20250314-招银国际-Advertiser_sentiment_remains_mixed__stepping_up_AI_investment_in_FY25_5页_1007kb

Weibo (WB US) Summary

Core Content

Weibo reported its fourth-quarter results for 2024 on 13 March, with net revenue of $457 million, largely flat YoY on a constant currency basis and in line with the Bloomberg consensus estimate. Non-GAAP net income rose by 40% YoY to $107 million, surpassing the consensus estimate by 9%, driven by effective opex control. For FY24, the company's net revenue was $1.75 billion, an increase of 1% YoY on a constant currency basis.

For FY25, the overall advertiser sentiment remains mixed. The national subsidy program has boosted ad budgets for verticals such as 3C and e-commerce, while others like cosmetics, personal care, and games remain cautious. Weibo's total revenue is forecasted to grow by 2% YoY on a constant currency basis in FY25, primarily due to the growth in the 3C and e-commerce sectors. However, the company has lowered its earnings forecast for FY25-26 due to a soft revenue outlook and increased AI investment. The target price has been trimmed to $14.50 from $15.00, based on an 8x FY25E PE.

Main Points

• Revenue Performance:

  • 4Q24: Net revenue $457 million (flat YoY), Advertising and marketing revenue $386 million (down 3% YoY).
  • FY24: Net revenue $1.75 billion (up 1% YoY).
  • FY25E: Total revenue growth expected at 2% YoY.

• Ad Revenue by Verticals:

  • Automobile and Handset: Strong YoY growth, as Weibo became the go-to platform for new product launches.
  • Games: Declined YoY due to a high base effect.
  • Cosmetics, Personal Care, Luxury: Declined YoY due to weak consumer sentiment.

• VAS Revenue:

  • Increased by 18% YoY to $71 million, driven by growth in membership and game-related revenue.

• User Metrics:

  • MAUs declined by 1% YoY to 590 million in December 2024.
  • DAU/MAU ratio improved to 44.1% (from 43.0% in December 2023).

• AI Investment:

  • Weibo integrated DeepSeek into its Intelligent Search product in February 2025, leading to a 40% increase in Intelligent Search MAUs.
  • Management expects to roll out Intelligent Search to all users in 1Q25.
  • AI investment is expected to improve search capabilities and ad ROI.

• Dividend Policy:

  • Weibo announced an annual dividend policy.
  • Paid out $200 million in FY24, translating to a c.8% dividend yield.

Key Financial Forecasts

Shareholding Structure

Stock Performance

Dividend Yield

• FY24: c.8% dividend yield based on $200 million payout.

Valuation Metrics

Analyst Recommendations

• Target Price: $14.50 (Previous: $15.00)
• Up/Downside: 39.2%
• Current Price: $10.42
• Rating: BUY (Maintain)

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10% over the next 12 months.
• SELL: Potential loss of over 10% over the next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Important Disclosures

• The report is not tailored to individual investors.
• CMBIGM is not a registered broker-dealer in the U.S. or Singapore.
• Information is subject to change and not guaranteed.
• The report may contain conflicts of interest and is for the use of intended recipients only.