How Did Sina Perform In Q4?

Sina (NASDAQ:SINA) reported its Q4 and full year fiscal 2018 results on March 5. The company’s Q4 missed consensus revenue and EPS estimates but provided guidance for fiscal 2019 in line with consensus expectations. Given the Chinese tax cuts, Sina may revise its growth expectations upwards should the broader economy begin to revive.

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Some key takeaways from Q4 results are below:

• Total revenues grew to $573 million (+14% y-o-y)
• Advertising revenues grew to $484 million (+14% y-o-y), on the back of a 25% y-o-y growth in Weibo advertising and marketing revenues. Gross margin grew to 82% (+600 bps y-o-y) due to a change in revenue reporting.
• Non-advertising revenues grew to $89 million (+12% y-o-y) driven by Weibo’s acquisition of live broadcasting business in Q4. Gross margin declined to 57% (-900 bps y-o-y) due to the lower margins of the live broadcasting business.
• The company’s management guided for 18-25% growth in fiscal 2019 revenues, ranging between $2.44-2.59 billion and driven by Weibo.

While management noted that the guidance provided was preliminary, we note that the recent Chinese tax cuts to spruce up the economy may be the reason for management lowering its 30% growth rates to sub-20% levels (on the lower end). The Chinese government has also indicated that it expects growth for the year to be 6-6.5%, lower than 2018. In context of the broader Chinese economy, Sina’s expectation of growing 3-4x faster is noteworthy. Considering fiscal stimulus generally has a transmission lag of 3-6 months, we will be looking out for Sina’s management revisiting its guidance over the next few quarters.

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