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Companies

Weibo revenue surges as China tech groups lift advertising

Social media operator attracts big spenders like Alibaba

Weibo is one of China's largest social media platforms, with 431 million active users.   © Reuters

China's Weibo reported on Wednesday that net revenue jumped 68% on the year to $426.6 million during the three months ended June 30.

The Chinese social media platform, with 431 million active users, has shown a strong ability to monetize its influence, attracting companies like Alibaba Group Holding, which have spent tens of millions of dollars each year on its platform for digital marketing. 

Advertising and marketing revenue accounted for roughly 87% of Weibo's quarterly revenue.

Described as China's answer to Twitter, the Nasdaq-listed company also reported that its second-quarter net income climbed to $140.9 million, or 62 cents per diluted share, from $73.5 million for the same period last year.

"We continue to see great momentum in our business," said Weibo CEO Wang Gaofei in an online statement.

"We believe Weibo's larger user scale, enriched content ecosystem, and strong social marketing capabilities will put us in a unique position to take advantage of the marketing budget shift toward mobile, social and video in the Chinese mobile internet market," Wang said.

While much of its revenue growth was fueled by a surge in online ads during the World Cup, the social media platform has also managed to attract long-term clients. China's e-commerce leader Alibaba, for one, has signed a frame contract with Weibo on an annual digital marketing budget of 700 million yuan ($102 million), according to Weibo Vice President Cao Fei.

"Similar to previous years, this year how much [Alibaba] spends on Weibo will largely depend on their core strategy and marketing efforts," Cao said. "Things would go well beyond 700 million yuan if they decided they need to pick up their marketing expenditure." She did not disclose when the agreement was signed, nor its time frame.

Weibo's second-quarter advertising and marketing revenue totaled $369.9 million, an increase of 69% year over year.

Besides cashing in on its market leadership, Weibo has also made progress in venturing into China's vast inland. Thanks to strategies like pre-installing its app in smartphones, "half of our new users now come from fourth-tier or even smaller cities," Gao said.

According to the company, its monthly active users had a net addition of 70 million from a year ago. And nine out of 10 Weibo users access its platform via smartphones.

Weibo's strong performance has also given a boost to the business of Sina, its parent company, also listed on Nasdaq. On Wednesday, Sina reported its revenue increased 50% year-over-year to $537.4 million during the second quarter, largely due to the growth of advertising revenue from Weibo.

Coco Liu

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