Q2 2020 Weibo Corp Earnings Call

Thank you operator. Welcome to label second quarter 2020 earnings conference call Jeremy today our chief executive officer company Long and already financed a Ninja Japanese house eight please conference call is also being broadcast on internet and available to live with our website.

Before the Mansion remarked. I would like to read you the Safe Harbor statement in connection with today's conference calls during today's conference call. We may make forward-looking statements payment that are not historical facts including statements of all beliefs and expectations forward-looking statement involved in health risks and uncertainties. A number of important factors could cause actual results so much yearly from those competing any forward-looking statements. We will assumes no obligation to update the forward-looking statements in this conference call and elsewhere further information regarding this page is including way with any report on form 20-f and other filings with the SEC.

Oh, the information provided in this press release is occurring as of the dead heroes. We both seems no obligation to update information except as required under applicable. Additionally. I'd like to remind you that our discussion today include certain non-gaap measures which is good. With conversation and certain other experiences month. We used to gain better understanding of reboots comparative or premium performance and the future Prospect our non-gaap financial institute during census gains losses, and the other items that are not expected without in future cash payment or a non-recurring nature or not indicative of our operating results and all look, Please refer to our press release for more information about our non-gaap measures. Loi mentioned prepared remarks will open the line for a brief Q&A session with this Alexa turn off.

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Kia clean. Hello everyone and welcome to wait a second quarter 2020 earnings conference call with Tammy took position as well as progress. We made our key initiative in 2020. Yeah, we both thought about the minimum wage.

Let me start with second-quarter financial.

Results in the second quarter our total revenue Ridge three hundred eighty seven point four million a decrease of 10% year-over-year or 7% on constant currency basis at home typing and marketing revenues reached 340 point six million a decrease of 8% year-over-year were 5% on a constant currency basis 89% of our money come from mobile home parts available only used 8% of year to 521 Jun 2020 an average 9% of you to 229 million in June twenty twenty 94% of labels came from mobile app.

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With the Kobe situation in China stabilized and people's work resumption. We observe the normalization of pandemic related constant consumption which led to sequential put bath traffic from the People level in the first quarter, but it's worth mentioning that we still notable roles of use of content generation and use engagement during this quarter back by a strategy to improve the engagement and retention on top of user groups particularly. We have reinforced our investment of distribution efficiency and social interaction to enhance use of sickness on a password on the monetization front with further refined and strengthen our adult Queen's designated for clients evolving Market needs during the pandemic with that and benefiting from birth and pick up a me the stabilization pandemic and will result or presumptions are at least into the backcountry coverage and which are revenue narrowly and and declining wage.

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Progress made in areas of product and monetization. Let's start with user groups and engagement. They are merely three aspects of progress we made which contribute to healthy gross abuse of em, every year. She took you to forget she took fashion during the first half of here. We emphasis on Synergy between our channels investment efforts and relevant product and operating efforts to provide better game experience for recording users. For example, extended the coverage of tax base Red Envelope incentives to recall users which improved using engagement off.

We also has the video content distribution to recall user which increase their constant on the platform this initiative help improve our use the acquisition efficiency life in for me tomorrow, Thursday, Thursday Thursday. Do you see your team that the children in the cream cone? Yeah, Japanese. Yep.

To meet this your the paper that you should have.

San Tan, notification of her chest. So the experience in, I appreciate during the pandemic we have solidify our strength in appreciation of social events in the in the same quarter of focus was on the location-based account opposition to how Trent to enhance user acquisition capability in local market during the pandemic. We have upgraded, distribution that can meet them location-based the content. We prioritize the distribution of local content submitted from local media and self media's over existing constant selective students need money, which largely improved constant quality and diversity and consequently in this quarter user who consumed the push location-based content dead year and meanwhile, we launched a subsection in hostage with a focus on location-based hard chance, we may need to drive content Discovery and consumption based on

Use this geographical regions you choose daily query of location-based hot Trends increased by double-digit compared with previous months this achievement help us serve you see if we can work of location-based account and distribution consisting of contribution feed recommendations and hostage underpinned by different Corporation with local media and apps media. This could help us enhance awkward competitiveness in the local market.

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Leslie on social interactions we continue to optimize our use of products and drive are using engagement first on relationship-based feed. We further optimize social contribution mechanism to drive cars and consumption efficiencies. Secondly, we have we have social attributes for super topical transfer functions and strengthen topic organization and discussion around how Trends and interest rates account as a result. We saw an Oculus increase the interaction and their willingness to post in June the total musical content increased over 30% over the years and the Daily Post grew over fifty percent of the year to put it into perspective indispensable for most users to share life moments and opinions and participate in discussions, and we will continue to be a crucial platforms to fulfill users need to Thursday.

And self defy the privilege of video content consumption. What time should I ask for you. I'm not sure that I'm not so sure you get chilled. Y'all do that. I'm about to tell me something. She said she had a shipping total energy.

Josh bought a new TV box should be home.

Next let's talk about video streaming as I mentioned last quarter. We plan to increase.

Concerts this year accordingly. We had provided her getting operation and product support for for you to see video before custom chassis extension and distribution efficiency to drive monetization around video ecosystem with the stabilize the traffic for a video content post-pandemic off and revenues generated to you in second-quarter food near the 40% quarter-over-quarter and it's July performance kept the same momentum as well for lunch or degree in Vision as a leading social media. We attempted to attract more video content creators to grow and label and enhance our user acquisition ability and traffic in the video Market. We have seen some progress made as a scale of PTC content creators continue to expand in June June.

What's the number of readers and their daily video submissions increased over fifty percents compared with December last year in July. We launched a project called Bots account aiming for the ram Pop-Up Video traffic and facilitates social relationship establishment by content creators, which was released for both well for us to promote concrete with engagement and retention on way before you're both on the same page with you suck.

Let's give it a 2018 charger Hellcat. How may I help you?

Cinterion table you come in. I mean, you should see a fertility sure you'll be able to pay cash.

I need to live streaming in the first.

Hoping here last thing you said that has enjoyed Rapid Station during the pandemic to capture Market opportunities. We launched new initiative in live streaming during this period and a further refine a position and focused for the business. Let me elaborate live streaming focus on topic based marketing and events interactions around like streaming content. We usually our topic list of live streaming council with enhance the traffic report aiming to promote influence of live stream content away board and strengthen our position at the important marketing channel for the life countless distribution take poppy, Live host as example in the second quarter of the sixty percent of the public post type account and broadcast on label and their weekly topic is posted increased by over two times compared with that before launching the topic list enticing authors.

Post to advertise and accumulate things on weibo as well. We also revamped live streaming product to further integrate with labels core products and improve traffic bath used to amplify life, exposure on the platform in mid-july visual out reservation feature for live streaming content and reminders feature on top of the page. You should fix the feet which helped lifeboats to precisely Target fans group and Achieve better results to private domain of traffic in July. We still higher life Generation by hooked up to the reservation feature and their number of viewers and interaction in a live shows more than doubled from June to sum up initiative will benefit wave was life changing ecosystem for one thing with a growing base of talk Live host accumulating bands and promoting life contents. We benefited from birth.

Traffic and Commercial demand arising from this group of users for another we have made some progress in our Corporation without live streaming and meanwhile Chef media live streaming also demonstrate the momentum with increasing adoption of a reservation and send targeting functions this encouraging chance with ultimately been off the beauty out of a live streaming ecosystem wage for you to show them to me.

On the monetization from with the stabilization of pandemic in China and a gradual economic recovery WE Post advertising business exhibited recovery Trend in the second quarter miles, whichever openings decreasing 8% here. We were 5% in German return improving from 5 quarter in terms of any chance. I won't argue age. They both came up on the show, so neat to me trippin by me so long so I just showed out. I mean, it's pretty enjoyable. So here so he could you show me the Kaiser.

MP3 Walk You Home she took so they brought me to touch him. They bought some coke took out two tires for sure. She's able to use her. She's she wants she needs someone put out yet have a block option. You may be able to jump off.

Okay, I love music increased 3% You were flat in German determine and increase 30% quarter-over-quarter the solid recovery of assistance in a second quarter when he mainly driven by two factors for one thing externally rent at budget has come back at a decent pace entertained by the reopening of domestic economy. And there is incentive to drive consumption such as the June 18th eCommerce event brand advertisers broccoli step up their promotional efforts with an on-track product launch schedule on top of the rebound of the oval admin. We continue to see upside from the prevailing trend of a partnership from offline to online which has been accelerated by the pandemic internally we both make we progress in reinforcing our differentiated value proposition to customers

We see some efforts to optimize at oaklands and improve service quality to be well positioned to serve French marketing objectives including new product launch left in March. How how you dance marketing as well as purchase intent cultivation?

He called with the Blockbuster Blockbuster reality show sister who makes waves as examples leveraging and Publix heated discussion around the chef and also significant traffic of the show will not only offer strong brand exposure for the shows functions such as military and or real platform that also attracts customer such as Tom Ford then come assets and Ahmad. Amadan Etc to Market yourself with diapers content curated by our operational team based on iPhone netmeeting recovery marketing team and and more tailor-made that product offerings several key industries of recovery and and off-road shops in the in terms of past and in the second quarter on any basis.

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Movie on to Assamese. Our estimate revenues decreased 21% will be here or 18% in general terms as sequentially as any Revenue increased 16% am either have ways of pandemic Optimas and a competition we believe is Duty time for the SME business to fully recover during the first half of them. We visited our competitive strategy for our performance at business from a longer-term perspective and devise a clear roadmap on the organizational structure and a dog from accordingly. Let me elaborate first we focus on driving the the adoption of our integrated content plus performance as solution a monkey.

Specifically, we reformed organizations organizational structure to empower simulates corporations between ourselves and our product operational teams as well as wage at agencies now routine such energies we Endeavor to develop marketing. Keratin that highlights. We posed differentiation in constant offerings. I appreciate your understanding of each specific industry in the first half of the year. We started to Pilot such industry-specific offerings with the gaming public education sectors, which resonated well among our customers.

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Thanks searching people account and plus performance power them to cover more Industries. So as to capture higher quality in the Future II with focus is improving women's and add placement efficiency. We Revisited the entire place in the process of supervision at home and revamped the system accordingly to tackle loss issues identified. We start to optimize advertisers experience in placing ad with us in the areas of our creation optimization and data analytics off. The fully upgraded system has opened up to customers during this month's on the performance from we simplified are formats and further improve are feed conversion. Currently. We have fully rolled out the new video and image formats to customers leading to nearly fifty percent and over a hundred percent increase wage.

Average traffic direction ratio with new video in and video and image formats respectively compared with the previous one. Additionally. We took a Target app, you optimize traffic control add attribution and obviously PX coverage. We are encouraged to see a wider ocps adoption among countries as well as higher penetration in terms of assets. We solid execution of this above initiatives. We are well-positioned to enhance our Market competitive and deliver further recovery performance at business in future.

See you tonight. Thank you. Go fee and hello everyone. Welcome to report second-quarter 2020 earnings conference call.

Let's start with the other metrics in June 2020. We close any used which is 523 million representing an expedition approximately thirty-seven million users you every year basis. We would have to be used you to the 229 million representing a net addition of approximately eighty million users you every year basis despite the new location of user traffic from the pig level in the first quarter. We will maintain the decent level of use the activities with higher proportion of use of generating contents on the platform and higher user engagement during this quarter.

Let's turn to financials at the remainder. My prepared remarks would focus on results and all the comparisons are made every year basis allies name is noted now. Let me walk you through our financial highlights for the second quarter of 2020.

So the overall guitar for the advertising business in the second quarter with academic largely brought under control in China. We would second quarter 2026 with 387.4 million a decrease of 10% or 7% constant currency basis reaching the higher end of our guidance. All pretty income was 121.9 minutes representing operating margin of 31% Nine income tax go to label was 114.5 million and the diluted EPS was fifty cents.

Now, let me place you on revenues.

We was advertising and marketing revenue for the second reporter twenty twenty four hundred a fourteen point six million a decrease of 8% or 5% off basis mobile ad revenues was three hundred four point four million contributing approximately 89% of total ad revenues up from 86% last year.

Moving onto Ka in the second quarter a decrease of 3% or flat customer basis.

Excluding the barter transactions have the impact from that sector would have increased 9% constant currency basis basis t e ad revenues or 30% reflecting and that's rebound from per quarter. The service recovery of our advertising business was mainly attributable to the valve control the pandemic situation in China which paved the way for business activity recovery and improving advertising demands as well as our address and driving value for advertisers to achieve branding plus performance effects based our unique social Marketing Solutions.

My industry category you can stress coat the pandemic and was back in the second quarter e-commerce wage. Also again, the moment at e-commerce platforms are located incremental resources into this year's June 18th event promotions took to capture pent-up demands from customers.

This is also well demonstrated in the ad revenues from Alibaba which grew 48% or 53% constant currency basis with a 35.7 million in the drive in the second quarter besides this as the pandemic further fueled the shift from all plans to a recent increase adoption of our Innovative product offerings such as solution from handset and Automobiles this quarter on sleep said the recovery pace of movie and entertainment sector and the luxury industry Let It Be Handover branding advertising industry bombed.

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This program the operating China and the corner of virus researchers in certain Global areas still linger which could further disrupt the business operations off the vehicle consumer demand.

Turning to ice and he's in the second quarter revenues hundred thirty eight or nine million a decrease of 21% or 18% constant basis despite active in normal activity is least ordered many small and medium-sized advertisers. Continue, you know, the truth is happiness in their business operations, especially for all the emotions consequently. We anticipate that it will take time to the owner to respond to the prepaid Dynamic level, even though online sectors such as gaming and online education continued to pack encouraging birth rate you over a year basis this quarter.

Moustache business from the first quarter truck up 16% Corner report a part for a normal seasonality very interested to see the gradual rebound from Industries like e-commerce and the certain local Services. I've consumption recovered on the country that's banned from gaming and education. So a moderate provide a sequential basis as infected with yours all that time span normalizing.

Well, the actual recovery pace of advertisers ad budget is beyond our control actively took the window to revamp our Billing System. I'm an optimist ad products in the hope of driving Browder OCT exit option for smart targeting higher ad placement efficiency and the batteries the Maryland which ultimate labels while for us to capture higher Add Water share a meal is competitive landscape of performance and Market in the loan. No value added service vas revenues were forty six point eight million in the second quarter a decrease of 23% or 25% constant currency basis primarily due to decreased of live streaming business and was partially offset by the increase in membership revenues dead.

Turn of the college expenses total costs and expenses for the second quarter was 265.5 Million flat year-over-year all pretty income. A second quarter was 121.9 Million operating margin of 31% compared to 38% last year turning contacts and it says manager income tax refunds for the second quarter was 14.7 Million compared to $26 on 1 million last year the issue with many attributable 24 the tax charge recognized from fair-value change of an investment in the second quarter of this year.

Income attributable to 4 in the second quarter was 114.5 minutes representing a net margin of 30% compared to 36% a year.

Turn on to our balance sheet and cash flow items as of June 30th, 2024 cash equivalents and short-term Investments month total the 233 billion compared to 2.4 billion as of December 31st, 2019 in the second quarter of 2026 with 121 + 7 maybe expenditures totaled eight point four million and the depreciation and amortisation defenses amount into 6.9 month.

No, that means her to financial Outlook anticipate our third quarter 2029 revenues to decrease by 5% to 7% year-over-year constant off. This court has this last week was current and the preliminary review and is subject to change with that. Let me now turn the call over to the operator page on these they should thank you gentlemen, begin the question-and-answer session.

And for your questions, please press star and the number one and wait for you need to be announced and to cancel the request. It is a pound for hash key questions, please press star is the number one three questions.

First question from the line of Gregory of Barclays discovered. I imagine many thanks for taking my question. So my my question about advertising business, so first how shall we think about the KA and that's advertising recovery Trend in the second half and took the fridge improved monetization and also in the prepared remarks you mentioned advertising system upgrade. So how shall we think about the old CP extract coverage post? Just awkward and also, uh, it'd be helpful if you can share some colors for the entire online advertising market and the car facts about competitive Dynamics will be very helpful. Thank you.

Okay, so here we can contact them first. Let me briefly recap on a second quarter performance and share some color on the recovery trancing so far 4K and SMBC in the second half is Michael from your life. They cannot become easy easy easy.

on the front we saw the overall Cable Systems combat knife face during the second quarter and leveraging the

The optimum our convenient and also the Improvement of the social marketing capability of our of our team and several key Industries, including off the GE Commerce and Automobiles already deliver positive year-over-year chance, however, entertainment and travel sectors still fell short of the a dollar compared with the same period last year due to the pandemic which drags the growth of K business team. I'm kind of sick. When do you want him to be able to call cannot be turned off?

And I I can shut down. So when would you contact me when he came home?

Entering to the the quarter we saw the overall brand sentiment after more positive. That's why the stabilisation of pandemic situation. And in fact, it's actually the consumption side as mentioned earlier key factors of grand business such as fmcg automobile engg handset continue to look healthy grilled shrimp in the quarter, but on the on the flipside despite some sequential pickup truck. Like entertainment. I'll see you all of these spending Trends given the dollar complete market demand compared with since your last year.

At this moment, assuming no further impact from the pandemic in the coming quarters, which backpack a business to continue to improve sequentially home drunk or demand a few fiber you, seasonality. So a cool for me, please. Hold on. We'll check back home sometimes often. She may need a code we met with that ship you don't you push on the body so it will tell you about a month.

Performance add front despite all the budget pick up from a low point in the first quarter.

Actually business a large with a customer really cautious in their marketing spend since as an estimate as an Advertiser are generally month-long available to macro downside particularly for the offline Merchants so that I mean as I mean business continued to decline on a year-over-year basis, well of outside life and education continue to grow very strongly with triple digit growth year-over-year and also e-commerce actors. They're real life books 180s, you, festival and the and the and the and the live streaming live streaming kind of e-commerce Improvement could see the over sector rebounded nicely quarter-over-quarter faces. Yep.

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Entering to the third quarter was possibly, sequentially with gaming and education sector continues to outperform sequentially wage also working very closely. However, offline Merchants contingencies housings. So we took the window to upgrade our Billing System and optimize our service to customers rep. For instance. We get rid of a few low-quality customers and also improve their designs which we believe would not be impact on as an Avenue in the office but we stand out performance at inconsistent in the long term in the coming quarter leveraging the marketing opportunities Workforce by the in, Thursday. We look for your resources and experience and Uncle patient with Ali Baba to drive dollars for the eCommerce Merchant wage.

I'm good, you're coming here when doctor a shovel off now with your TV, then we go down with that said no Genie and tell you what you can show.

Availability of how will it be easier?

For the S&P since which is the you know, most people focus on we think the overall performance at Market continuing to to face they come home and see if complications ways unfavorable evening versus Supply Dynamics given the completion in the in the supply side of strategy would be towards open market solution that integrates our strength in traffic and also enhance our advertisement efficiency. This is being on this lock the gaming and adaptation factor, which outperformed the over-all factor in the first half.

Please hold man. Can I take a bath gone up having the battery summer months off depending but we'll send you the pressure of birth.

I'm in traffic. And content. We we also in the first half of you also upgraded the whole system to improve the life of the advertising deficiencies there currently the coverage has accounted for over 60% of the total at 7 a.m. And we started to increase to 80% toward the end of the year. And we also we also emphasize on the conversion capability by purchasing more directly from features in our office is currently the video and image-based upgraded product from meaningfully drive up our trucks Direction ratio, and I will ask for 4 minutes.

Thank you. Thank you.

Thank you. Next question is from the line of Bank of America, please go ahead and thank you for taking my questions which will be about a video content video monetization can management is going to ask what's the positioning of your video account initiatives in a video products space. And also what's the growth strategy for that? And how is the progress of the video content creator development and then secondly wage is the monetization for the video account and for your video ad and what could be the potential impact to the profit margin resulting from the video and sharing.

And lastly if Tom is loud. Can you update as

How is the activity level and the retention Level Training for your top content creators? And what socks competition strategy for the top content creators? Thank you.

Okay, so can you turn off any man can do?

In terms of the video account you mentioned the initial launch it is to attract those emerging video, and creators to join form a more systematic video product to increase your overall accounting system.

So here's what I kind of met. Some girl should talk to that should be encouraged. Okay, if I put you up here with no sweetheart. I can you please show me kindergarten.

On the counting generation side the video account will enable us to attract more content creators to join the platform with the least the rights of the video content platform and lower entry lower barrier for the video content creation a bunch of the high quality video, creators have emerging emergent China with video accounts. We could ease the process of video submission and facilitate them. So she asked that accumulation and interaction for those video, creators.

We've with multimedia formats viral distribution capability and monetization opportunity will be very attractive to the top leader of now that with the launch of the video account. We offer a more systematic approach to in high high quality video conference in a situation way for an overall ecosystems. As of now, we have over five hundred thousand, creators joined the video account. Which over 5,000 have a fan base over a million per person. Okay? Yep. Yep.

No.

Is going out so what's that all about this Fisher tears to do. What do you use your highest birth more and more video content creator join our platforms through the program on track. Why don't use the community and do the diverse and high-quality video offerings. For instance for the game for the only demon vertical the total fan base a 2018 fiber video, quit or imagining vertical go over 40% in the past year.

And the overall influence of our influence in the human body for also being elevated additionally this video, created not only poem video content all platform but also interact with fans in the image and the tax format for the leading to different user engagement off off off off.

You know, you shouldn't have to do the channel.

Vermont Edition in the first half we had made great progress being jumping up a video ad monetization efficiency when Hancock we also pretty good chance for video relay The Matrix such as user who consume video on Weibel and also video traffic.

Leveraging the improved account and distribution efficiency, and for another we have enriched and optimize our video a dolphin's dead end of different video consumption scenarios. And for example, the the watch plus being cambium product could deliver better at format off without which which will improve that improve the video ad monetization. This is being reflected in the famous actors with almost over the design and creative in the video force and we are also seeing increasing adoption of video formats in the e-commerce and education sectors wage, and I don't know I know what we can you log

Kiya tum the shipping the name of the shop you put the put here.

And I kind of want to hear a song that you are not going to that page. There should be an issue here in terms of the video content creators. Our primary focus is you build out of the month. We will give you calling for system by Empower them to monetize within our system. We share a portion of advertising Revenue with them for the vehicle.

Awesome this year on a platform and we also share a portion of the ad revenues from the pictures host by these concentrators and off this, creator of Sue the composition of a platform. It will provide quality content to the auto platform and also especially in the office and also the documentation fee for those monotype four topics. They offer they won't be a rather share with in those speeds and entering into the second half. We will continue to focus on his handsome of distribution efficiency to further Drive the video content consumption. So I took you off the video and Robin and incentives to create a self-reinforcing video content system.

So I kind of took you know, for sure. Yep, You're right. I couldn't do that. I'm going to terms with me one day you got what you may need your parts order to be funny.

And if we look at the way boards, inconsistent from the broader view, you have been really focusing on the sustainability and diversity of ecosystem that we not only work to charge the engagement of the degrees, but also nurtures a small and medium very hopes interior also the traffic support and we provided support to those of the two most brutal. There's a small birdies host and have sewing nice growth in the traffic closures of this month in interest rates fees and in terms of monetization in addition to the advertising, they also empower the concrete to monetize wage base models including e-commerce replug subscriptions Optimas and wisdom my position opportunity offered you can further improve

I'll come in the oval table market and the reinforcement.

I'll call him for system. So in recent years we are able to see the number of top, theaters as well as the Daily Post and interactions kept double-digit growth of you. Thank you.

Thank you much ma'am. Thank you.

Thank you. They sent you a question and answer session and the like to have the conference back to mister.

I think operator and send you over to join us. We'll see you next quarter.

Thank you. They said gentlemen that concludes our conference for today. Thank you for participating you mean, I won't disconnect.

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