Q4 2016 Real-Time Call Brief

Highlights

Our total revenue reached 212.7 million, up 43% year over year.

Advertising and marketing revenue reached 187.9 million, up 45% year over year with 68% of our ad revenue coming from mobile.

Non-GAAP net income was 77 million, up 134% year-over-year.

Weibo's total revenue for fiscal year 2016 reached 655.8 million, up 31% year over year.

Advertising and marketing revenue reached 571 million, up 42% year over year.

SME and KA advertising revenue reached 513 million, up 98% year over year.

Non-GAAP net income reached 183.5 million, up 167% year over year.

Weibo's robust revenue growth and operational efficiency in 2016 are derived from the following three areas.

On the user front, Weibo's monthly active users reached 313 million at December, up 33% year-over-year.

Average daily active users in December reached 139 million, up 30% year-on-year.

In December, 90% of Weibo's MAUs were mobile.

In 2016, our MAUs included by 77 million and DAUs increased by 33 million representing a much larger user base increase than 2015.

Daily video views in December increased 713% year-on-year.

Top creators have been a key contributor of premium video content to Weibo and average daily video views of top creators have increased over 200% year over year.

CCTV in Q4 shared a total of 6,920 short videos, up 22% quarter-over-quarter and broadcasted 379 live stream sessions, up 40% quarter-over-quarter.

During the recent years, we partnered with five TV networks to broadcast their New Year's Eve gala live on Weibo, attracting over 20 million viewers and generating over 40 million engagements.

The audience on Weibo live broadcast represented 10% of the total audience feed for the New Year's gala.

Through our cooperation video shared to Weibo from Youku in December increased 19% from three months ago.

Lastly, on a UGC front, through enhancements of user experience for mobile video uploads, the number of users who have posted a video and the number of video shared on Weibo has increased 43% and 37% respectively from the prior year.

In December, monthly views of our top vertical KOLs taken together increased 74% year-over-year and 20 verticals now have monthly views exceeded 10 billion compared to a 11 verticals a year ago including food, relationships, sports and variety shows.

Key account revenue continued to grow rapidly increasing 133% year-over-year, SME revenue increased 85% year-over-year.

Wrigley ran a short video advertising campaign on Weibo and AP test results showed that brand satisfaction towards the brand rose 23% and willingness to purchase Wrigley's products rose 34% after the ad campaign.

Using OPPO as another example, after OPPO ran a product launch campaign for their R9s smartphone on Weibo, over 90% of the participant surveys are positive and/or neutral views towards their brand and the R9s smartphone.

By using Weibo, advertising targeting and the messaging function, our T6 studio's ad engagement on Weibo reached 13% and sales conversion rose five times.

Ad revenue from Alibaba reached 24.7 million in Q4, up 157% from last quarter.

The new social content model campaign for example linked product mention and Weibo feeds of influencer to product page on Tmall, as novel innovation became a highlight posted by almost 200 e-commerce influencers and celebrities on Tmall.

Purchase recommendations reached over 10 billion views and live broadcast streamed by e-commerce influencers to subsequent hot items on Tmall had more than 6 million views.

The number of key customers have grown rapidly increasing 65% year-over-year.

For the fourth quarter, Weibo's total revenue reached $212.7 million, up 43% year-over-year or 53% on a constant currency basis, exceeding the company's guidance between $205 million and $210 million.

Non-GAAP net income attributed to Weibo reached $77 million, up 134% year-over-year.

Non-GAAP diluted EPS was $0.34 compared to $0.15 a year ago.

With revenue peaking in our seasonally high fourth quarter, our adjusted EBITDA reached $78.2 million, up 111% year-over-year and adjusted EBITDA margin reached 37% compared to 25% last year.

For fiscal 2016, Weibo's total revenue reached $655.8 million, up 37% year-over-year or 45% on a constant currency basis.

Our SME and KA businesses together make up 90% of Weibo's advertising revenues.

Each grew robustly in 2016 and 98% year-over-year or 110% on a constant currency basis.

Non-GAAP net income attributed to Weibo in 2016 reached $183.5 million, up 167% year-over-year.

Non-GAAP diluted EPS was $0.82 compared to $0.32 a year ago.

Adjusted EBITDA reached $193.7 million, up 126% year-over-year and adjusted EBITDA margin reached 30% compared to 18% in 2015.

Advertising and marketing revenue for the fourth quarter reached $187.9 million, up 45% year over year or 55% on a constant currency basis.

Mobile ad revenue made up 68% of total ad revenues and was up 53% or 54% on a constant currency basis.

Total advertisers reached 689,000, up 4% year-over-year.

The strength of Weibo's advertising was led by our SME business, which reached $101.4 million, up 85% year-over-year or 98% on a constant currency basis in the fourth quarter.

In the fourth quarter, our KA ads revenue reached $61.8 million, up 149% year-over-year compared to 130% in the third quarter, 84% in the second quarter and so on a constant currency basis.

Weibo's value added services reached $24.9 million in the fourth quarter, up 28% year-over-year and 37% on a constant currency basis.

Membership fees was up 89% year-over-year and data licensing was up 79% year-over-year on a constant currency basis.

The two together make up more than 50% of Weibo's DAS revenue.

Total non-GAAP costs and expenses were $139.2 million, up 20% year-over-year.

Cost of sales was $48.7 million, up 16% year-over-year, while operating expenses totaled $90.6 million, up 22% year-over-year.

Non-GAAP net income attributed to Weibo in the fourth quarter was $77 million, up 134% year-over-year.

Adjusted EBITDA reached $78.2 million and adjusted EBITDA margin was 37% compared to 25% a year ago.

As of December 31, 2016, Weibo's cash, equivalents and short term investments totaled $396 million.

Cash provided by operating activities for the fourth quarter was $82.3 million.

Capital expenditure totaled $6.5 million and depreciation and amortization expenses were $3.5 million.

Our shares in the market, per our ADR depositary firm, approximately 23% of Weibo's shares outstanding were represented by American depository shares as of the end of December.

We estimate our first quarter revenue to be between $185 million and $190 million, which does not take into consideration of foreign exchange rate fluctuations.