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SINA Corp's (SINA) Q2 Earnings & Revenues Beat Estimates

Zacks Equity Research

SINA Corporation SINA reported second-quarter 2019 non-GAAP earnings of 76 cents per share that crushed the Zacks Consensus Estimate by a whopping 34 cents. However, the figure declined 15.1% from the year-ago quarter.

Non-GAAP net revenues declined 0.8% year over year to $530.4 million. Nevertheless, the figure beat the consensus mark of $513 million.

At constant currency (cc), non-GAAP revenues increased 5% year over year.

Quarter Details

Advertising revenues (81.7% of revenues) decreased 4.5% year over year (up 1% at cc) to $433.6 million due to a decline in portal advertising revenues.

Non-advertising revenues (18.3% of total revenues) increased 19.4% year over year to $99.4 million. The growth was driven by robust performance from Weibo's live streaming business and higher revenues generated from SINA’s fin-tech businesses.

Sina Corporation Price, Consensus and EPS Surprise

Sina Corporation Price, Consensus and EPS Surprise

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

Revenues from the Weibo business grew 1.2% year over year to $431.8 million. The company added 21 million users sequentially, reaching MAUs of 486 million.

Weibo’s advertising & marketing revenues increased 0.2% year over year (up 6% at cc) to $370.7 million. Weibo’s VAS revenues rose 8% to $61.2 million.

Portal advertising revenues fell 25.2% year over year (down 21% at cc) to $63 million due to lower ad spending by SME customers. Other revenues jumped 42.8% to $43.7 million.

Operating Details

SINA reported a second-quarter non-GAAP gross profit of $408.8 million, down 5.2% year over year.

Gross margin of 77.1% contracted 360 basis points (bps) on a year-over-year basis to 77.1%. Advertising gross margin shrank 200 bps to 81%. Non-advertising gross margin was 60%, down from year-ago quarter’s 68%.

Portal gross margin contracted 300 bps on a year-over-year basis to 55%. Weibo gross margin was 81%, significantly down from 86% posted in the year-ago quarter.

Sales and marketing expenses were $147.7 million, down 19.5% year over year. Product development expenses were $92 million, reflecting an increase of 9.7%. Moreover, general and administrative expenses surged 57.9% to $43 million.

Operating expenses (48.3% of revenues) on a non-GAAP basis were $256 million, down 5.9% year over year.

Non-GAAP operating income was $152.8 million, down 4% year over year (up 5% at cc). Operating margin of 28.8% shrank 90 bps on a year-over-year basis.

Balance Sheet and Cash Flow

As of Jun 30, 2019, cash, cash equivalents and short-term investments were $2.15 billion.

While net cash provided by operating activities was $128.6 million in the second quarter, capital expenditures totaled $5 million.

Zacks Rank & Stocks to Consider

Currently, SINA carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader computer & technology sector are Chegg CHGG, Paylocity Holding PCTY and Cirrus Logic CRUS, all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Chegg, Paylocity and Cirrus is 30%, 20% and 15%, respectively.

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