 2024, uncertainties in macroeconomic development, especially consumption, persist. We remain cautious about the outlook, particularly in first-tier cities. Despite these challenges, Weibo's advertising business is relatively stable, and we continue to attract budget for new product launches and top-notch IP collaborations.
Q: What's the latest development in AIGC (Artificial Intelligence Generated Content), and how does it help with content production and commercialization efficiency?
A: (Gaofei Wang, CEO) We received approval for our large language model (LLM) in July. This technology enhances AI products like comment robots and AI assistants, improving user interaction. In Q2, we focused on better interpreting and understanding user-generated content, which is often unstructured. Our LLM helps in precise content recommendation and search result summarization, improving user experience. For instance, our search feature now has over 10 million MAUs. We continue to explore AI's potential to enhance content understanding and recommendation.
Q: Can you provide more color on the trends entering the third quarter of 2024?
A: (Fei Cao, CFO) Weibo continues to be the go-to platform for discovering and discussing hot trends, especially during events like the summer Olympics, which boosted user engagement and ad spending. However, post-Olympic ad demand may be lukewarm due to sluggish consumption data. We will enhance our sales execution and content ecosystem in the second half of the year to mitigate macro and industry headwinds.
Q: How did Weibo's advertising and marketing revenues perform in Q2 2024?
A: (Fei Cao, CFO) Advertising and marketing revenues were $375.3 million, a decrease of 3% year-over-year or 1% on a constant currency basis. Mobile ad revenue contributed approximately 94% of total ad revenues. Growth was driven by 3P products, e-commerce, and entertainment sectors. However, the FMCG sector, particularly cosmetics and personal care, underperformed due to intense competition and reduced ad budgets.
Q: What are the key strategies for Weibo's monetization in 2024?
A: (Gaofei Wang, CEO) In 2024, we focus on growing user scale and engagement, strengthening the content ecosystem, and improving operating efficiency. We maintain close cooperation with handset manufacturers and invest in refining our business model's accuracy and targeting capabilities. We also emphasize user-generated content and vertical content ecosystems like digital products, automotive, and gaming to enhance monetization efficiency.
Q: How did Weibo's user metrics perform in Q2 2024?
A: (Fei Cao, CFO) In June 2024, Weibo's MAUs reached 583 million, and average DAUs reached 256 million. We proactively adjusted our user strategy to focus on acquiring and engaging high-quality users, resulting in an improved DAU versus MAU ratio.
Q: What were the financial highlights for Weibo in Q2 2024?
A: (Fei Cao, CFO) Net revenue was $437.9 million, a decrease of 1% year-over-year or an increase of 1% on a constant currency basis. Operating income was $157.6 million, representing an operating margin of 36%. Net income attributable to Weibo was $126.3 million, with a net margin of 29%. Diluted EPS was $0.48.
Q: How did Weibo's VAS (Value-Added Services) revenue perform in Q2 2024?
A: (Fei Cao, CFO) VAS revenue was $62.6 million, an increase of 15% year-over-year or 18% on a constant currency basis, primarily driven by revenue growth from membership services. Improved ARPU for membership services contributed to this growth.
Q: What are the key drivers of Weibo's advertising revenue?
A: (Gaofei Wang, CEO) Key drivers include hot trend and IP marketing, celebrity and KOL marketing, and performance ads. These ad offerings account for over 50% of our total ad revenues. We focus on industries like FMCG, digital products, automotive, luxury goods, cosmetics, and beauty. Our competitive edge lies in media-oriented and brand-oriented ad placement and content marketing based on hot trends, IPs, and celebrities.
Q: How is Weibo addressing the challenges in the cosmetics and beauty sector?
A: (Gaofei Wang, CEO) The cosmetics and beauty sector faces pressure due to reduced ad budgets and intense competition. We are stepping up cooperation with e-commerce platforms and domestic brands, exploring new product launch opportunities, and providing better marketing support. We hope these efforts will stabilize or return ad revenue growth in this sector by Q4 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
