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SINA Q1 Earnings Miss Estimates, Down Y/Y, Revenues Up

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SINA Corporation reported first-quarter 2019 non-GAAP earnings of 40 cents per share that missed the Zacks Consensus Estimate by 4 cents and declined 14.9% from the year-ago quarter.

Non-GAAP net revenues grew 8% year over year to $472.5 million. However, the figure missed the Zacks Consensus Estimate of $479 million.

The year-over-year increase was driven by growth in Weibo revenues and non-advertising revenues.

Sina Corporation Price, Consensus and EPS Surprise

 

Sina Corporation Price, Consensus and EPS Surprise

Sina Corporation price-consensus-eps-surprise-chart | Sina Corporation Quote

Quarter Details

Advertising revenues (81.7% of total revenues) increased 5.7% year over year to $388 million, primarily driven by an increase of $38.2 million in Weibo advertising and marketing revenues. However, the decline in portal advertising revenues partially offset the increase.

Non-advertising revenues (18.3% of total revenues) increased 18.2% year over year to $87.1 million. The increase was primarily attributed to revenues generated from Weibo’s live broadcasting platform and higher revenues from SINA’s fin-tech businesses.

Revenues from Weibo (WB - Free Report) business grew 14.1% year over year to $399.2 million.

Weibo’s VAS revenues increased 23.7% to $58 million and ad and marketing revenues grew 12.6% to $341.1 million in the reported quarter. Moreover, Weibo’s online advertising revenues increased 13% year over year to $341.1 million due to the FMCG sector, which adopted the company’s marketing tools. Weibo’s SME revenues increased 5% year over year.

However, softness in the gaming sector due to “macro challenges, regulations and  competition in the ad inventory supply” hurt growth.

Portal revenues declined 10% year over year to $81.8 million. Portal advertising revenues declined 26.9% year over year to $46.9 million. Decline in Small Medium Enterprise (SME) customers’ ad budget negatively impacted growth.

Portal non-ad revenue revenues increased 34% to $32.3 million. This increase was driven by growth in micro loan facilitation business.

Operating Details

SINA reported gross profit of $359.6 million, up 8.3% year over year. Gross margin of 75.7% expanded 40 basis points (bps) from the year-ago quarter. This increase was driven by a 100 bps increase in advertising platform gross margin.

Operating expenses (57.4% of total revenues) were $272.7 million, up 5.4% year over year. Sales and marketing expenses were $145.5 million, up 4.1% year over year. Product development expense was $94.1 million, reflecting an increase of 10.5%. However, general and administrative expenses fell 2.3% to $33.2 million.

Operating income in the reported quarter was $86.9 million, up 18.6% year over year.

Balance Sheet and Cash Flow

SINA exited the quarter with cash, cash equivalents and short-term investments of $2.1 billion compared with $2.3 billion in the fourth-quarter of 2018.

Cash provided by operating activities in the quarter was $93.5 million compared with $138.9 million in the prior quarter. Capital expenditure was $10 million.

Zacks Rank & Stocks to Consider

Currently, SINA has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader computer technology sector include Verint Systems Inc. (VRNT - Free Report) and Match Group, Inc. (MTCH - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for Verint and Match is pegged at 11% and 15.2%, respectively.

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