Q1 2022 Weibo Corp Earnings Call
Yes.
Good day and thank you for standing by welcome to wait till first quarter 2022 earnings call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be question and answer session.
To answer questions. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
And now I'll like to hand, the conference over to MS. Sandra Zhang Weibo's IR team. Thank you. Please go ahead.
Thank you operator, welcome to Weibo's fourth quarter, 'twenty 2022 earnings conference call.
Joining me today are Chief Executive Officer, Godfrey Walton and our Chief financial officer of eating out.
The conference call is also being broadcasted on the Internet and east coast available through Weibo's IR website.
Before the 19th N V box I'd like to read you the six public Sema in connection with today's conference call Julien.
During today's conference call. We may make forward looking statements statements that are not historical facts, including statements of our beliefs expectations.
Forward looking statements involve risks and uncertainty.
And then the of important factors could cause actual results to differ materially from those contained in any forward looking statement Weibo assumes no obligation to update the forward looking statements in this conference call and elsewhere.
Further information regarding this and other risks is included in your weight with annual report on form 20-F, and other filings with the SEC.
Oh the information provided in this press release is occurring as well.
Thank you Ralph we bought assumes no obligation to update such information, except as to be quiet and applicable law.
Additionally, I would like to read you remind you that our discussion today includes certain non-GAAP measures.
Stock based compensation and certain other expenses.
We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and the future posts back.
Oh, no that financials exclude certain expenses gains and losses and other items that had not expected to result in future cash payment was nonrecurring in nature, while not indicative of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measure.
Hello, you mentioned in his prepared remarks, we will open the lines for a brief Q&A session with this I would like to turn the call over to our CEO Golfie Wong.
Sure Yes.
<unk> claimed that they.
How about the Olympics.
Thank you Hello, everyone and welcome to Weibo's first quarter 2022 earnings conference call for instance, how about with somebody else wanted it yourself are they already in Q1.
Yeah.
I kinda.
On todays call ill share with you highlights in Weibo's user product and monetization in the first quarter of 'twenty two.
So you don't have them, yet you don't work well.
Although with that body.
Great.
And what I know.
Right.
But what I want.
Did you to leave whether you're where you want to.
I believe you don't run the BD.
Yeah.
On the user front, we booked and he used to be $582 million and average you used to be $252 million in March 'twenty, 'twenty, 'twenty, two adding approximately $51 million and 22 million year over year, respectively.
March 95% of Weibo's Ami you came from mobile.
Sure.
How are you doing are you taking anything different.
Hum.
We can do that.
T G I.
And so you can tell you start to.
Oh sure Yeah for the Shanghai Tang.
But do you know.
No we havent tuned up.
Thanks, Tony.
Oh go another deep look longer term do you want.
Yeah.
So I'm not sure.
Well you could go back to the computer but that you do.
Bob you mentioned getting it turned out that.
She doesn't want to divest with Archie yeah, Yeah, it's not an issue.
Okay.
So you can run the other bettendorf.
And you can say tongue, Andrew although you've got Sardinia.
On monetization the macro environment industry policy recent let's take Colby Nike research I posed for sports immediately impacted production and operation of many companies could different degrees, causing most of the time it took them for.
It will reduce their marketing budget seems much now mostly thanks to solid growth of our user scale and shopping as well as our efforts in key industries, such as gaming and apparel. We have further gains that's the nation among advertisers for our differentiated market solution that integrates well with I'll use it.
Product and content accretion in the first quarter. Our total revenue reached $484 6 million up 6% year over year, and they'll add revenues reached $427 1 million up 10% year over year and 90, 494% of revenue.
He came from mobile this quarter, our non-GAAP operating income reached 141 7 billion.
Yeah, what you didn't know about it I mean I kind of performance.
Now, let me share with you our progress made in product innovation and the first quarter.
Opinion.
Pardon me I mean, that's one issue.
Sure Sean.
Yes.
Meanwhile, she is going to change.
Sure Sean.
Oh man.
Marcia.
When you break them down.
It appears you're young people.
Yeah.
Alright.
Well, the only tissue champions Gotcha.
Sure.
She she took.
Okay.
Alright sounds good.
Did you actually talk to them.
When do they need.
Thank you Jamie.
Product front, we continue to focus on operating efficiency savings that he used to base expansion and engagement improvement so as to uplift our monetization efficiency.
10 O front, considering our user scale and the competitive landscape, we will emphasize on balancing user acquisition cost and monetization and improve all I said used acquisition.
Competition will continue to step up investment and I appreciate so Paul Cheng and social content deepen strategic cooperation with partners from media Entertainment gaming and sports verticals to encourage discussion around Oh, Chen and I T.
Maintaining our competitiveness in core use of function.
And you truly useful Fisher.
Sure.
Thank you Lydia I forgot already.
Sure.
We signed.
He introduced again.
Gotcha.
Sure.
Thanks for that Dave.
Thank you operator.
Yeah.
Pardon me I told she cannot charge.
She can jump on that.
You don't want to.
Due to a change in that.
Actual hockey.
Sure.
Yes, Danielle the economy yet.
As you know my people to try and jump in parallel.
Sure.
Hum.
Sure.
I'm sorry.
You bet.
In the first quarter with the Spring Festival holiday and Winter Olympics, our user base and traffic build.
Asleep, demonstrating weight advantages in Hodgkin's and social attribute during the spring festival content related to the Spring Festival gala of 'twenty five for TV stations with distributed await won't be a topic meetings are screaming and et cetera, but spring festival gala related topics the viewership.
Past the 20 billion.
Especially with more than 770 million up 46% from last year and Moreover, we launched the live call pigs and obsolete topic features that allows user to discuss like it's supposed to.
Life, well watching the spring festival gala wildly Hello, with and celebrities Kols and users were able to join in the life discussion altogether and I think the willingness of discussion around the event as a result, the discussion of the scatter related topics created by users increased by.
145% from last year.
And they're doing it because it's cheap.
Thank you.
Alright.
Hello, gentlemen.
I'm actually Julien.
Yes.
Any thoughts on that.
Well you know some people the truth.
Young youngster equal Amit.
How much you can see kind of a second topic.
Cool.
Thank you Paul.
Yeah.
Paul.
I mean, what do you know what.
Bonnie Anderson, Chairman and CEO .
Okay.
Good morning.
I'm sorry.
Sure.
Yeah.
Got it.
In Charlotte.
Hey, Joe.
Sure sure.
Furthermore, our content accretion and also they can winter Olympics has attracted in Massachusetts, who consume conference all LIBOR from the Winter Olympics event to sports is pension campaigns and the other piece of the inclusion.
We work with the winter Sports Nutrition center to encourage athletes to open accounts.
They engaged on LIBOR and beauty content distribution magic leap to say media and meikle among other media to enhance the dissemination and discussion of content a longer game.
Not only be the topic to them by the Beijing Winter Olympics surpassed that of the Tokyo Olympic games, but the athletes and their followers will also more engaged on LIBOR based on historical data as people return to school in the World and the work after the spring festival, the user scale and traffic on Weibo will flow.
Back to a third.
Certain extent however in March we grew all user and traffic nicely, mainly attributable to more social events occurred and equally constant online due to the disruption from COVID-19, coupled with our optimized channel structure and improved operating efficiency of culture and social context.
Hum.
Sure.
I mean, you shouldn't you shouldn't do.
Yeah got you talk on mute you can guy you want to meet you and shows.
Alright.
Duncan.
Duncan.
She is in Italy seafood pizza.
Yeah.
Do you watch alright.
Didn't you put them at that time.
So as you.
Cool.
Between the new Virginia.
You don't know why that create a totally thiago time, he or she can you shall be pizza.
I think she talked about the unusual paydown touching it.
Sure.
Channel front, we further optimized our China investment strategy, we focus on efficiency and still continental accretion of Spring Festival and the winter Olympic games, how well I'll use of any increase with engagement, we cut the budget investment, even though all I channel and try to shift to more budget to channels.
Potentially a briefing use the visit frequency.
And Meanwhile, we improved all capabilities of selling products to clients and increase the long term retention of the monetize monetize the boat traffic and use it to continue to optimize channel all of I 10 in the first quarter, we optimized our product from several aspects to driving to precisely talk.
Can you use it with the recommended content.
We also focus on optimizing the push pull strategy and improving the product experience.
The frequency of use of consumption in March the per capita consumption of channel user increased by 40% from.
The fourth quarter last year.
It's actually up with well known to you.
Uh huh.
Also be able to pay you.
Where do we can do.
Thanks for the question.
Has that changed.
Thanks drew.
Yes.
So that's really what you showed us.
Okay.
Yes.
Okay.
Oh without cause.
Okay.
Thank you Moshe.
Sure.
Tony and I can assure to determine the future calls.
Do you want to call it.
Yeah.
I can't.
Yeah.
And of course, you hope you're doing well.
Okay.
Hum.
Neil.
Excellent.
So it will be in for the future.
So as you want clean water.
Let me start you know somebody.
Sure.
Thank you.
E G.
Since your tissue.
When you kind of cut sheet.
So we didn't want to deal with it.
So there shouldn't be me.
Oh geez.
Oh, social attributes we've continued to strengthen the social features of our Houston product by focusing on promoting scale and engagement of Weibo's core users.
All of these relationships based defeat the nimble fifth refreshment continues to improve from December .
December benefiting from anything from the optimization of income and distribution of the relationship is defeat.
Effectively tank and compete using vault are possible.
Additionally, we continue to invest in social content enrichment personal lives our content distribution and front end product spirit to improve the experience of youth consumption and the social thickness of the relationship.
Community product, we focus on improving the part of the mechanism to better serve user consumption and to enable users to discover content appealed relation and interact with each other with the communities.
At the same time, we strengthened the integration of products and operations to further expand the community to more verticals you reached vertical content, so as to better fulfill used to sleep with social relations based on interest and location within the community in March the number of Skus.
This call US who use community products continued to increase up by double digits from last December the number of posters and post in the communities served and they used to have in gaming sport and animation at a campus continues to be our engaged we have seen that communicated.
In fact, if the increased user engagement and promote user intention in the long run, which boosts our confidence in weibo's, new positioning and the growth potential in the market of social attribute.
Especially as Amit can we have a bit more well, yeah, and that's only been doing and what you don't see him in Hollywood you Philadelphia.
Are you interested in household.
He has a time here.
Yeah Judah.
Oh for sure. She said she mentioned coupled with G box.
Okay.
Okay.
Okay.
And Jim I think what you.
What does that mean, he always mean towards converting don't we actually don't foolish major whether she's almost I mean, that's one of them to ensure we're thinking you know what your agreement with Xiaomi Cogent, Tricia yoga yoga shooting towards tier.
You couldn't do it but once you do question you forgot to Cushing Youre asking me, how do we get usually nothing probably osha shelvey showing hint towards neutral or if I didn't see really a chance to listen you got about.
Got it.
I can't really.
That's helpful.
Oh videos, we continue to focus on the skill and innovation and you'll see the accounts, especially on vertical it doesn't drive more traffic and engagement and also high quality content creators.
2022 we will provide more support on products and operations to this video content creators to encourage medium generation and interaction we respect and ensure the Pointe.
Quantity and the quality of video content, which in turn drives user engagement as of the end of March the number of accounts exceeded 30 million in the first quarter. We provided video content creator with more editing tools and features to promote social interaction around video content to increase media.
Generation and engagement.
At the same time, we encourage use of consumption in core information inflammation basis seat to continuously optimize the recommendation mechanism for high quality video content creators and data content.
For example for the relationship with the seat we optimized the recommendation of video accounts based on user social relations, which significantly improve the distribution of video account and efficiency of use of consumption. We also launched the heartbeat you list in the discovery page, which not only.
Stimulated immediate consumption, but also further strengthens the positioning of discover it takes in the consumption of how chatty and popular content.
Oh, well, that's just like that one.
Well Nathan.
Yes annualized churn will go D E Shaw.
That's going to be able to outweigh peanuts in the Coca Cola sugar.
If AUM, yet and don't see suddenly the Xiaomi Mi.
Well, even the termination sheet too liberally I'm going to shine.
Youngest human dose.
Oh My gosh.
Are you seeing similar hockey power that turns out.
Without change.
I would actually on that one.
They book.
Do you have any clothes help she already had one teacher she's a tweet O N E.
I mean do you teach them with that.
Neither of them yes.
When your children that she's going to choose to shop, but you don't know me I'm sorry that was that's how our children to yourself quite a few changes that you'll be talking to you going forward.
She can.
You got to Boston, Togo change challenge.
She comes from Kenneth Herbert.
Thank you Joseph.
So that can be bought Queens Hugo G H.
Sure Richard.
She says she makes Rudolph before me she won't bundle at Fisher cheap labor.
What I can tell you about Q2 this year.
Yeah.
Finally, let me share some color I'll walk you know recently battle against domestic resurgence since Marsh U K has been reported across the country. During this outbreak we fully leveraged we've watched a problem advantage in the resource applications and information distribution on my head.
We worked with Shanghai relief People's Daily CCTV News and other office Counsel, Scott I'd say media and what can I say more than two or 2002 hundred topics on the COVID-19 situation in Shanghai, which generated nearly 200 million views.
And over 22 million discussion in total we have also established and efficient use of humor refute any mechanism in cooperation with stuff in department to company address numerous enemies information well optimized our product mechanism to empty fighting information rich too.
More usage on the other hand.
We continue to enhance efficiency.
Capability in a public a rescue system with Christy upgraded our rescue channel based on the existing super topic product to better.
Birch requests for help up to now we have reported more than 5000 valid lead pass through government, partly resulting in more than to sell in a few countries that last few cases. In addition, this year. We also attempt to coordinate with N G O business media.
Volunteers deeply et cetera to build US a society wide rescue system against Covid, providing assistance and support for people are seeking medical treatment supply.
Psychological consulting so as to further amplify our value in a society wide emergency relief and assistance.
Alright.
Yeah, She's only hotel in Charlotte.
Archie.
Would you be able to sell almost exactly on your question to me Sonya.
We didn't put it out.
See you soon.
Let me touch on LIBOR that go.
In Telangana.
Our monetization in 2022.
You need to focus on enhancing our potential and efficiency of traffic monetization and thus beefing up our overall monetization scale.
Underpinned by the resilience of Weibo's brand plus performance at offerings in key verticals, we are dedicated to expanding the marketing Campbell of brand plus performance at Wisconsin operation to more industries and clients aiming to strengthen our industry based marketing capability as well as our marketing competitor.
This market competitiveness.
The haynesville for them it will.
Well it won't be done all of that nature.
So you shouldn't you pull out the.
So jacob you'd be able to have plenty of home yet she will cook a pizza accretion you would only have the potential to talk with you again in a bundle.
We tend to hunker.
Got it.
Cool.
So Casey the wall attempted chunky cooking.
Isn't that cool things coming from that.
Label and wish him well.
So moshe coincidence.
You Didnt say it could go to.
Okay cool and we should have been pushing for Cooper into semi bookings in Idaho and a switch maintenance you should you can share with my head of commercial computer in Switzerland.
But actually if you wish you all your kingdom.
Sure.
Sure, it's a positive for tuna Tricia <unk>.
They usually want to be thoughtful about who should it come back.
Kudos on that so how do we use it on your own.
This higher putting some water from the social Timekeeping Vandal and attach them 20 up I'm Gonna Cool. She was she got her tremble did you figure out to tenants and you know hopefully you take out.
Oh, I don't know me, sometimes a chance so don't come to show for it so it's pushed.
She was part of the P values.
We don't usually when.
They're easy to compare it to the court.
Please limit today without any of those.
Cool.
That's cool.
Cool.
Goosen changes of the century.
Two for me.
No.
Please go ahead you're live.
Question, Oh, you should come out with the government.
Children.
Two groups with a gym.
Tell us about that.
Okay.
Got it.
But it's about that.
Gotcha.
So does it have to be able to prevent cohorts with everybody.
Okay.
From an industry perspective, our AD revenue increased by 10% year over year in the first quarter, mainly benefiting from the Spring Festival and the Winter Olympics as well as all improve that capability to fulfill customer's brand plus performance marketing needs in key industries.
For example, during the Winter Olympics, we helped them Olympic sponsors to build hype in the are in the market in a market featuring a combo of all at all things such as topic.
How chance launch screen AD et cetera to uplift their branch recognition.
Now, reaching a high chance of Olympic sports event and ask like endorsement.
Our unique solution of Hodgkin marketing at <unk>.
And why wider recognition amongst no cell type, but especially the Chinese food footwear and apparel brands during the two Olympic games season.
As a result, we are pleased to see higher AD demand for apparel vertical with our revenue from the from this vertical growing very nicely year over year now, let me share our progress in the gaming vertical as well as revenues from the gaming vertical our sustained strong growth momentum with <unk>.
Over 50% year over year growth in the first quarter. The primary attribute attribute the growth momentum to a differentiated AD playbook, we developed for the gaming industry in the past two years, we lovely we have strengthened the synergies between sales product.
And operation to empty fiber distribution and discussion of new games as well as facilitate the accumulation and activity of social assets, coupled with our ongoing optimization of input format that offering we managed to capture incremental brand AD budget for new game release from clients, who traditionally.
The value conversion without cause.
Considering the approval policy of that hub.
The game license, we launched event based offering and service with top gaming clients in the first quarter to better align with client event pipeline and fulfill their marketing needs in connection with major major version upgrades and updates and new cat new character promotion.
A good example, each celebration we work closely with the team out of Tyson and aggregating all marketing events on LIBOR, including Bushnell update.
And that's the official announcement and the branding and the branding events et cetera from the public test now the official account of nation camping has accumulated over 4 million followers, the mental abuse and discussion around the major nation hopping exceeded 12 billion.
6 million, respectively with over 4 million long long term defense of topic.
How are you.
Yeah.
And that was it.
Sure.
All the countries.
That's.
That's useful.
Cool.
Got you.
I know people that you can ship to them.
One of them.
Oh sure.
During the Orange you see good teacher Defense force touch on Argentina.
Okay.
Social coalition, how important to hear you.
Oh sure.
Hum.
The first quarter.
Ah patient isn't.
In the first two months, we had pretty good start both in terms of user traffic and financial performance.
We have seen that.
Lastly, since March Amit Geo political issues and the COVID-19, researches, our multinational customers and off offline customer start to cut back marketing.
Marketing spend.
Our channel marketing campaigns, but what's left to be impacted as a result, Oh I Love Me was also negative impact in March entering the second quarter with more regions setting setting up lockdown and the prevention prevention measures various aspect of economic activities has been signature.
It doesn't need to swap it including production logistic and Oh, the offline activities, which the Iraqi way all of the growth of the overall out of the Hiseq market.
Jean Laurent and intellectual property as well and then city you don't come to Houston, because I can't really talk about what group.
If I'm at Tinder equals confusion, even kind of cool yeah.
Do you envision a fleet that's yet conclude agents you can push it and be able to catch up all the time.
Kubota you should go maybe she can.
To some people who can go out there and they'll do it.
Before me.
Sure.
Jugal Joe.
And Jim let me in the queue tend to eat keto automation are.
Sure Jack on millions of quote unquote.
The Orange full freedom to I'm going to begin with.
Two weeks ago.
To do that.
It was only two months ago.
For the second quarter. Despite many market headwinds we are dedicated to join together, we saw customers, who navy base through the difficult times and reinforcing our own competitive edge in the hope of capturing market opportunities post a normalization for one thing we offered pocketed favorable policy.
Our resources to support that those customers are customers and industries hit hard by COVID-19, inviting customers to explore and exploit our brand plus performance at all thing so as to boost their confidence in the social media marketing well raising the utilization rate of LIBOR.
Our AD inventory at the same time.
Another we proactively take the window to further refine our product offerings and reinforce our core competitiveness on major initiatives include optimized optimizing operating cost performance at offerings to improve efficiency.
<unk> of our content marketing service and extending customer scenario just to name a few we are making solid progress against all of these initiatives.
Critical move to further strengthen our competitiveness in the AD market.
Yeah, I mean, it's a feature.
Okay.
With that let me turn nickel over to say tell for a financial review.
Thank you Godfrey and Hello, everyone.
Welcome to Liberty Crestwood her kind of I need two earnings conference call.
Let's start with user matrix.
You're much particularly to Weibo's Ami you and I read it do you expect that to.
182 million and 252 million respectively.
And I thought they issue a 15 9 million in the country to a million users respectively, a year over year basis.
Might be likely to achieve solid user growth momentum with disciplined marketing spend.
Turning to financials as a reminder, my prepared remarks would focus on non-GAAP results.
Monetary I'm on a U S dollar term and all the comparisons are on a year over year basis, unless otherwise noted.
Now, let me walk you through our financial highlights for the first quarter of 2022.
When it was first quarter 2022 and other revenues were 484 6 million an increase of 6%.
Operating income was $141 7 million, representing an operating margin of 29% that.
Net income attributable to Weibo, there's $132 9 million, representing a net margin of 27% diluted EPS was 56 days compared to 57% last year.
Now, let me give you more color on revenue.
Weibo advertising and marketing revenue for the first quarter plenty plenty to visit to reach the 427 million an.
An increase of 10% mobile AD revenues were 400 under one 9 million accountability on approximately 94% of total AD revenue.
We had a solid start to 'twenty to 'twenty two.
LIBOR de Levered relative lately in AD growth in the first quarter, even though the overall advertising market.
On top of it all I mean, the macro uncertainties resurgence of COVID-19 on Lockdown disruptions.
First quarter 2022 our leading verticals in terms of AD revenue contribution.
That's M C G firstly products and the gaming.
In terms of growth the farthest the worry in verticals, where gaming and luxury of my major ones.
Besides the regulatory and the macro trend into winning demands that.
The relatively resilient procurement of F. M C G I'm thirsty product sectors.
Australia did that Weibo's brand plus performance at offering resonated greatly with customers in the sector and enable them to build have eyes on the major events.
Such as the winter Olympic games.
For gaming sector.
Our calculation in the content vertical as well as an improvement of <unk> performance for the sector boded well for us to tap into higher AD wallet share of gaming sector honestly said E Commerce Entertainment and education categories.
Moving to the ascending trend due to sluggish consumption data and the regulatory impact.
From a product perspective, promoting the speeds continue to be the largest part followed by social display ads and search and topic at offerings.
Laughs at I'd say I'm tired of me as much in the second quarter illegal and National wide Army Corps outbreaks, and subsequently restrictions and lockdown major plastic and they've disrupted the advertising market.
All of the miles that industry was high off that exposure.
As also that margin and also industry cut AD budget due to suspension of off line activities.
Robertson of production.
The restriction and locked up the major area in China, especially Shanghai has also negatively impacted consumption sectors, such as atom C D and e-commerce.
The funded at Comcast originally scheduled for the quarter and the card AD budget Accordingly.
Additionally, we also have made ourselves an AD campaign execution challenges due to locked up in Shanghai.
As COVID-19, resurgence rapidly evokes national wide and the restriction of locked August dropped the economy activities, including production consumption no drastic and off line activities.
Based on our current observation on our best estimate we expect the potential impact on our advertising business in the second quarter is material.
Even more severe than the COVID-19 impact on our business in 2020.
Given the major errors impacted duration of restrictions and lockdown as well as the current macro economy of completion.
We're closely monitoring the evolving situation and the way, we make relentless I've worked to mitigate such headwinds.
Leveraging our diverse industrial mix and Gardasil, nine where coverage national wide well doing our utmost to protect our employees partners and communities.
Is that a near term challenges ahead.
I encourage you to see our user and engagement metrics remained solid momentum laying a foundation for us to afford are tapping into a wider.
Our graphics and the increased monetization scale business to recover.
We remain confident in our long term monetization opportunities that are unique a lot of conversation and a diversified economy ecosystem will unlock.
AD revenues from Alibaba for the fourth quarter decreased 22% to 25 9 million primarily attributable to its own conservative macro strategies are made away consumption and Luxor as mentioned earlier.
Value added services revenues were 57 5 million in the first quarter a decrease of 17%. The decrease last revenues was mainly due to less revenue from.
That's the revenue contribution from membership service and a decrease of last trailing revenues.
Turning to cost and expenses total cost and expenses for the first quarter was 842 9 million an increase of 7%. The increase was primarily due to first higher personnel related cost that kind of step up in content cost mainly associated with the way it's been to Olympic games.
Third reclamation coker business called truck chassis with lamps after exemption holiday last year the.
The increase was primarily offset by a decrease of sales and the marketing expenses with discipline the channel investments and the reduced off 90 months.
Operating income in the first quarter was 141 7 million, an increase of 3% representing operating margin of 29% exceeding our expectations as we continued to effectively balance growth and margin performance amid uncertainties.
Turning to income tax under GAAP measure income tax expense for the first quarter was $11 7 million compared to a $14 9 million last year.
Net income attributable to labor in the first quarter was $132 9 million, representing a net margin of 27% compared to a 28% last year.
Turning to our balance sheet and the cash flow items as of March 31st 2020 to Weibo's cash cash equivalents and short term investments totaled about $3 3 billion compared with $3 1 billion as of December 31st plenty plenty of water in.
In the first quarter of 2017 cash provided by operating activities was 248 6 million capital expenditures totaled eight 1 million.
Depreciation and amortization expenses amounted to 15 million with that let me now turn the call over to the operator for Q&A session. Thank you.
Thank you. Thank you.
As a reminder, if you wish you ask a question. Please press star one on your telephone lines for your name to be announced if you wish to withdraw your request. Please press the pound or hashed E standby, while we kept all of our question and answer roster. Once again Thats Star One quick question.
Your first question comes from the line up and Alicia Yap from Citi. Please ask your question.
Hi, Thank you a funny time wash on how 60 additional what actually one oh well it sounds good to me Satchel sure a woman she volatile each Jean Michel.
To fall well Gladstone Quaker warm to show them why shop. So therefore, well guess 117 bad joke aside telephone calls that you thought about that <expletive> told me. He got anything yet. It's just somebody younger you called self auto Triton talk a whole woman to you yes.
We have fun Uh huh Sabine.
She should she said that yeah, my whole watch hole to the Oh God that so called trade you hi, yeah like kind of why I'm, just should not equal hung yeh. It you shouldn't see that nice.
Can you tell me about that.
Our whole Donald Intuitions of club O do their friends to hold all of them enjoy their T cells do not you go home you don't you side. She is still high so quite a quite a full school the whole what does he finds out thanks for taking my question.
Question, just relate that to the Cobra impact in the second quarter. So if management can give a little bit more detail or the color and comes off the direction that we see in April and May are what kind of the magnitude of the decline.
For the online budget and what is our expectation for June and also you know into the second half of the ship, which industry vertical actually skiing.
Bakersfield back in terms of their spending.
The past few months, and then which industries are Buddy code that you think will actually see a big leap out one states reopening is actually happening. Thank you.
Okay.
Well.
Well sure Felicia I think.
Uh huh.
Sure sure so I'm really kind of hard though to what I'm, saying is once you're at your door.
I cannot quote any of that you can shoot a finance social attach on to its own Goldman cohort Us Angel.
She didn't have you don't do that anymore.
So you use will call you won't be Oh, God bless you.
Well done.
Okay.
Okay. So thank you for your question. So first of all I would like to talk to you about the situation.
Q2.
Because of Covid. So you can see that you've been talking about the mid March I just wanted to Q2 in China due to the Covid, we have been seeing the escalation of the control policies due to Covid here in China and this is impacting a lot of marketing campaigns, all final core customers as well as those ad.
AD budget as well.
Okay.
So I'm, calling out Oklahoma them with you and I kind of elements within the shoulder.
So I'm.
The charters for sure it has to be dealt with.
Alright.
Yep Yep Yep sorry.
European.
My condolences on a coat Aqua babies, Ontario, which isn't that far down the future.
How do you change it or do you Cook with essentially.
Once you finish this year you saw that kind of hurt that emphasis on Asia you yourself.
And also we're talking about the different ads for example, the performance that we can see that especially the information flow adds this capped a quite stable in terms of the volume. However, the pricing wise. This has been a little bit of reduced as I can.
I'm talking about those brand advertisement. So you can see that because a majority of the agents are located in east China. So I think that to in terms of the budget and this has been impacted due to the COVID-19.
Oh, I'm sorry up in contact center. So you can see on the science and I saw that you took.
Could you give me a.
That's clear.
Awesome.
So you can kind of ballpark, but cobalt charlotte's fishing for nutrition, what assumptions are there certain she's rolling option either huge orders I don't see outdoor them no differently.
I think in our Congress.
Thank you.
Colorado.
You're quite welcome.
Why haven't you will creep without accessing the same show.
Hey, Paul Lewis and came out to create traveled before thanks real quick and I'll show you that zynga each in the paper.
Hum Shanghai It doesn't it go up.
Michelle.
Yeah.
Okay.
Thank you Louis and I see what you are actually you'll finish.
Felicia you a meal and then since then.
For all you put on them a little Grandma space.
So, it's all well actually that they can't even.
To show all that kind of a quick handoffs, you're talking about our technology.
Oh sure.
Therapy alcohol with US a couple of quick ones before I showed that very sharp focus on that.
Oh, well the shelf bottleneck machine I show you got you got you what reinforces our belief would be so we can match it.
Okay.
Also talking about the situations Yeah, you know since the late March we have been seeing a driving down trend in terms of the bookings and also talking about the April because of the impact to do logistics as well as the execution of the projects in China, We had been seeing a drill.
And down the trend of the brand advertisement and also talking about May we used to believe that China will recover very soon and actually it wasn't recovered very well onto the level up to March however.
Still also in after June originally when we saw that it won't be fully recovered however, because of another COVID-19 broke out in Beijing area. We've been seeing some kind of the fluctuation of our performance there and also because Shanghai just resumed walks and also all the kind of a lifestyle things.
First up to June so and there was a lot of uncertainty here in terms of Shanghai and also the our performance in the second half. So we are not going to be as optimistic as we used to be in May and also you know talking about the effectiveness or the performance AD the impact to that particular category or be the minimized.
And also how about talking about the brand customers.
They have a whole process, which is going to be followed if they want to be kind of a budget and also resumed it but it's been in terms of the budget allocation and the marketing plans. That's when it's execution et cetera. So we expect that the brand customers are gone and should recover slower than the performance.
Alright.
So call it like kind of a voluntary scrip minions alcohol <unk> coffee shops in our categories at all yet.
Archie I sure, yes akshay.
But what it tells me that I'm not sure what happened.
It's your hard work.
Excluding the ocean.
No.
Sure.
Cause young shutdowns and it sounds you like kind of a hybrid.
Got it.
And also talking about industrial vehicles first of all we believe that the gaming industry has been the least impacted and also in Q2, there was a kind of a upward trend or going upwards and also in May of course, we had a little bit in part because of the availability of the gaming license, but still you know that.
Legal impact could be controlled.
Okay.
The manager on the go short again.
MCT is sort of yet, but she is voting yes.
Sharon articles, so I'm kind of so essentially when you have got that done.
Okay.
Before.
So with that Joe for sometime that we don't quite know stay at home and then wait and see.
Yeah, it's a shame that cook with it you highlight kind of how much of that each of them of course here the whole Banco Galicia chocolate won't create sometimes try it out as a whole.
Yep.
She trusts Sudan.
That's what I'm showing you saw that on the phone here kind of off to a doctor.
Yeah.
Okay.
The change for our country to come that you're trying to shop channel right.
Trying to calibrate that Kate Hudson I'm trying to figure what you thought it would actually look quite the Rd Rd.
And so we should have a single function that you've done to chew shirt actually that it's once you have that Shan Shan Shan Bear Island.
What are you trying to think about it.
No.
And also because 50% of our businesses are focusing on FMC G luxury products as well as the automotive industry. So you can see that these three verticals they've been impacted heavily in April because of Covid. How is the one that was a little bit recovery of the control.
And also containment of the Covid in May we've seen a very quick and also robust rebound. All these three verticals. So that is to say that in the future. If the COVID-19 could be better contained a we're going to see it for example, more marketing campaigns organized by the customers in those categories or those are vehicles, we're going to see a very good recovery and rebound.
If their budget to us and of course, that's in Beijing, We've got Cancelation of the Ultra show and Ah. This does well it did impact the budget allocation. However, this broader windows more opportunities for the future because you know most of the Oems are now moving there are published and also did launch a bunch of their new models from off.
Flying to online and this is exactly the same that we experienced in 2020 in terms of the mobile and also the smartphone and the street right. So a lot of them, but you know people move up their campaign from offline to online. So this is going to give us more confidence for us to see a very good increase off the bus.
<unk>, especially for the automotive industry.
Nuance with whom we're kind of issue.
I mean, I'm pretty young adult essentially though sometimes I forget your St. Charles shall be the old political so how are you.
And as usual in their own way.
You sure shot you shouldn't close rates, you're getting on Shanghai, which I'll say a harder when you're doing the switch I think Sean the only thing about doing a short quick kind of junior and the kind of ballpark either shutdowns or did I hear it you don't know what that people in the house Archie with you here.
Sure.
This was unusual there sure Fabulous irrational Gilles Javier.
Here's one that's all.
Oh no.
So either shutdowns had done shepherding.
Oh, the full funnel you sat down.
And it's a coupon that Jim young children.
Oh I see.
Based on our system seem like kind of I'd say close to the new range.
Got it.
Okay, and then next I would like to say that I'm talking about the other verticals, especially those offline activity oriented industries for example, deep aesthetic medicine.
So o'toole customers. They have been they will also receive the impact after Q3, even and even if now we've got a reopening of Shanghai is still there will be an impact and also talking about the mobile smartphone industry. We also have experienced a driven down all the sales of this particular industry vertical.
And of course in Q2, there wasn't a big impact to the smartphone industry.
We really believe that in the future that this is going to be impacted negatively and of course interim if we're talking about the smartphone. This is not only the customer that we have but also this should be regarded as the channel are supposed to do the marketing and also adds so in terms of the expenses saving.
And the fee savings, there's actually no. It has brought with US a positive impact. So if we are talking about offsetting all these coupons. So we are not seeing a big impact to our profit margin.
Okay.
Tony and I kind of IEC to adhere even half of the wall.
Yeah. Thanks argued with him that come and go that way.
Yeah, actually I'll put a gigabyte sanction that kind of thing.
On the food definitely top of mind and kind of shy on careful.
You don't have that he got that so you'll have to wait and so hard to pin pad cope with it.
Beyond that I don't know again, albeit some chunghwa I got when I'm talking about the Shanghai Vishal.
Okay, well that's great.
So I'm sure that part you you should take away from the opening and IV Shawn Duffy, our mindset I don't know.
Essential tremor.
So how do they ship.
And also lastly, I would like to say that you know in Q1 of this year, we had about one and half of the month of the Inbox and also in Q2, the impact would have been lasting for about one and a half month to two months and also I think that there's a pretty good impact is larger than our expectation because shanghai.
I just reopened itself in the first of June and also in Beijing, There is still such in areas, but hum having people working from home still so and also because you know talking about the brand customers, they're having a longer process to follow them to restart and then also a reboot their business and also this required collaboration.
<unk> closely between publishers and also agents. So when you really think that you know we're going to have a slower recovery.
Our business than our expectation in the June and also the second half.
Okay.
Thank you.
Yeah.
Thank you. Our next question comes from Thomas Chong from Jefferies. Please go ahead.
Once the hogs. So you said what are you talking just hold it human Oh, well, they're going to shoot Wonder woman batch, we would show you found.
I mean.
Oftentimes these problems.
Yeah.
I do want to watch market.
Sure well, we didn't guide to more cost you can.
Margin trend.
Thanks management for taking my.
Crushes Oh I have a question regarding <unk>.
Our cost control and the trend in operating expenses kind of trying to do and I'll check one.
Once you're bringing up all our margin outlook in the remainder of the year. Thank you.
Yeah.
Oh, well, if I'm out with you and actually the only way that looks at all of them to use it.
Operator.
The new coal mine season, I'm sure, that's what hydro would be help volatile.
Oh I see.
Rather close to the beach element out.
Or is that easy to achieve.
Can you do that you're watching what's happening show them until they yeah alright.
Alright, I call quite European economy.
So basically you can catch it all.
Copenhagen climate that you can talk to you today. If you are suddenly open to do we have regulatory DHL deal.
So that's the only thing you need all of it.
I think on the margin I should.
Oh sure that equals 20 class Chihuahua I mentioned immediately.
Sure Amit.
Hi, James F 18.
On the private and government.
So do you hear me now.
He not only on a kind of on a thoughtful woman she doesn't they won't come back.
I'm familiar with junior released publicly until but obviously they will tell you though.
If I'm in the truth, we are leading the charge aldehyde peptide how're you doing forward.
Oh sure Gotcha, Okay, that's great I know you're pretty sure got you.
You know you can shop.
Sure.
Got it.
Oh, okay.
So first of all I'm talking about the cost control closed so first of all we're having a stricter control and also a strict policy in terms of the IRI and also keeping a quite prohibitive in terms of the placements among different channels and also the budge purchasing of the seats. For example, and also you know I'm talking about Q1.
How 'bout, but still we had no strict rule.
Rules on the appraisal alright, and also if the channel for example cannot provide windows the tons as it requires within three months or six months, we're going to cancel a collaboration with that channel and also as a result, we have been seeing a quite good performance in terms of margin in Q.
<unk>.
Second of all you know, especially in Q1, we are talking about the consolation of already the or decreasing of the tax related to the country's establishment by one 5% and also second point is about the activity relates to expenses and due to the Covid. We cannot organized so a lot of activity is as planned. So this is that in those states.
Some of the costs relating to the activities and also campaign. However, those kind of activities are also profit, making so this did impact our revenue at the same time.
Okay. Okay.
Okay, maybe I can add some color on the margin or so in terms of margin as a result of better monetization.
Larger business scale and higher operating leverage they had shifted a good carpet margin in first quarter of last year and historically label. All these men turn a healthy margin level and how do you have into the second half of the 20th on Youtube Iced coffee.
Mentioned earlier.
Right in fact that negatively impact our advertising business is not here. So I mean, that's a difficult market environment and the combined effects of numbers.
Other factors such as exploration after certain tax English.
Sensitive.
The poultry business contact her theater, it'll be the lobby and the rehab through investment income.
Its IP, such as Beijing Winter Olympics, and N. B. So we do expect a decline in operating margin compared to last year about the management passenger HDR content is not the highest priority list here is to optimize our cost structure.
There's more discipline in the China investment and other funding strategy.
LIBOR as you know LIBOR has always Manhattan dotcom sovereignty ever style. Our goal is improving operating efficiency they've picked her our assessment to control our overhead spending and striving for higher operating leverage to mitigate the margin flat as small as possible.
And ultimately keep our house supranational Magic I think you'll come out right.
Okay. Thank you.
You.
Alright. Thank you. Your next question comes from Tien Ho from T. H capital. Please ask your question.
And that she's yeah, Nico definitely don't merino blend that you would've been cheap at excuse me what kind of puts you from doing yeah, and no woman to teens axon did tick up you were calling out I mean to be dumping deem that they had some job well do some other things that you should woman sequel gotten schedule for each woman stage one.
So you'll see a movie out the door shop, because we want them to be a U R. M. AOR who's a mobile M. E. A lot you know cause their mobile M E Dingo jirga.
To go eat what are you doing about that kind of I wouldn't say talk with all of you there should be on the street.
Not much to say she doesn't say you can do the secrets now shown that Yugo Ginger Jones, She said that she had no calls per day.
Kushan, you're shutting down that you could see what not.
Now about the Holdco to hold not juices, how you choose your Kool who the Daytona Oh, you didn't seem that Chico Noah Hong Kong border digital name them, but you know who the Neutrolin who'll E C G. But she got Tejas, you're going you called you'll be seeing you talking to no we're fine.
About right it's about the user so what what is the eventual goal for the company to accomplish regarding the total number of the I'm a U D. A use and also what's the company's.
Planned in 2022 to acquire new users are in China, and also how to use Covington operation to improve user retention and user activity level on the platform. Thank you.
T J.
Hum Eagle in Q2 on the parents so much.
But she has a Shanghai harsha.
I want to go into Q.
Sure.
Joining a shipyard later, yeah sure Tom.
Kind of the canton social media the pin pad that you put on social networking and how do you want to do that maybe once you're diagnosed you go easy.
I mean, you are doing your son yet.
I don't think that we have once you complete them.
Yeah.
Yes.
So all of them for sure.
Somebody else with adequate it's all about what your share component again will come into put that no more condo.
Yeah, I mean, I don't know if I'm not too sure.
You cannot I sure don't meet either didn't go away.
Ill put enemies.
That's if you want liquidity.
He's a chance, it's actually going to come out I don't mean to discount change on hydro plant.
And I told them they can literally feel tightness accounting milk, whether you should fatigue.
Hi, Phil.
With shipping.
Okay.
So what did you say familiar children shoes that you put out there.
Charlie.
Sure.
Correct.
So I know this question has been I'll answer them in a previously while we were listing our company and also did the secondary a road show in Hong Kong last year. So we were saying that if we were not operating any video related content and also strategies and then the social media or the upper limit up to social media will be.
Only 60% of that talk the social network.
It was about 2013, our time in different ways. So we're now emphasizing a lot on the differentiation points between Weibo and also Twitter and also the other pure social media and we have been doing more complicated works and also more works as well in terms of our business operational business development.
Especially we're talking about the video so you know and it sounds like the video the impact and it's actually going to be bigger than the social media and also the business driving courses are going to be more or less well than the social media only so that's why that even as well we've had a lot of headwinds. That's what is the market competition in the video content area, whereas.
Still trying to invest as many as possible and so.
So we believe that while we have a very key positioning and also important positioning in the video area and then we are going to further uplift the upper limit of the number of users and also the others and now in terms of the total traffic and data. The video policy accounted for about one third of the total drop it now we have so this is extremely very import.
And for us to uplift our further the upper limit.
Okay.
Uh huh.
You can kind of pop culture.
Closer to Cheyenne taxes, if you can do you I mean, English English and English on women.
Well, yes, so I need you to what you're trying to go down that route.
And I've got it that way.
Uh huh.
So you won't go away at all.
Let's pivot on social club you shouldn't think of them more than you are jumping from Shanghai and ship.
So that's kind of how you hired about people cutting so Joe maybe a woman makes you feel good and I would put it in the Gulf topping a coffee on the sort of a champion.
As a woman she had elements of it without talking about the cushion we need to do what you call that kind of odd to me.
Okay.
Sure.
That's usual cause a little hard to call and go get.
She told me at the table total government was going to go with it.
Hi, Anthony.
Sure.
Yeah.
With a massage out so I told you that two inclusive topic, how to convert them to go with.
As usual I won't go into I mean people. So that's what we all come out of hydrocodone.
With that she didn't want that people are coming up with.
Well whatever you know kudos you to hit your junior handling.
Of course, it does seem like some relief I wouldn't go to Linda.
Sure sure.
And also lastly, I would like to say that you know talking about a business value of a company that does not only related to the <unk> and also adding to your number but I think it's more relevant to the activity of the users. So, especially you know in Q1, we've been saying that our total traffic has been reached and the kind of the upper.
Mitch or the kind of a peak level before any erecting the reconciliation and also some ratification conducted to the entertainment industry right. So because you know activity or was all about the stickiness of the users and also we are we really believe that with a business model of Weibo combining social.
Media together with the media Hot trends for example, this is going to be our key strategy to be sustainable in the future and also in Q1 because of the ratification conducted to the entertainment industry, we already sad that the entertainment industry will not be recovered until the second call. Sam This is still there.
Case, right now and also that's.
That's why we've been doing a lot of other works for example, the launch of all time and Super topics as well as the community et cetera. So those businesses are now offsetting the decline the activity that we experienced because of that change happened to the entertainment industry and also as a result, we are saying that.
M. A use and also do you use are important but this is not the only thing that we're focusing on.
What we are focusing more on the provision of better quality services to users and also enhance the stickiness of users and enhance the activity of uses that interactivity also uses as well. So these strategies are going to be the long term strategy and also making us sustainable in the future.
Yeah.
Alright, thank you.
Ladies and gentlemen.
A question and answer session I'll now hand, the call back to Ms. Sandra Zhang for closing remarks.
Well, thanks, operator, and thank you all for joining US. This concludes our conference call. We will see you next quarter.
Thank you that does conclude our conference for today. Thank you for participating you may all disconnect.
[music].
Yeah.
[music].
Uh huh.
[music].