SINA Reports First Quarter 2015 Financial Results

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SINA Reports First Quarter 2015 Financial Results

SHANGHAI, May 14, 2015 /PRNewswire/ -- SINA Corporation (the "Company" or "SINA") (NASDAQ: SINA), a leading online media company serving China and the global Chinese communities, today announced its unaudited financial results for the first quarter ended March 31, 2015.

First Quarter 2015 Highlights

  • Net revenues increased 8% year over year to $184.6 million. Non-GAAP net revenues increased 9% year over year to $182 million.
  • Advertising revenues grew 11% year over year to $150.4 million. Non-advertising revenues were $34.2 million. Non-GAAP non-advertising revenues were $31.6 million.
  • Net loss attributable to SINA was $10.3 million, or $0.18 diluted net loss per share attributable to SINA. Non-GAAP net income attributable to SINA was $3 million, or $0.04 non-GAAP diluted net income per share attributable to SINA.

"We are delighted that Weibo continued to show strong momentum in both operational and financial fronts." said Charles Chao, Chairman and CEO of SINA. "Weibo's mobile strategy has continued to deliver impressive results in both user traffic and revenue growth. With Weibo's firm execution in user growth, capitalizing on the shift to mobile by rolling out more mobile centric and social advertising products, we believe that the powerful social media platform and cohesive ecosystem that we have built up will better fulfill both users' and customers' needs at various dimensions. On the portal side, we are experiencing a critical transformative period to revamp our legacy business and diversify our business models through implementation of vertical and mobile strategies. We have seen encouraging results from certain vertical areas and mobile forefronts. We are confident that we can further leverage SINA's brand to capture more business opportunities and achieve long-term growth." Mr. Chao added.

First Quarter 2015 Financial Results

For the first quarter of 2015, SINA reported net revenues of $184.6 million, compared to $171.5 million for the same period last year. Non-GAAP net revenues for the first quarter of 2015 totaled $182 million, compared to $167.3 million for the same period last year.

Online advertising revenues for the first quarter of 2015 were $150.4 million, compared to $135.7 million for the same period last year. The year-over-year growth in online advertising revenues resulted from an increase of $27.3 million in Weibo advertising and marketing revenues, offset by a decline of $12.7 million in portal advertising revenues.

Non-advertising revenues for the first quarter of 2015 were $34.2 million. Non-GAAP non-advertising revenues for the first quarter of 2015 were $31.6 million, remaining at a similar level for the same period last year. The flattish year-over-year change in non-GAAP non-advertising revenues was mainly due to a decrease in Weibo data licensing revenues, partially offset by an increase in game revenues and Weibo membership services revenues.

Gross margin for the first quarter of 2015 was 58%, compared to 60% for the same period last year. Advertising gross margin for the first quarter of 2015 was 57%, compared to 60% for the same period last year. Non-advertising gross margin for the first quarter of 2015 was 61%. Non-GAAP non-advertising gross margin for the first quarter of 2015 was 58%, compared to 57% for the same period last year.

Operating expenses for the first quarter of 2015 totaled $132.5 million, compared to $111.7 million for the same period last year. Non-GAAP operating expenses for the first quarter of 2015 totaled $119.6 million, compared to $104.4 million for the same period last year, primarily due to higher personnel costs and marketing expenditures.

Loss from operations for the first quarter of 2015 was $25.2 million, compared to $8.7 million for the same period last year. Non-GAAP loss from operations for the first quarter of 2015 was $13.6 million, compared to $4.8 million for the same period last year.

Non-operating income for the first quarter of 2015 was $8.4 million, compared to a non-operating loss of $29.9 million for the same period last year. Non-operating income for the first quarter of 2015 mainly included $3.7 million, or $5.9 million on a non-GAAP basis, in earnings from equity-method investments, which are accounted for under the equity-method and reported one quarter in arrears. Non-operating loss for the first quarter of 2014 was $29.9 million, including a $40.2 million loss from the change in fair value of investor option liability in connection with Alibaba's investment in Weibo and an $8.7 million, or $10.7 million on a non-GAAP basis, in earnings from equity method investments, which were accounted for under the equity-method and reported on a one-quarter lagging basis.

Net loss attributable to SINA for the first quarter of 2015 was $10.3 million, compared to $33.2 million for the same period last year. Diluted net loss per share attributable to SINA for the first quarter of 2015 was $0.18, compared to $0.52 for the same period last year. Non-GAAP net income attributable to SINA for the first quarter of 2015 was $3 million, compared to $11.1 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA for the first quarter of 2015 was $0.04, compared to $0.15 for the same period last year.

As of March 31, 2015, SINA's cash, cash equivalents and short-term investments totaled $2.1 billion, compared to $2.2 billion as of December 31, 2014. The decrease in cash, cash equivalents, and short-term investments was mainly due to share repurchase and new investments in the first quarter of 2015. For the first quarter of 2015, net cash provided by operating activities was $0.7 million, capital expenditures totaled $10.9 million, and depreciation and amortization expenses amounted to $10.5 million.

Non-GAAP Measures

This release contains the following non-GAAP financial measures: non-GAAP net revenues, non-GAAP non-advertising revenues, non-GAAP advertising and non-advertising gross margin, non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP net income attributable to SINA and non-GAAP diluted net income per share attributable to SINA. These non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with U.S. GAAP. The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.

The Company's non-GAAP financial measures exclude recognition of deferred revenues in relation to the equity investment in E-House, stock-based compensation, amortization of intangible assets net of tax, adjustment for GAAP to non-GAAP reconciling items on the share of equity method investments, gain (loss) on the sale, deemed disposal and impairment on business, investment and non-controlling interest in a subsidiary, change in fair value of investor option liability, adjustment for GAAP to non-GAAP reconciling items for the gain (loss) attributable to non-controlling interests and amortization of convertible debt issuance cost. The Company's management uses these non-GAAP financial measures in their financial and operating decision-making, because management believes these measures reflect the Company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. The Company believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: (i) in comparing the Company's current financial results with the Company's past financial results in a consistent manner, and (ii) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains/losses and other items (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of the Company's core operating results and business outlook.

Use of non-GAAP financial measures has limitations. The Company's non-GAAP financial measures do not include all income and expense items that affect the Company's operations. They may not be comparable to non-GAAP financial measures used by other companies. Management compensates for these limitations by also considering the Company's financial results prepared in accordance with U.S. GAAP. Reconciliations of the Company's non-GAAP measures to the nearest comparable GAAP measures are set forth in the section below titled "Unaudited Reconciliation of GAAP and Non-GAAP Results."

Conference Call

SINA will host a conference call from 10:10 p.m.10:50 p.m. Eastern Time on May 14, 2015 (or 10:10 a.m.10:50 a.m. Beijing Time on May 15, 2015) to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available through the Company's corporate website at http://corp.sina.com.cn. The conference call can be accessed as follows:

US:

+1 845 675 0437

Hong Kong:

+852 3018 6771

Passcode for all regions:

45260137

A replay of the conference call will be available through morning Eastern Time May 23, 2015. The dial-in number is +61 2 8199 0299. The passcode for the replay is 45260137.

About SINA

We are an online media company serving China and the global Chinese communities. Our digital media network of SINA.com (portal), SINA mobile (mobile portal and mobile apps) and Weibo (social media) enables Internet users to access professional media and user generated content in multi-media formats from desktop personal computers and mobile devices and share their interests with friends and acquaintances.

SINA.com offers distinct and targeted professional content on each of its region-specific websites and a full range of complementary offerings. Our mobile portal, SINA.cn, provides news information and entertainment content from SINA.com customized for mobile users in WAP (mobile browser) and mobile application format. Weibo is a leading social media platform for people to create, distribute and discover Chinese-language content. Based on an open platform architecture, Weibo allows users to create and post feeds up to 140 Chinese characters and attach multi-media content, as well as access a wide range of organically and third-party developed applications, such as online games.

Through these properties and other product lines, we offer an array of online media and social media services to our users to create a rich canvas for businesses and advertisers to effectively connect and engage with their targeted audiences.

Safe Harbor Statement

This press release contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described, without limitation, in quotations from management in this press release). SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "confidence," "estimates" and similar statements. SINA assumes no obligation to update the forward-looking statements in this press release and elsewhere. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to SINA's limited operating history in certain new businesses; condition of the global financial and credit market; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly operating results; the Company's reliance on online advertising sales and value-added services for a majority of its revenues; failure to successfully develop, introduce, drive adoption of or monetize new features and products, including portal, Weibo and MVAS products; failure to enter and develop the small and medium enterprise market by the Company or through cooperation with other parties, such a Alibaba; the Company's reliance on mobile operators in China to provide MVAS and changes in mobile operators' policies for MVAS in China; failure to successfully integrate acquired businesses; risks associated with the Company's investments, including equity pick-up and impairment; and failure to compete successfully against new entrants and established industry competitors. Further information regarding these and other risks is included in SINA's annual report on Form 20-F for the year ended December 31, 2014 and other filings with the Securities and Exchange Commission.

Contact:

Investor Relations
SINA Corporation
Phone: +86 10 5898 3336
Email: ir@staff.sina.com.cn

SINA CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollars in thousands, except per share data)








Three months ended


March 31,


December 31,


2015


2014


2014

Net revenues:






    Advertising

$ 150,353


$ 135,726


$ 181,935

    Non-advertising

34,234


35,752


29,202


184,587


171,478


211,137

Cost of revenues:






    Advertising *

63,949


54,856


63,315

    Non-advertising

13,368


13,675


11,069


77,317


68,531


74,384

Gross profit

107,270


102,947


136,753







Operating expenses:






    Sales and marketing *

60,251


49,960


61,069

    Product development *

51,613


44,535


50,719

    General and administrative *

20,634


17,176


21,102


132,498


111,671


132,890

Income (Loss) from operations

(25,228)


(8,724)


3,863







Non-operating income (loss):






    Earning from equity method investments, net

3,652


8,722


3,167

    Gain (loss) on sale of and impairment on investments, net

(1,085)


(381)


53,081

    Change in fair value of investor option liability

-


(40,188)


-

    Interest and other income, net

5,783


1,955


7,835


8,350


(29,892)


64,083







Income (Loss) before income taxes

(16,878)


(38,616)


67,946

Income tax benefits (expenses)

2,985


1,216


(7,004)







Net income (loss)

(13,893)


(37,400)


60,942

    Less: Net income (loss) attributable to non-controlling interests

(3,584)


(4,234)


1,191







Net income (loss) attributable to SINA

$ (10,309)


$ (33,166)


$ 59,751













Basic net income (loss) per share attributable to SINA

$ (0.18)


$ (0.50)


$ 0.95

Diluted net income (loss) per share attributable to SINA **

$ (0.18)


$ (0.52)


$ 0.90







Shares used in computing basic






  net income (loss) per share attributable to SINA

58,753


66,034


63,017

Shares used in computing diluted






  net income (loss) per share attributable to SINA

58,753


66,034


69,524













* Stock-based compensation in each category:






    Cost of revenues - advertising

$ 1,423


$ 775


$ 809

    Sales and marketing

2,622


1,147


1,377

    Product development

3,495


1,355


2,242

    General and administrative

5,834


3,610


5,107







** Net income (loss) attributable to SINA is adjusted for diluted shares issued by our subsidiary and equity method investments.

 

SINA CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)











March 31,



December 31,




2015



2014


Assets


Current assets:







Cash and cash equivalents


$ 1,350,591



$ 1,223,682


Short-term investments


706,603



942,856


Accounts receivable, net


281,195



259,764


Prepaid expenses and other current assets


140,472



109,214


    Subtotal


2,478,861



2,535,516








Property and equipment, net


58,588



63,729

Goodwill and intangible assets, net


63,570



64,489

Long-term investments, net


797,151



860,003

Other assets


192,330



179,591

Total assets


$ 3,590,500



$ 3,703,328









Liabilities and Shareholders' Equity


Current liabilities:







Accounts payable


$ 2,895



$ 3,853


Accrued liabilities


337,770



320,268


Deferred revenues


50,025



50,557


Income taxes payable


14,512



17,979


    Subtotal


405,202



392,657








Convertible debt


800,000



800,000

Long-term deferred revenue


82,782



85,391

Other long-term liabilities


3,803



4,010


    Total liabilities


1,291,787



1,282,058








Shareholders' equity







SINA shareholders' equity


2,013,487



2,145,772


Non-controlling interests


285,226



275,498


    Total shareholders' equity


2,298,713



2,421,270








Total liabilities and shareholders' equity


$ 3,590,500



$ 3,703,328

 

SINA CORPORATION

UNAUDITED ADDITIONAL INFORMATION

(U.S. Dollars in thousands)








Three months ended


March 31,


December 31,


2015


2014


2014







Net revenues






Portal:






Portal Advertising

$ 71,193


$ 83,873


$ 93,962

Other

17,104


20,095


11,963

Subtotal

88,297


103,968


105,925







Weibo

96,290


67,510


105,212


$ 184,587


$ 171,478


$ 211,137







Cost of revenues






Portal:






Portal Advertising

$ 38,974


$ 39,456


$ 41,299

Other

9,418


11,632


7,299

Subtotal

48,392


51,088


48,598







Weibo

28,925


17,443


25,786


$ 77,317


$ 68,531


$ 74,384

 

SINA CORPORATION


UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS


(U.S. Dollars in thousands, except per share data)









































Three months ended



March 31, 2015


March 31, 2014


December 31, 2014







Non-GAAP






Non-GAAP






Non-GAAP



Actual


Adjustments


Results


Actual


Adjustments


Results


Actual


Adjustments


Results





















Advertising revenues

$ 150,353




$ 150,353


$ 135,726




$ 135,726


$ 181,935




$ 181,935


Non-advertising revenues

34,234


(2,609)

(a)

31,625


35,752


(4,132)

(a)

31,620


29,202


(2,609)

(a)

26,593


Net revenues

$ 184,587


$ (2,609)


$ 181,978


$ 171,478


$ (4,132)


$ 167,346


$ 211,137


$ (2,609)


$ 208,528
























(2,609)

(a)





(4,132)

(a)





(2,609)

(a)






1,423

(b)





775

(b)





809

(b)



Gross profit

$ 107,270


$ (1,186)


$ 106,084


$ 102,947


$ (3,357)


$ 99,590


$ 136,753


$ (1,800)


$ 134,953











































(11,951)

(b)





(6,112)

(b)





(8,726)

(b)






(902)

(c)





(1,171)

(c)





(904)

(c)



Operating expenses

$ 132,498


$ (12,853)


$ 119,645


$ 111,671


$ (7,283)


$ 104,388


$ 132,890


$ (9,630)


$ 123,260











































(2,609)

(a)





(4,132)

(a)





(2,609)

(a)






13,374

(b)





6,887

(b)





9,535

(b)






902

(c)





1,171

(c)





904

(c)



Income (loss) from operations

$ (25,228)


$ 11,667


$ (13,561)


$ (8,724)


$ 3,926


$ (4,798)


$ 3,863


$ 7,830


$ 11,693






























(4,132)

(a)












(2,609)

(a)





6,887

(b)





(2,609)

(a)






13,374

(b)





899

(c)





9,535

(b)






694

(c)





1,942

(d)





694

(c)






2,286

(d)





381

(e)





2,411

(d)






1,085

(e)





40,188

(f)





(53,081)

(e)






(2,644)

(g)





(3,289)

(g)





(2,160)

(g)






1,111

(h)





1,398

(h)





1,398

(h)



Net income (loss) attributable to SINA

$ (10,309)


$ 13,297


$ 2,988


$ (33,166)


$ 44,274


$ 11,108


$ 59,751


$ (43,812)


$ 15,939








































Diluted net income (loss) per share attributable to SINA *

$ (0.18)




$ 0.04


$ (0.52)




$ 0.15


$ 0.90




$ 0.24


Shares used in computing diluted



















  net income (loss) per share attributable to SINA

58,753


36

(i)

58,789


66,034


289

(i)

66,323


69,524


(6,468)

(i)

63,056








































Gross margin - advertising

57%


1%


58%


60%


0%


60%


65%


1%


66%


Gross margin - non-advertising

61%


-3%


58%


62%


-5%


57%


62%


-4%


58%








































(a) To adjust the recognition of deferred revenue related to the license agreements granted to E-House.
(b) To adjust stock-based compensation.
(c) To adjust amortization of intangible assets and tax provision on amortization of intangible assets.
(d) To adjust the GAAP to Non-GAAP reconciling items on the share of equity method investments, net of share of amortization of intangibles not on their books.
(e) To adjust gain (loss) on sale of investments, gain (loss) on deemed disposal and (impairment) on investments, net.
(f) To adjust the change in fair value of investor option liability.
(g) To adjust GAAP to Non-GAAP reconciling items for the gain (loss) attributable to non-controlling interests.
(h) To adjust convertible debt issuance cost.
(i) To adjust the number of shares for dilution resulted from convertible debt and unvested equity granted.
 

* Net income (loss) attributable to SINA is adjusted for diluted shares issued by our subsidiary and equity method investments.




















UNAUDITED RECONCILIATION OF SINA'S SHARE OF EQUITY INVESTMENTS' GAAP TO NON-GAAP RESULTS*





















Three months ended



March 31, 2015


March 31, 2014


December 31, 2014



Actual


Adjustments


Non-GAAP Results


Actual


Adjustments


Non-GAAP Results


Actual


Adjustments


Non-GAAP Results





















To adjust stock-based compensation



$ 1,381






$ 1,043






$ 1,632




To adjust amortization of intangible



















  assets resulting from business acquisitions



607






576






473




Earning from equity method investments, net

$ 3,950


$ 1,988


$ 5,938


$ 9,045


$ 1,619


$ 10,664


$ 3,473


$ 2,105


$ 5,578


Share of amortization of equity investments'



















  intangibles not on their books

$ (298)


$ 298


$ -


$ (323)


$ 323


$ -


$ (306)


$ 306


$ -



$ 3,652


$ 2,286


$ 5,938


$ 8,722


$ 1,942


$ 10,664


$ 3,167


$ 2,411


$ 5,578








































* Earning from equity method investments is recorded one quarter in arrears.




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SOURCE SINA Corporation