20241120-招银国际-3Q24_results_beat_on_Olympic_event__4Q24_outlook_remains_under_pressure_6页_1mb

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CMB International Global Markets | Equity Research | Company Update

Weibo (WB US)
3Q24 Results Exceed Expectations Driven by Olympic Event; 4Q24 Outlook Faces Pressures

On November 19, 2024, Weibo reported its 3Q24 financial results: net revenue increased by 5% YoY ($465mn), beating Bloomberg consensus estimates by 7% primarily due to stabilized advertising revenue and stronger-than-expected growth in Value-Added Services (VAS) revenue (25% YoY). Non-GAAP net income rose to $139mn (2% YoY increase), exceeding consensus by 16%, driven by top-line performance and enhanced operational efficiency.

Key Highlights:

• Advertising Revenue Recovery: Advertising revenue grew by 2% YoY to $399mn (flat YoY on a constant currency basis) in 3Q24, boosted significantly by Olympic-related demand (food & beverage vertical led growth). Certain sectors like cosmetics still face pressure due to soft consumption sentiment.
• VAS Growth: VAS revenue surged 25% YoY, supported by membership service upgrades.
• User Engagement: Monthly Active Users (MAUs) stood at 587mn in Sep 2024 (-3% YoY), but the Daily-Active-User-to-Monthly-Active-User ratio improved to 43.8%. Total interactions on the front page increased significantly quarter-on-quarter.
• Margin & Outlook: Non-GAAP OPM declined slightly YoY to 35.4%, mainly due to higher Sales & Marketing investments. For 4Q24E, management expects ad growth to remain hampered by high-base effects and weak ad demand in certain sectors, resulting in a projected 4% YoY decline (constant currency). VAS is expected to grow 14% in 2024E (constant currency). Policy stimulus on the macro economy may take time to show effect.
• Valuation Update: We maintain our BUY rating but lower our Target Price to $15.00 (down 3%) based on an 8x FY25E non-GAAP PE, reflecting cautious sentiment. This is viewed as a discount to peers due to incremental factors.

Analysts recommend booking until November 2024.

Summary

Weibo's 3Q24 performance exceeded market expectations, primarily led by Olympic-related advertising boosts and strong VAS growth. Ad revenue stabilization continues, though growth rates are expected to normalize in 4Q24E due to challenging comparisons and soft demand in key verticals. VAS remains a bright spot, growing faster than overall top-line. Weibo's user engagement shows improvement. The company maintains a relatively strong market position but faces near-term valuation pressure and cautious forward-looking sentiment.