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SINA Q1 Earnings Top Estimates, Advertising Revenues Impress

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SINA Corporation’s (SINA - Free Report) first-quarter 2018 non-GAAP earnings of 47 cents per share beat the Zacks Consensus Estimate by a couple of cents but declined 3 cents from the year-ago quarter.

Net revenues grew 59% to $441 million and beat the Zacks Consensus Estimate of $440 million. Non-GAAP net revenues also grew 59% to $438.1 million.

Quarter Details

Advertising revenues surged 61% year over year to $367.1 million, driven by the momentum in the Weibo segment. Non-advertising (non GAAP) revenues increased 50% year over year to $71.1 million driven by growth in fintech business as well as increased revenues from Weibo gaming and membership.

Revenues from Weibo business surged 75.6% year over year to $349.8 million. Monthly active users increased 20.7% from the year-ago quarter to 411 million, driven by an increasing number of mobile users. At the end of the quarter, daily active users went up to 184 million, up 19.5% from the year-ago quarter.

Weibo non-ad revenues grew 57% to $46.9 million on the back of increased membership and gaming revenues. Weibo's ad and marketing revenues grew 79% to $302.9 million in the reported quarter.

Portal advertising revenues were up 7% year over year to $64.1 million driven by increased mobile transition and monetization. Mobile app revenues for portal accounted for 77% of total portal ad revenues compared with 53% in the year-ago quarter. The upside is attributed to growth in mobile traffic for SINA News and Finance applications. Daily Active Users for News app and Finance app increased 31% and 40%, respectively.

Portal non-advertising revenues increased 38% to $24.1 million. However, stricter regulation in micro-lending sector continues to remain an overhang.

Margins

Non-GAAP operating income was $94.6 million, which surged 49% year over year. However, non-GAAP operating margin of 22% declined 100 basis points from the year-ago quarter.

Increase in sales and marketing expenses to increase Weibo and SINA news app users and a rise in product development cost remain dampeners.

Balance Sheet and Cash Flow

SINA exited the quarter with cash & cash equivalents (including short-term investments & restricted cash) of $3.64 billion compared with $3.59 billion as of Dec 31, 2017.

Cash provided by operating activities in the quarter was $54.9 million. Capital expenditure was $36.2 million.

Sina Corporation Price, Consensus and EPS Surprise

Sina Corporation Price, Consensus and EPS Surprise | Sina Corporation Quote

Zacks Rank & Stocks to Consider

SINA currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , Micron Technology (MU - Free Report) and Western Digital (WDC - Free Report) , all sporting 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 Lam Research, Micron and Western Digital is projected to be 17.7%, 10% and 19%, respectively.

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