SINA Corp. SINA reported fourth-quarter 2015 adjusted earnings of 21 cents per share, which outpaced the Zacks Consensus Estimate of 11 cents. Earnings also improved from 10 cents per share reported in the year-ago quarter.
Despite the strong results, shares declined nearly 4% in the after-hours trading session, due to a weak revenue outlook for 2016.
Quarter Details
Revenues increased 21.3% year over year to $256 million and surpassed the Zacks Consensus Estimate of $243 million.
Advertising revenues moved up 23% year over year to $223.2 million. The upside was primarily driven by strength in advertising related to Weibo WB, which increased 47% year over year to $129.5 million.
Non-advertising revenues jumped 13% year over year to $33 million driven by strength in the both portal and Weibo businesses. Revenues from Weibo value added services (VAS) increased 13% year over year to $19.5 million.
Weibo revenues surged 41.6% year over year to $149 million. Monthly active users went up 34% year over year to 236 million. Daily active users for Weibo came in at 106 million at quarter-end. The strong growth momentum of Weibo advertising was driven by increasing adoption of mobile devices and improved monetization, particularly for small and medium-sized enterprises.
Portal revenues increased only 1.2% year over year to $107.2 million as Portal Advertising revenues remained flat.
Non-GAAP gross margin remained flat on a year-over-year basis at 65%. Though gross margin benefited from a higher revenue base, it was offset by lower advertising gross margin. Operating expenses as a percentage of revenues declined to 53.7% from 62.9% in the prior-year quarter.
Lower operating expenses in the quarter contributed to the company’s profitability. SINA reported operating income of $29.3million in the quarter, as against $3.9 million in the year-ago quarter.
Balance Sheet and Cash Flow
SINA exited the quarter with cash, cash equivalents and short-term investments of $2.4 billion compared with $2.2 billion on Dec 31, 2014.
Cash provided by operating activities in the quarter was $98.9 million.
The company also initiated a new $500 million share repurchase program which will continue till Jun 2017.
Outlook
For 2016, SINA projects non-GAAP revenues between $850 million and $950 million, assuming 8.5% currency depreciation. The guidance also excludes $10.4 million of deferred license revenues from E-House. The Zacks Consensus Estimate is pegged higher at $994 million.
Our Take
SINA has a strong product pipeline and is investing in product development and marketing. The company’s robust user base for its e-Commerce and Weibo offerings are the positives.