Sina Q4 reported net profit of $16.4 million, down 64percent year on year.

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 Sina Q4 reported net profit of $16.4 million, down 64percent year on year.


Netease Technologies News March 5, todays Sina (NASDAQ: SINA) released unaudited financial reports for the fourth quarter and the whole year up to December 31, 2018. According to the report, Sinas net revenue in the fourth quarter was $573 billion, an increase of 14% over the same period last year; Sinas net profit should be $16.4 million, down 64% from the same period last year.

According to the results, Sinas net revenue in 2018 was $2.11 billion, up 33% from $1.58 billion in 2017. Sinas common shareholders should account for $125.6 billion in net profit in 2018 and $156.6 billion in 2017, down 20% from the same period last year.

Performance Focus in the Fourth Quarter of 2018

Net revenue increased by 14% under the US Accounting Standards and non-US General Accounting Standards over the same period last year, to $573 million and $570.4 million respectively.

Advertising revenue rose 14% from the same period last year to $484.3 million.

Non-advertising revenue increased 12% from the same period last year to $88.7 million. Non-US GAAP non-advertising revenue increased 13% from the same period last year to $86.1 million.

Sina should make a net profit of $16.4 million, or 22 cents a share. Non-US GAAP Sina should account for a net profit of $57.7 million, or 80 cents a share of diluted net income.

In December 2018, the number of active users (MAUs) reached 462 million, a net increase of about 70 million over the same period last year. 93% of the monthly active users of microblog are mobile users.

The average number of active users (DAUs) reached 200 million in December 2018, a net increase of 28 million over the same period last year.

Performance Focus in 2018

Net revenue increased by 33% over the previous year under the US Accounting Standards and non-US General Accounting Standards, to $2.11 billion and $2.1 billion respectively.

Advertising revenue increased 36% from the previous year to $1.79 billion.

Non-advertising revenue increased 17% from the previous year to $319 million. Non-US GAAP non-advertising revenue increased 18% from the previous year to $308.6 million.

In 2018, Sina should account for a net profit of $125.6 million, or a diluted net income of $1.70 per share. In 2018, non-US GAAP Sina should account for a net profit of US$227.1 million, or US$3.07 per share diluted net income.

Corporate Performance in the Fourth Quarter of 2018

Net revenue in the fourth quarter of 2018 was $573 million, up 14% from $503.7 million in the same period last year. Non-US GAAP net revenue in the fourth quarter of 2018 was $570.4 million, up 14% from $501.1 billion in the same period last year.

Advertising revenue in the fourth quarter of 2018 was $484.3 million, up 14% from $424.8 million in the same period last year. The comparative increase in advertising revenue in the fourth quarter was mainly attributable to the annual growth of 84.7 million US dollars in micro-blog advertising and marketing revenue, an increase of 25%.

Non-advertising revenue in the fourth quarter of 2018 was $88.7 million, up 12% from $79 million in the same period last year. Non-US GAAP non-advertising revenue in the fourth quarter of 2018 was $86.1 million, up 13% from $76.4 million in the same period last year. The year-to-year growth of non-advertising revenue is mainly due to the new acquisition of live business by Weibo in the fourth quarter of 2018.

Gross profit margin was 79% in the fourth quarter of 2018 and 75% in the same period last year. In the fourth quarter of 2018, the gross margin of advertising business was 82%, compared with 76% in the same period last year. The growth of gross profit margin in advertising business is mainly related to the adoption of new revenue criteria and the change of income presentation form from gross income to net income. In the fourth quarter of 2018, the gross profit rate of non-advertising business was 57%, which was lower than 66% in the same period last year. This was mainly due to the relatively low gross profit rate of the live business acquired by Weibo.

Operating expenditure in the fourth quarter of 2018 was $319.9 billion, compared with $248.4 million in the same period last year. The comparative growth of operating expenditure in the fourth quarter is mainly related to the marketing expenditure related to swap transactions under the new revenue criteria, which should be included in operating expenditure, as well as the goodwill of non-core business lines and the impairment of intangible assets resulting from acquisitions. In the fourth quarter of 2018, non-US GAAP operating expenditure was $288.6 million, compared with $226.8 million in the same period last year.

Operating profit in the fourth quarter of 2018 was $1301 million, compared with $128.7 million in the same period last year. The operating profit margin in the fourth quarter of 2018 was 23%, lower than 26% in the same period last year. Non-US GAAP operating profit in the fourth quarter of 2018 was $159.6 million, compared with $149.8 million in the same period last year. Non-US GAAP operating profit margin was 28% in the fourth quarter of 2018, slightly lower than 30% in the same period last year.

In the fourth quarter of 2018, non-operating losses amounted to $12.6 million, while non-operating profits amounted to $7.7 million in the same period last year. The non-operating losses in the fourth quarter of 2018 include: (1) a net loss of US$23 million resulting from the sale of investment, changes in fair value of investment and impairment of investment, which is not included in the non-operating losses calculated according to non-US general accounting standards; (2) a net interest of US$151 million and other income; (3) a net loss of equity investment of US$47 million, which defers the profits and losses of equity investment for one quarter. Confirm. Non-operating earnings in the fourth quarter of 2017 include net interest and other income of $11.2 million, as well as equity investment losses of $2.8 million, which are deferred for one quarter.

Income tax costs in the fourth quarter of 2018 were $14.3 million, compared with $17.2 million in the same period last year.

In the fourth quarter of 2018, Sinas common shareholders should make a net profit of $16.4 million, compared with $45.4 million in the same period last year. In the fourth quarter of 2018, Sinas common shareholdersnet profit per share should be 22 cents, compared with 60 cents in the same period last year. In the fourth quarter of 2018, non-GAAP common shareholders of Sina should account for a net profit of $57.7 million, compared with $60 million in the same period last year. In the fourth quarter of 2018, non-GAAP common shareholders of Sina should make 80 cents of net profit per share diluted, compared with 79 cents in the same period last year.

As of December 31, 2018, Sinas total cash, cash equivalents and short-term investments amounted to $2.3 billion and $3.4 billion as of December 31, 2017. Sinas decrease in cash, cash equivalents and short-term total investment is mainly related to the companys investment activities, the implementation of the companys stock repurchase plan and the repayment of the companys convertible senior bonds. Net cash generated by operating activities in the fourth quarter of 2018 was $138.9 million, capital expenditure was $17.1 million and depreciation and amortization costs were $11.9 million.

Business Performance in 2018

Net revenue in 2018 was $2.11 billion, up 33% from $1.58 billion in 2017. Non-US GAAP net revenue in 2018 was $2.1 billion, up 33% from $1.57 billion in 2017.

In 2018, advertising revenue was $1.79 billion, up 36% from $1.31 billion in 2017, mainly due to a 50% increase in micro-blog advertising and marketing revenue to $502.4 million.

Non-advertising revenue in 2018 was $319 million, up 17% from $272 billion in 2017. Non-US GAAP non-advertising revenue in 2018 was $308.6 million, up 18% from $261.6 million in 2017, thanks to the growth of Weibo membership fee revenue and revenue contribution from Weibo live broadcasting business.

The gross profit rate for the whole year of 2018 was 79%, which exceeded 74% in 2017. In 2018, the gross profit margin of advertising business was 81%, more than 75% in 2017. The growth of gross margin of advertising business in 2018 is mainly due to the change of income presentation form from gross income to net income under the new revenue criteria. The gross margin of non-advertising business in 2018 was 65%, slightly lower than 67% in 2017.

The total operating expenditure in 2018 was $1.19 billion and that in 2017 was $781.2 million. Apart from the swap-related marketing expenditure required by the new revenue criteria, the comparative increase in operating expenditure is also related to the increase in sales and marketing expenditure of the users accessed by Weibo, as well as the increase in personnel-related costs. The operating expenses of non-US GAAP in 2018 were US$1.07 billion and US$694.6 million in 2017.

Operating earnings in 2018 were $467 million and $388.6 million in 2017. Operating profit margin in 2018 was 22%, lower than 25% in 2017. The operating profit of non-US GAAP in 2018 was 581.5 million US dollars and that of GAAP in 2017 was 474 million US dollars. Non-US GAAP operating profit margin in 2018 was 28%, slightly lower than 30% in 2017.

Non-operating earnings for the whole year of 2018 were $88.5 million and $35.7 million in 2017. Non-operational earnings in 2018 mainly include (1) net interest and other income of $69.4 million; (2) net income of $18 million resulting from the sale of investment, changes in fair value of investment and impairment of investment, which is not included in non-operational earnings calculated according to non-U.S. General Accounting Standards; (3) net income of equity investment of $11.1 million. The profit and loss of the equity investment is deferred for one quarter. The non-operating earnings for the whole year of 2017 mainly include (1) net interest of $42.7 million and other income; (2) equity investment loss of $16.1 million. The deferred profit and loss of the equity investment is confirmed quarterly; (3) The net income of $9 million resulting from the sale of investment, the change of fair value of investment and the impairment of investment is excluded from the non-operating profit calculated on the basis of non-U.S. General Accounting Standards.

Income tax costs in 2018 were $129.1 million and $74.7 million in 2017. The rise in income tax costs is mainly related to higher profits in 2018 and deferred income tax charges due to changes in fair value of investment. Non-US GAAP income tax costs were $91 million in 2018 and $73.9 million in 2017.

Sinas common shareholders should account for a net profit of 125.6 billion US dollars in 2018 and 156.6 million US dollars in 2017. In 2018, Sinas common shareholders should share a diluted net profit of $1.70 per share and $2.09 per share in 2017. Non-US GAAP Sinas common shareholders should account for a net profit of $227.1 million in 2018 and $207.9 billion in 2017. In 2018, common shareholders of non-US GAAP Sina should make up $3.07 of net diluted earnings per share and $2.77 in 2017.

The net cash generated by business activities in 2018 was $311 million, capital expenditure was $262.2 million and depreciation and amortization expenses were $41.2 million.

Financial impact of new revenue standards

The company has adopted the new revenue standards since January 1, 2018. The financial reports published after January 1, 2018 are compiled in accordance with the new revenue standards (new basis), while the financial reports published before January 1, 2018 are still compiled in accordance with the old revenue standards (old basis), without adjustment. The old compilation basis is the accounting method adopted in the companys history.

The impact of the companys adoption of the new revenue criteria on current earnings performance is listed below.

Performance outlook

Sina expects US GAAP net revenue to be between 16.5 billion yuan and 17.5 billion yuan in 2019, or between 2.44 billion and 2.59 billion dollars, converted to 675 million yuan based on the exchange rate of US dollar to RMB. The guidelines represent annual growth rates of net revenue between 18% and 25%. The above revenue projections include $10.4 million in deferred revenue related to the granting of the Leghorn concession. These expectations reflect Sinas current preliminary judgment and may be adjusted in the future.