Earnings preview: What to expect when Weibo reports Q2 results

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Weibo Corp. (NASDAQ: WB) is scheduled to report second quarter 2019 earnings results on Monday, August 19, before market open. Analysts expect the company to report earnings of $0.56 per share on revenue of $429 million.

The majority of Weibo’s revenues come from advertising. The
company has posted double-digit growth in advertising revenues in past quarters
and this trend is likely to continue in the second quarter as well.

Another point to note is the user metrics. Weibo has consistently managed to grow its monthly and daily active user bases over the past five quarters. The growth in this area is expected to continue going forward.

Weibo active users quarterly trend

eMarketer
estimates
that Weibo will generate ad revenues of over $2.2 billion in 2019
and that this figure will exceed $3 billion in 2021. This momentum is attributed
to growth in the user base and the company is estimated to reach 374 million
monthly active users in 2019.

Weibo, however, faces challenges from the ongoing US-China
trade war, the slowdown in the Chinese economy as well as higher costs.  

In the first quarter of 2019, Weibo reported better-than-expected earnings while revenues narrowly missed estimates. Revenues grew 14% to $399 million while adjusted EPS was $0.56.

Advertising and marketing revenues grew 13% year-over-year.
Revenue from value-added service grew 24%, aided by revenues derived from the
live streaming business Yizhibo which was acquired in the fourth quarter of
2018. Monthly active users grew by 54 million to a total of 465 million users
while daily active users rose by around 19 million to 203 million users.  

For the second
quarter, Weibo has guided for net revenues to range between $427
million and $437 million, representing an increase of 7-10% year-over-year
on a constant currency basis. 

Weibo’s shares have dropped 40% so far this year and 17% in the past one month.

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