After A Strong Start To 2018, What To Expect From Sina Through The Year

Sina (NASDAQ:SINA) announced its first quarter earnings on May 9, reporting nearly 60% growth in revenues to $441 million. Weibo advertising was the largest contributor to the revenue growth in the March quarter, with revenues increasing nearly 80% on a y-o-y basis to $303 million for the quarter. Weibo’s non-advertising revenues were also up 56% to $47 million. On the other hand, Sina’s portal advertising revenues were up only 8% over the comparable prior year period to $64 million. Additionally, the gross margin of the portal business was flat over the year-ago period at around 50%, while Weibo’s gross margin expanded 5 percentage points to 82% for the quarter.

We expect the strong revenue growth to continue through the current year. We expect combined advertising revenues to continue to drive top line growth, particularly due to strength at Weibo. Ad revenues are expected to increase 30% to over $2 billion for the full year. Similarly, non-advertising revenues are also expected to continue to increase in the teens through the year. Despite the revenue growth, we expect margins to be slightly lower than the comparable prior year period as the company intends to scale up its marketing expenses for the next few quarters. This could result in lower operating margins in the near term. However, in the long run, we forecast the company’s EBITDA margin to expand. We have created an interactive analysis which summarizes our full year expectations for Sina. Our EPS forecast for Sina stands at $3.32 for the year, which is in line with consensus estimates. You can change expected segment revenue and margin figures for Sina to gauge how it will impact expected EPS for the full year.

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