SINA : Reports Second Quarter 2018 Unaudited Financial Results

BEIJING, Aug. 8, 2018 /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 second quarter ended June 30, 2018.

'We had another good quarter.' said Charles Chao, Chairman and CEO of SINA. 'Weibo continued to record healthy growth in both user base and monetization despite more intensified competition.' said Mr. Chao. 'For SINA businesses, we continued to see robust growth in user scale of SINA mobile apps, which bodes well for improved mobile monetization of SINA media.' Mr. Chao added.

Second Quarter 2018 Highlights

• Both net revenues and non-GAAP net revenues increased 50% year-over-year to $537.4 million and $534.8 million, respectively.
• Advertising revenues increased 54% year-over-year to $454.1 million.
• Non-advertising revenues increased 31% year-over-year to $83.3 million. Non-GAAP non-advertising revenues increased 32% year-over-year to $80.7 million.
• Income from operations increased 44% year-over-year to $136.2 million. Non-GAAP income from operations increased 38% year-over-year to $159.1 million.
• Net income attributable to SINA was $35.1 million, or $0.47 for diluted net income per share attributable to SINA's ordinary shareholders. Non-GAAP net income attributable to SINA was $66.5 million, or $0.89 for non-GAAP diluted net income per share attributable to SINA's ordinary shareholders.

Second Quarter 2018 Financial Results

For the second quarter of 2018, SINA reported net revenues of $537.4 million, an increase of 50% compared to $358.9 million for the same period last year. Non-GAAP net revenues for the second quarter of 2018 were $534.8 million, an increase of 50% compared to $356.3 million for the same period last year.

Advertising revenues for the second quarter of 2018 were $454.1 million, an increase of 54% compared to $295.2 million for the same period last year, primarily driven by an increase of $151.6 million, or 69% growth in Weibo advertising and marketing revenues.

Non-advertising revenues for the second quarter of 2018 were $83.3 million, an increase of 31% compared to $63.8 million for the same period last year. Non-GAAP non-advertising revenues for the second quarter of 2018 were $80.7 million, an increase of 32% compared to $61.2 million for the same period last year, benefiting from increased Weibo membership fees, revenue share from live broadcasting business, and revenues derived from SINA fin-tech businesses.

Gross margin for the second quarter of 2018 was 80%, compared to 74% for the same period last year. Advertising gross margin for the second quarter of 2018 was 82%, compared to 76% for the same period last year. The increase in advertising gross margin was mainly resulted from our revenue reporting changed from gross basis to net basis under the new accounting standard adopted. Non-advertising gross margin for the second quarter of 2018 was 69%, compared to 68% for the same period last year.

Operating expenses for the second quarter of 2018 totaled $294.7 million, compared to $171.9 million for the same period last year. Apart from the inclusion of marketing expense related to barter transactions recorded under the new accounting standard as illustrated below, the increase in operating expenses was primarily attributable to the increase in sales and marketing expenses for user acquisition of Weibo and SINA mobile apps, as well as the increase in personal costs for product development. Non-GAAP operating expenses for the second quarter of 2018 totaled $272.1 million, compared to $150.6 million for the same period last year.

Income from operations for the second quarter of 2018 was $136.2 million, an increase of 44% compared to $94.7 million for the same period last year. Operating margin was 25%, slightly down from 26% for the same period last year. Non-GAAP income from operations for the second quarter of 2018 was $159.1 million, an increase of 38% compared to $115.5 million for the same period last year. Non-GAAP operating margin was 30%, down from 32% for the same period last year.

Non-operating income for the second quarter of 2018 was $1.2 million, compared to a non-operating loss of $13.4 million for the same period last year. Non-operating income for the second quarter of 2018 included (i) a $20.1 million net interest and other income; (ii) a $16.4 million net loss on sale of investments, fair value changes and impairment on investments, which is excluded under non-GAAP measure; and (iii) a $2.5 million loss pick-up from equity-method investments, which is reported one quarter in arrears and is mainly resulted from the loss pick-up related to the Company's investment in Leju Holding Limited ('Leju'). Non-operating loss for the second quarter of 2017 included (i) a $101.0 million gains from disposing of certain marketable securities and other gains, which are excluded under non-GAAP measure; (ii) a $113.1 million of investment impairment write down of the Company's investment in Leju, which is excluded under non-GAAP measure; and (iii) a $5.3 million loss pick-up from equity-method investments.

Income tax expenses for the second quarter of 2018 were $27.9 million, compared to $19.1 million for the same period last year, primarily owing to higher profitability with a relatively stable tax rates in our PRC operation.

Net income attributable to SINA's ordinary shareholders for the second quarter of 2018 was $35.1 million, compared to $23.4 million for the same period last year. Diluted net income per share attributable to SINA's ordinary shareholders for the second quarter of 2018 was $0.47, compared to $0.31 for the same period last year. Non-GAAP net income attributable to SINA's ordinary shareholders for the second quarter of 2018 was $66.5 million, compared to $52.7 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA's ordinary shareholders for the second quarter of 2018 was $0.89, compared to $0.70 for the same period last year.

As of June 30, 2018, SINA's cash, cash equivalents and short-term investments totaled $2.7 billion, compared to $3.4 billion as of December 31, 2017. The decrease of SINA's cash, cash equivalents and short-term investments was mainly resulted from continued investment activities and the execution of the Company's share repurchase program. For the second quarter of 2018, net cash provided by operating activities was $16.4 million, capital expenditures totaled $162.1 million, and depreciation and amortization expenses amounted to $10.0 million.

Share Repurchase Program

On June 30, 2018, the Company has completed its $500 million share repurchase program which was approved in February 2016 by the Company's board of directors. As of June 30, 2018, the Company has repurchased approximately 3.4 million shares for approximately $302.6 million under the program.

SINA's board of directors has approved a new share repurchase plan whereby SINA is authorized to repurchase its own ordinary shares with an aggregate value of up to $500 million for a period through the end of December 2019. SINA expects to fund the repurchase out of its existing cash balance.‎ The share repurchase may be effected on the open market at prevailing market prices and/or in negotiated transactions off the market from time to time as market conditions warrant and will be implemented in accordance with applicable rules under the U.S. Securities Exchange Act of 1934, as amended.

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:

	Three months ended June 30, 2018
	Adjustments
	Old Basis ASC 605		VAT		Barter Transaction		New Basis ASC 606
	($ In thousands, except for percentage)
Net revenues	540,106		(30,159)		27,413		537,360
- Portal	120,788		(6,656)		672		114,804
- Weibo	423,593		(23,745)		26,741		426,589
Cost of revenues	136,632		(30,159)		-		106,473
Operating expenses	268,639		-		26,069		294,708
- Sales and marketing	157,520		-		26,069		183,589
Income from operations	134,835		-		1,344		136,179
Gross margin	74.7%						80.2%
Operating margin	25.0%						25.3%

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, 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 8:10 a.m. - 8:40 a.m. Eastern Time on August 8, 2018 (or 8:10 p.m. - 8:40 p.m. Beijing Time on August 8, 2018) 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:

US:	[phone]
Hong Kong:	[phone]
China:	400 120 0654
International:	[phone]
Passcode for all regions:	3381946

A replay of the conference call will be available through morning Eastern Time August 16, 2018. The dial-in number is [phone]. The passcode for the replay is 3381946.

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: [phone]
Email: [e-mail]

SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollars in thousands, except per share data)
		Three months ended						Six months ended
		June 30,				March 31,		June 30,
		2018		2017		2018		2018		2017
Net revenues(1):
Advertising		$ 454,091		$ 295,153		$ 367,081		$ 821,172		$ 523,152
Non-advertising		83,269		63,779		73,671		156,940		113,845
		537,360		358,932		440,752		978,112		636,997
Cost of revenues(1)(2):
Advertising		80,583		72,211		83,115		163,698		139,879
Non-advertising		25,890		20,113		25,592		51,482		39,017
		106,473		92,324		108,707		215,180		178,896
Gross profit		430,887		266,608		332,045		762,932		458,101
Operating expenses:
Sales and marketing (1)(2)		183,589		83,408		139,687		323,276		151,491
Product development (2)		83,877		63,486		85,137		169,014		117,906
General and administrative (2)		27,242		25,036		33,932		61,174		49,059
		294,708		171,930		258,756		553,464		318,456
Income from operations		136,179		94,678		73,289		209,468		139,645
Non-operating income (loss):
Loss from equity method investments, net		(2,527)		(5,265)		(1,772)		(4,299)		(2,122)
Gain on sale of investments, fair value changes and impairment on investments, net (3)		(16,396)		(16,315)		7,226		(9,170)		(432)
Interest and other income, net		20,116		8,225		17,098		37,214		19,458
		1,193		(13,355)		22,552		23,745		16,904
Income before income taxes		137,372		81,323		95,841		233,213		156,549
Income tax expense		(27,858)		(19,135)		(18,750)		(46,608)		(32,961)
Net income		109,514		62,188		77,091		186,605		123,588
Less: Net income attributable to non-controlling interests		74,462		38,798		48,397		122,859		61,674
Net income attributable to SINA's ordinary shareholders		$ 35,052		$ 23,390		$ 28,694		$ 63,746		$ 61,914
Basic net income per share		$ 0.49		$ 0.33		$ 0.40		$ 0.89		$ 0.87
Diluted net income per share (4)		$ 0.47		$ 0.31		$ 0.38		$ 0.85		$ 0.83
Shares used in computing basic net income per share		71,210		71,197		71,440		71,324		71,078
Shares used in computing diluted net income per share		73,553		73,890		74,036		73,793		73,667
(1) On January 1, 2018, the Company adopted ASC 606 Revenue from Contracts with Customers using the modified retrospective method,which means that prior periods amount will be reported on a historical basis and amounts for 2018 are reported on the new basis. Under the new accounting standard, the main impact to the Company is that it now reports revenue net of value added tax and recognizes revenues and expenses at fair value for advertising barter transactions.