SINA Reports Fourth Quarter and Fiscal Year 2018 Unaudited Financial Results

BEIJING, March 5, 2019 /PRNewswire/ -- SINA Corporation (the "Company" or "SINA") (NASDAQ: SINA), a leading online media company serving China and the global Chinese communities, today announced its unaudited financial results for the fourth quarter and the fiscal year ended December 31, 2018.

Fourth Quarter 2018 Highlights

• Both net revenues and non-GAAP net revenues increased 14% year-over-year to $573.0 million and $570.4 million, respectively.
• Advertising revenues increased 14% year-over-year to $484.3 million.
• Non-advertising revenues increased 12% year-over-year to $88.7 million. Non-GAAP non-advertising revenues increased 13% year-over-year to $86.1 million.
• Net income attributable to SINA was $16.4 million, or $0.22 for diluted net income per share attributable to SINA's ordinary shareholders. Non-GAAP net income attributable to SINA was $57.7 million, or $0.80 for non-GAAP diluted net income per share attributable to SINA's ordinary shareholders.
• Weibo's monthly active users ("MAUs") were 462 million in December 2018, a net addition of approximately 70 million users on a year-over-year basis. Weibo's mobile MAUs represented 93% of Weibo's MAUs.
• Weibo's average daily active users ("DAUs") were 200 million in December 2018, a net addition of approximately 28 million users on a year-over-year basis.

Fiscal Year 2018 Highlights

• Both net revenues and non-GAAP net revenues increased 33% year-over-year to $2.11 billion and $2.10 billion, respectively.
• Advertising revenues increased 36% year-over-year to $1.79 billion.
• Non-advertising revenues increased 17% year-over-year to $319.0 million. Non-GAAP non-advertising revenues increased 18% year-over-year to $308.6 million.
• Net income attributable to SINA was $125.6 million, or $1.70 for diluted net income per share attributable to SINA's ordinary shareholders. Non-GAAP net income attributable to SINA was $227.1 million, or $3.07 for non-GAAP diluted net income per share attributable to SINA's ordinary shareholders.

Fourth Quarter 2018 Financial Results

For the fourth quarter of 2018, SINA reported net revenues of $573.0 million, an increase of 14% compared to $503.7 million for the same period last year. Non-GAAP net revenues for the fourth quarter of 2018 were $570.4 million, an increase of 14% compared to $501.1 million for the same period last year.

Advertising revenues for the fourth quarter of 2018 were $484.3 million, an increase of 14% compared to $424.8 million for the same period last year, primarily driven by an increase of $84.7 million, or 25% growth in Weibo advertising and marketing revenues.

Non-advertising revenues for the fourth quarter of 2018 were $88.7 million, an increase of 12% compared to $79.0 million for the same period last year. Non-GAAP non-advertising revenues for the fourth quarter of 2018 were $86.1 million, an increase of 13% compared to $76.4 million for the same period last year. The year-over-year growth in non-advertising revenues was mainly attributable to the newly acquired live broadcasting business by Weibo in the fourth quarter of 2018.

Gross margin for the fourth quarter of 2018 was 79%, compared to 75% for the same period last year. Advertising gross margin for the fourth quarter of 2018 was 82%, compared to 76% for the same period last year. The increase in advertising gross margin was due to our revenue reporting changed from gross basis to net basis under the new revenue guidance adopted. Non-advertising gross margin for the fourth quarter of 2018 was 57%, down from 66% for the same period last year, mainly resulted from the relatively lower margin of the acquired live broadcasting business of Weibo.   

Operating expenses for the fourth quarter of 2018 totaled $319.9 million, compared to $248.4 million for the same period last year. The increase primarily resulted from the inclusion of marketing expense related to barter transactions recorded under the new revenue guidance as illustrated below as well as goodwill and acquired intangibles impairment charge for non-core business line. Non-GAAP operating expenses for the fourth quarter of 2018 totaled $288.6 million, compared to $226.8 million for the same period last year.

Income from operations for the fourth quarter of 2018 was $130.1 million, compared to $128.7 million for the same period last year. Operating margin was 23%, down from 26% for the same period last year. Non-GAAP income from operations for the fourth quarter of 2018 was $159.6 million, compared to $149.8 million for the same period last year. Non-GAAP operating margin was 28%, slightly down from 30% for the same period last year.

Non-operating loss for the fourth quarter of 2018 was $12.6 million, compared to a non-operating income of $7.7 million for the same period last year. Non-operating loss for the fourth quarter of 2018 included (i) a $23.0 million net loss on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measure; (ii) a $15.1 million net interest and other income; and (iii) a $4.7 million net loss from equity-method investments, which is reported one quarter in arrears. Non-operating income for the fourth quarter of 2017 composed of an $11.2 million net interest and other income and a $2.8 million loss pick-up from equity-method investments, which is reported one quarter in arrears. 

Income tax expenses for the fourth quarter of 2018 were $14.3 million, compared to $17.2 million for the same period last year.

Net income attributable to SINA's ordinary shareholders for the fourth quarter of 2018 was $16.4 million, compared to $45.4 million for the same period last year. Diluted net income per share attributable to SINA's ordinary shareholders for the fourth quarter of 2018 was $0.22, compared to $0.60 for the same period last year. Non-GAAP net income attributable to SINA's ordinary shareholders for the fourth quarter of 2018 was $57.7 million, compared to $60.0 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA's ordinary shareholders for the fourth quarter of 2018 was $0.80, compared to $0.79 for the same period last year.

As of December 31, 2018, SINA's cash, cash equivalents and short-term investments totaled $2.3 billion, compared to $3.4 billion as of December 31, 2017. The decrease of SINA's cash, cash equivalents and short-term investments mainly resulted from continued investment activities, the execution of the Company's share repurchase program and repayment of SINA's convertible senior notes. For the fourth quarter of 2018, net cash provided by operating activities was $138.9 million, capital expenditures totaled $17.1 million, and depreciation and amortization expenses amounted to $11.9 million.

Fiscal Year 2018 Financial Results

For fiscal year 2018, SINA reported net revenues of $2.11 billion, an increase of 33% compared to $1.58 billion in 2017. Non-GAAP net revenues for 2018 were $2.10 billion, an increase of 33% compared to $1.57 billion in 2017.

Advertising revenues in 2018 were $1.79 billion, an increase of 36% compared to $1.31 billion in 2017, primarily driven by an increase of $502.4 million, or 50% growth in Weibo advertising and marketing revenues.

Non-advertising revenues in 2018 were $319.0 million, an increase of 17% compared to $272.0 million in 2017. Non-GAAP non-advertising revenues in 2018 were $308.6 million, an increase of 18% compared to $261.6 million in 2017, benefiting from increased Weibo membership fees and incremental revenue contributed from the live broadcasting business of Weibo.

Gross margin in 2018 was 79%, compared to 74% in 2017. Advertising gross margin in 2018 was 81%, compared to 75% in 2017. The increase in advertising gross margin mainly resulted from our revenue reporting changed from gross basis to net basis under the new accounting standard adopted. Non-advertising gross margin in 2018 was 65%, slightly down from 67% in 2017.  

Operating expenses in 2018 totaled $1.19 billion, compared to $781.2 million in 2017. Apart from the inclusion of marketing expense related to barter transactions recorded under the new revenue guidance as illustrated below, the increase in operating expenses was also attributable to the increase in sales and marketing expenses for Weibo's user acquisition and the increase in personnel related expenses. Non-GAAP operating expenses in 2018 totaled $1.07 billion, compared to $694.6 million in 2017.

Income from operations in 2018 was $467.0 million, compared to $388.6 million in 2017. Operating margin was 22%, down from 25% in 2017. Non-GAAP income from operations in 2018 was $581.5 million, compared to $474.0 million in 2017. Non-GAAP operating margin was 28%, slightly down from 30% in 2017.

Non-operating income in 2018 was $88.5 million, compared to $35.7 million in 2017. Non-operating income in 2018 included (i) a $69.4 million net interest and other income; (ii) an $18.0 million net gain on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measure; and (iii) a $1.1 million net income from equity-method investments, which is reported one quarter in arrears. Non-operating income in 2017 mainly included (i) a $42.7 million net interest and other income; (ii) a $16.1 million net loss from equity-method investments, which is reported one quarter in arrears; and (iii) a $9.0 million net gain on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measure.   

Income tax expenses in 2018 were $129.1 million, compared to $74.7 million in 2017. The increase was primarily due to higher profits generated in 2018 and the deferred tax provision recognized in respect of the fair value changes of investments. Non-GAAP income tax expenses in 2018 were $91.0 million, compared to $73.9 million in 2017.

Net income attributable to SINA's ordinary shareholders in 2018 was $125.6 million, compared to $156.6 million in 2017. Diluted net income per share attributable to SINA's ordinary shareholders in 2018 was $1.70, compared to $2.09 in 2017. Non-GAAP net income attributable to SINA's ordinary shareholders in 2018 was $227.1 million, compared to $207.9 million in 2017. Non-GAAP diluted net income per share attributable to SINA's ordinary shareholders in 2018 was $3.07, compared to $2.77 in 2017.

For the fiscal year of 2018, net cash provided by operating activities was $311.0 million, capital expenditures totaled $262.2 million, and depreciation and amortization expenses amounted to $41.2 million.

Financial Impact from New Revenue Guidance

As the Company adopted new revenue guidance ASC Topic 606 on January 1, 2018, results for reporting periods beginning after January 1, 2018 are presented under Topic 606 ('New Basis'), while prior period amounts are not adjusted and continue to be reported under Topic 605 ('Old Basis') , which is the Company's historic accounting method.

The Company's current period reported results which reflected the impact from the adoption of the new revenue guidance are as follows:

Business Outlook

For the fiscal year 2019, SINA estimates that its net revenues are between RMB16.5 billion and RMB17.5 billion, or US$2.44 billion and US$2.59 billion, assuming US dollar and RMB exchange rate of 6.75. It represents an annual growth rate of 18% to 25% on a constant currency basis. Such revenue forecast includes the recognition of $10.4 million in deferred license revenues related to the license granted to Leju. This forecast reflects SINA's current and preliminary view, which is subject to change.

Non-GAAP Measures

This release contains the following non-GAAP financial measures: non-GAAP net revenues, non-GAAP non-advertising revenues, non-GAAP advertising and non-advertising gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income attributable to SINA's ordinary shareholders and non-GAAP diluted net income per share attributable to SINA's ordinary shareholders. These non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with U.S. GAAP. The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.

The Company's non-GAAP financial measures exclude recognition of deferred revenues related to the license granted to Leju, stock-based compensation, amortization of intangible assets, goodwill and acquired intangibles impairment, adjustment for non-GAAP to GAAP reconciling items on the share of equity method investments, gain (loss) on sale of investment, deemed disposal, fair value changes and impairment on investment, and income tax effects of above non-GAAP to GAAP reconciling items and adjustment for non-GAAP to GAAP reconciling items for the income attributable to non-controlling interests and amortization of convertible debt issuance cost. The Company's management uses these non-GAAP financial measures in their financial and operating decision-making, because management believes these measures reflect the Company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. The Company believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: (i) in comparing the Company's current financial results with the Company's past financial results in a consistent manner, and (ii) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gain/loss and other items (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of the Company's core operating results and business outlook.

Use of non-GAAP financial measures has limitations. The Company's non-GAAP financial measures do not include all income and expense items that affect the Company's operations. They may not be comparable to non-GAAP financial measures used by other companies. Management compensates for these limitations by also considering the Company's financial results prepared in accordance with U.S. GAAP. Reconciliations of the Company's non-GAAP measures to the nearest comparable GAAP measures are set forth in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."

Conference Call

SINA will host a conference call from 7:10 a.m. – 7:40 a.m. Eastern Time on March 5, 2019 (or 8:10 p.m. – 8:40 p.m. Beijing Time on March 5, 2019) to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available through the Company's corporate website at http://ir.sina.com. The conference call can be accessed as follows:

A replay of the conference call will be available through morning Eastern Time March 13, 2019. The dial-in number is +61 2 9003 4211. The passcode for the replay is 4677406.

About SINA

SINA is a leading online media company serving China and the global Chinese communities. Its digital media network of SINA.com (portal), SINA mobile (mobile portal and mobile apps) and Weibo (social media) enables internet users to access professional media and user generated content in multi-media formats from personal computers and mobile devices and share their interests with friends and acquaintances.

SINA.com offers distinct and targeted professional content on each of its region-specific websites and a full range of complementary offerings. SINA mobile provides news information, professional and entertainment content customized for mobile users through mobile applications and mobile portal site SINA.cn.

Weibo is a leading social media platform for people to create, distribute and discover content. Based on an open platform architecture, Weibo provides unprecedented and simple way for people and organizations to publicly express themselves in real time, interact with others on a massive global platform and stay connected with the world.

Through these properties and other product lines, SINA offer an array of online media and social media services to its users to create a rich canvas for businesses and advertisers to effectively connect and engage with their targeted audiences.

Safe Harbor Statement

This press release contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described, without limitation, in quotations from management in this press release). SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "confidence," "estimates" and similar statements. SINA assumes no obligation to update the forward-looking statements in this press release and elsewhere. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to failure to meet internal or external expectations of future performance given the rapidly evolving markets; condition of the global financial and credit market; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly operating results; the Company's reliance on online advertising sales and value-added services for a majority of its revenues; failure to successfully develop, introduce, drive adoption of or monetize new features and products, including portal, Weibo and fin-tech products; failure to enter and develop the small and medium enterprise market by the Company or through cooperation with other parties, such as Alibaba; failure to successfully integrate acquired businesses; risks associated with the Company's investments, including equity pick-up and impairment; and failure to compete successfully against new entrants and established industry competitors. Further information regarding these and other risks is included in SINA's 2017 annual reports on Form 20-F and other filings with the Securities and Exchange Commission.

Contact:
Investor Relations
SINA Corporation
Phone: +86 10 5898 3336
Email: [email protected]