Sina Corporation (NASDAQ:SINA)
Q3 2016 Earnings Conference Call
November 08, 2016 09:10 PM ET
Sandra Zhang - IR
Charles Chao - CEO
Bonnie Zhang - CFO
Eddie Leung - BofA Merrill Lynch
Chi Tsang - HSBC
Wendy Huang - Macquarie
Piyush Mubayi - Goldman Sachs
Karen Chan - Jefferies
Ladies and gentlemen thank you for standing by. And welcome to the Sina's Earnings Conference Call for the Third Quarter Of 2016. At this time, all participants are in a listen-only-mode. Today's call will include a question-and-answer session. [Operator Instructions] I must advice you that this conference is being recorded today Tuesday 22 November, 2016.
I would now like to hand the conference over to your first speaker today, Ms. Sandra Zhang. Thank you, please go ahead.
Thanks operator and good morning everyone. Welcome to Sina's third quarter 2016 earnings conference call. Joining me today are our Chairman and CEO Charles Chao and our CFO Bonnie Zhang. This conference call is also being broadcast on the internet and is available through the IR section of Sina's website.
Before the mentioning remarks, I would like to read you the safe harbor statements in connection with today's conference call. During the course of this conference call we may make forward-looking statements, statements that are not historical fact, including statements about our beliefs and expectations.
Forward-looking statements involve inherent risk and uncertainty, a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sina assumes no obligation to update a forward-looking statement in this conference call and elsewhere. Further information regarding this and other risk is included in Sina's Annual Report on Form 20 F for the year ended December 31, 2015, and is with other filings with the SEC.
Additionally, I would like to remind you that our discussion today includes non-GAAP measures which exclude stock based compensation and certain other items. We use non-GAAP financial measures to gain a better understanding of Sina's comparative operating performance and future prospects.
Our non-GAAP measures exclude certain expenses, gains and losses and other items that are not expected to result in future cash payment or that are non-recurring in nature or may not be indicative of our core operating result and business outlook. Please refer to our press release for more information about our non-GAAP measures.
During the call we may discuss non-GAAP financial measures for Weibo which have not been audited and our best estimate on Weibo results applying the same methodologies we use to calculate non-GAAP measures for Sina at the Group level. These numbers have not been audited and exclude certain items, including those used to devise non-GAAP measures, overhead allocation and intercompany transactions.
Following the management prepared remarks; we will open the lines for a brief Q&A session. With this, I would like to turn the call over to our Chairman and CEO, Charles Chao.
Thank you, Sandra and good morning, everyone. Thank you for joining us for Sina Corporation's third quarter 2016 earnings conference call. We are delighted to have another solid quarter. Weibo continued its strong momentum on user growth and engagements, thanks to network effect of the content ecosystem Weibo has built an extensive adoption of short video and the live content among our users.
Our team's solid execution in expanding interest based content categories and enhancing efficiency of content distribution has created a more relevant in obtaining and engaging Weibo community. Portal on the other hand has ramped up mobile traffic on Sina News App through effective channel distribution, improved user experience and refined recommendation engine.
On the monetization side, Weibo's revenue has been elevated to a new high, with non-Alibaba revenue growing at accelerating annual rate of 101% or 112% on constant currency basis. The significant operating leverage of the performance has driven by Weibo's non-GAAP operating margin to 31%.
On the portal side, thanks to the better stands of Sina News App and Sina.cn on the small screen. Mobile monetization of portal furthering advanced with half of the portal advertising revenues contributed from mobile devices.
Let's start with Weibo operating metrics. The monthly active users in September 2016 grew 34% annual basis to $297 million and the average daily active user grew 32% to $132 million. Mobile MAU grew 39% on annual basis accounting for 89% of monthly active user base. Benefiting from Olympics and other social events, our daily active user has topped $140 million at the peak time, among which we observed returning users who have left our platform for an extended time period. Time spend on Weibo increased meaningful in this quarter in comparison with the same period last year, a direct result of the extended content consumption in video and usage in live streaming tools.
We are very happy to see the progress just by the initiatives taken by Weibo in show video, live streaming and in cultivating sales media and the KOL or key opinion leader culture as one of the core values derived from network effect on the platform. In the recently held [indiscernible], we highlighted the growing power of KOLs and the sales media on Weibo platform.
As of the third quarter 2016, 45 vertical areas on Weibo have surpassed 1 billion monthly dealership among which 18 vertical areas surpassing 10 billion dealership including celebrities, media, fashion and the finance and new verticals like sports, e-commerce and education. Our effort in cultivating KOLs and sales media not only has brought us abundant new content a lot of them on exclusive basis, but also create a stronger demand for organic advertising on Weibo platform for promoting content to relevant audience base.
On top of that we are providing more and more tools and assistance for the KOLs to monetize their social assets through advertising, through e-commerce or subscription and tipping et cetera. As of late October, when the forum was held it is conceptually estimated that the KOLs have generate at least RMB11.7 billion in monetization value from Weibo this year, including RMB10.8 billion in e-commerce RMB417 million from tipping and subscription and RMB430 million in advertising. An ecosystem surrounding the content is being formed on Weibo and is getting stronger.
With more content, more user and the more user engagement Weibo advertising revenues grew 48% on year-over-year basis to $157 million in the third quarter, we’re encouraged to see the accelerate growth on non-Ali Baba advertising revenues doubling on annual basis, representing 94% of Weibo ad revenue in the third quarter.
We are also excited to see that in the third quarter the growth rate for KA advertising revenue surpassed that of SME with significant increase in number of KA customers. This speaks well for the growing social impact of Weibo platform. The accelerated growth of both KA and SME advertising revenues well demonstrate Weibo’s brand influence, platform scale and the unique positioning in online ad market to capture share of mobile ad budget, benefit from separate allocation of social budget and tip into incremental share of video and even TV budget.
With the robust growth of the top-line plus the significant operating leverage enjoyed at the platform, Weibo has achieved further margin expansion and delivered operating margin on non-GAAP basis to 31% in the third quarter of 2016, a record high in the history of Weibo.
Let’s move on to our portal business. For the third quarter 2016, we continue to see robust growth of mobile traffic generated from Sina News App and the significant mobile presence of Sina.cn. In September 2016 the daily active users of Sina News App grew 278% and on a year-to-year comparison basis and daily unique visitor of Sina.cn grew 33% in the same period, driven by the enriched content formats, more varieties in content categories in result of our embrace of sales media content and the improved recommendation mechanism to deliver personalized information on the audience interest base.
Talk briefly on monetization which Bonnie will elaborate later. Portal advertising revenues generated from mobile devices grew 69% year-over-year and accounted for 50% of total portal ad revenues, up significantly from 29% last year. Small and medium enterprises delivered the meaningful growth on annual basis, with performance based advertising being the key driver.
Before concluding my remarks, let me share some thoughts on the in-con dividends we recently distributed. On October 14, 2016 we have completed the distribution of over 7 million Class A ordinary share of Weibo to Sina’s shareholders as of September 12 on a pro rata basis on 1 to 10. Though decreasing our shareholding percentage of Weibo from 53.5% to 52.2% and our voting power in Weibo from 78% to 75%, we are confident in our action to unlock value for our shareholders allow them to directly benefit from Weibo’s growth momentum and at the same time increased free float of Weibo’s shares.
Given that Sina stock it still traded at a significant discount to the aggregate value at hosting Weibo portal and net cash it owns, as well as the long-term investment portfolios held, which has been proved to be either creating synergies to Sina’s core business or to deliver decent financial returns in a future we are open to possible values to further unlock the value of our company and maximize shareholder values interest at a time that are deemed to be appropriate.
With that, I'm turning the call to Bonnie, our CFO, for a more detailed financial review.
Thank you, Charles, and thank you all for joining our conference call today. Let me walk you through our financial highlights for the third quarter of 2016. Before diving into detailed financial review, I would like to remind you that unless otherwise noted, my comments would focus on non-GAAP financial measures, which mainly exclude stock-based compensation and amortization of intangible assets, and a gain or loss on the sale of investments. All of our comparisons are on a year-over-year basis unless otherwise noted.
We have another strong quarter for the three months ended September 30, 2016. Sina's total net revenue grew 22% to $272.3 million, gross margin is 68% up from 64% last year. Operating income grew 99% year-over-year to $56.5 million, representing an operating margin of 21%, largely improving from 13% last year. Net income attributable to Sina grew 79% to $43.7 million, representing a net margin of 15%, up from 11% last year. Our diluted net income per share is $0.56 compared to $0.39 last year.
Now let's turn to key financial items. Sina's online advertising revenue for the third quarter of 2016 grew 21% to $233.6 million. Portal advertising revenue for the third quarter of 2016 is $79.9 million, down 9% or 4% on constant currency basis. The decline was due to a 53% of reduction in revenue contributed by Alibaba on portal. As we explained in early part of the year, we had anticipated a significant decline in marketing dollar spend on portal by Alibaba, as a result of the expiration of the sales contract among Ali, Sina and Weibo.
Growth in mobile traffic of Sina News App has been very robust in the quarter, as we continue to leverage Weibo to gain new users and increase our investments in the channel marketing. Incremental mobile inventory has led to the enhanced mobile monetization capability on portal with half of the portal ad revenue contributed from mobile in this quarter.
Although e-commerce and FMCG are the top three industry segments in terms of revenue contribution, in aggregation representing 71% of total portal advertising and marketing revenue. However our financial industry customers who played an important role in portal revenue contribution last year were under pressure due to the new advertising regulation tighten the policy in internet finance marketing and a softer domestic capital market.
Moving onto Weibo advertising revenue, in the third quarter of 2016 Weibo's ad revenue grew 48% or 56% on a constant dollar base to $156.7 million. Weibo’s non-Alibaba advertising revenue has delivered an annual growth rate at 101% or 112% on constant currency basis. This is the third consecutive quarter for our non-Alibaba revenue to deliver a triple digit growth rate on a constant dollar base. In contrast with the first half of 2016 when SME segment has the most robust growth in revenue.
In the third quarter, key account sector become the pivotal piece to lead the further monetization Weibo, while SME continues to strive. Key accounts revenue growth at an accelerated rate of 119% or 130% on constant currency basis to $63 million, representing 40% of Weibo ad revenue. Revenue contributed by SME customers is $84.5 million, 100% growth rate on a year-over-year basis under constant dollar calculation. SME revenue as a percentage of total Weibo advertising revenue is 54%.
Though benefiting from the incremental ad budgets from Olympic game that increased demand from brand advertise on Weibo across multiple industries, platforms and products which demonstrate Weibo’s unique and irreplaceable platform position in the digital market in China. Recognizing the social marketing value Weibo can create and deliver, key account customers not only those from traditional industries such as FMCG and auto, but also online partners including e-commerce players engage Weibo to amplify their brand exposure to increase their reach to a wider and younger audience group and to generally more leads or high conversions among targeted customer groups.
These value proposition were built on a spectrum of products from traditional social products like promoter feeds or promoter topics to marketing products unique customize through the Weibo ecosystem such as Fans Headline, Weibo showcase. The team continued to focus on developing commercial products that can well address branding and performance marketing need from advertisers.
For example, the promoter video add launched in the second quarter has received a wide adoption by both key accounts and SME customers. Over 190 brand advertisers and 3,900 SME marketers purchased this ad product and altogether contribute approximately 10% of Weibo’s ad revenue in this quarter. As evidenced by increasing number of marketers who are willing to spend on Weibo and rising ARPU from our performer existing customers Weibo products are well received among customer groups. We are confident we will be able to capture more shares of wallet in the digital marketing budget in the years to come.
Turning to the non-advertising revenue, for the third quarter 2016 non-advertising revenue grew 28% to $38.6 million, portal non-advertising revenue grew 63% to $18.4 million mainly attributable to the increase in portal businesses. Weibo non-ad revenue grew 7% to $20.2 million resulted from the increase of membership revenues.
Turning to gross margin, for the third quarter 2016 gross margin was 68% up from 64% last year. Advertising gross margin for the third quarter 2016 was 71% up from 65%. The growing revenue proportion contributed by SME customers in both portal and Weibo business is the key factor driving our high gross margin for our advertising business. Non-advertising revenues gross margin was 50%, down from 56% attributable to increasing lower margin revenue stream from portal new business.
Now moving on to operating expenses, for the third quarter 2016 operating expenses totaled $127.9 million compared to $113.9 million last year. Weibo’s operating expenses for the third quarter of 2016 grew 19% to $78.7 million due to the increase in marketing expenses that relates to channel marketing fees and onetime write-off of long aging overview receivables recoded in the general and administrative expenses.
Excluding Weibo related expenses, operating expense for non-Weibo business was slightly up 3% to $49.2 million. Operating income for the third quarter of 2016 grew 99% to $56.5 million, representing a 21% growth operating margin significantly up from a 13% operating margin last year. The improved operating income was achieved through the operating leverage and a margin expansion of Weibo platform, as well as the stabilized in non-Weibo business.
Turing to non-operating income, the non-operating items. Under GAAP measure non-operating income for the third quarter 2016 was $143.1 million compared to an income of $4.9 million last year. Non-operating income for the third quarter 2016 was primarily composed of the following items. Number one, a $133.5 million net gain on sale of certain investments including our prior shareholding in [indiscernible] commonly known as [indiscernible], and impairment on investments, which is excluded under non-GAAP measure. And number two, a $5.5 million earnings pickup from equity method investments mainly resulted from E-House and is reported one quarter in arrears.
Turning to taxes, under GAAP measures income tax for the third quarter 2016 was $19.1 million compared to $4.8 million last year. The increase in income tax expenses was to accrue China withholding tax liability associated with the sale of certain investments in this quarter. Non-GAAP income tax for the quarter was $3.9 million.
Turning to net income, net income attributable to Sina for the third quarter of 2016 was $43.7 million compared to $24.4 million last year. Net margin of two comparison periods is 16% and 11% respectively. Diluted net income per share for the third quarter of 2016 was $0.56 compared to $0.39 last year.
Now I will move onto the balance sheet and cash flow items. As of September 30, 2016 Sina's cash, cash equivalents and short-term investments $2.2 billion at a similar level as of December 31, 2015. Out of $2.2 billion cash short-term investments balance, $479.4 million relates to Weibo’s cash and short-term investments. For the third quarter 2016, net cash provided by operating activities was $256.1 million, capital expenditures totaled $2.3 million and depreciation and amortization expenses amounted to $7.3 million.
Before I close my today's remarks, I want to comment few words on the latest MSCI index in addition. In the recent announced November 2016 semi-annual index review by MSCI both Sina and Weibo has been added to the MSCI China standard index with Sina being estimated to be one of the top three with largest way increase, while Weibo as one of the top three largest addition to MSCI emerging market index measured by full market cap.
This affirmation is very important to us and we view it as a milestone for both companies in recognizing what we have achieved. I want to take this opportunity to thank our shareholder for both Sina and Weibo for your trust and support and also I would like to thanks all sell side analysts for your patients to standby us all these years.
With that we would like to take your questions. Operator, could you please pull for questions.
Thank you. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Eddie Leung from Merrill Lynch.
Good morning thank you for taking my questions. I have two questions on your portal advertise increases. The first one is about the trend of your other advertisers excluding Alibaba, could you talk about the year-on-year trend of the non-Alibaba related advertising on the portal basis? And secondly about your SME advertisers, could you share with us the rough proportion of contribution from the SME advertisers to your portal advertising. And what type of advertisers are these SME advertisers? Thanks.
Hey Eddie let me take your questions. The first one the non-Alibaba part, I think we indicated in the prior quarter that we start to see a trend up in terms of constant dollar basis for our KA and SME aggregate. In the third quarter, actually we delivered on constant dollar basis 5%, little bit over 5% increase for that two groups to customer revenue in total. So that is a significant changes compared to the prior eight or nine quarters, which we have experienced the constant decline in terms of the particularly in the KA segment.
I think this quarter overall revenue decline really a direct result of the significant reduction in Alibaba revenue contribution from year-over-year basis. So that hopefully that answers your first question. And the second question, in terms of the SME customer trend, we are -- year-over-year basis we continue to see a relative faster growing pace of our SME customers. The key industry segments are included e-commerce, education and less in the financial segment.
I think I had indicated in the -- in my prepared remarks that financial sector in the prior few quarter has been pretty strong on both the KA and SME perspective. However, with the new advertising regulation and also the tightened online financing marketing rules, we see some softness in that particular industry segment.
Thank you. Our next question comes from the line of Chi Tsang from HSBC. Please ask your question.
Great, thank you very much and a nice set of results for us all front. I wanted to ask about two things, firstly in terms of your Weibo stake. So you sold down your Weibo stake slightly this quarter, I am wondering under what circumstances might you sell down the Weibo stake further. And secondly, I am wondering if you can give us an update on your relationship with Alibaba, both from the Weibo side and the Sina side and maybe comment on any further areas for cooperation in 2017? Thank you.
Okay. Regarding your first question, I mean the selling of Weibo shares. I think this is the first time I mean the management actually sold some shares in Weibo after it went public. And I think this is natural I mean action here given that Weibo has been doing quite well in this appreciation start and we actually as management has tried to do this process in a very smooth way. So we actually did this transaction a private transaction and simultaneously there is a distribution of dividend of Weibo shares to Sina’s shareholders.
So that we are not only unlocked the value for shares for Sina shareholders, but also actually increasing the floating shares for Weibo, actually this was intention here, because there is a limitation in terms of Weibo supporting shares that prevent some of the large funds to enter the market here. And so by doing that we are trying to make the liquidity of Weibo shares much better.
And, so we’re not contemplating any -- I mean we cannot really contemplating in what kind of circumstance we can sell shares. I mean but, overall I mean we have strong confidence in Weibo’s future, given the set of results we’re seeing given that that the forecast we have I mean you can see the momentum really going on here. So we have a strong confidence especially we believe that the Weibo is just at a beginning of its platform value and has a great future to continue its strong growth in the future.
And with regard to your second question, our relation with Alibaba, Alibaba obviously is a significant industry strategic shareholder of Weibo and given their shareholding over 30%. I mean Weibo is quite significant and historically we have been working very closely in many fronts, many fronts including the sales and marketing, including advertising, including sharing the data and including utilizing their payment system to better serve our Weibo customers and users for monetization for transactions.
So and I view this as a very, very strategic and very important relationship. And we're going to continue this relationship. I think this is mutually beneficial for both parties and given that Weibo increasing become large scale social platform, I believe that it will play an increasing important role in e-commerce kind of ecosystem in the China market. And so in many ways we’re going to work more closely in the future.
And with regarding the Sina’s relationship with Alibaba, we have always been very close in terms of cooperation, but there is no like shareholding kind of relationships. So this is more like arms-length transaction, but given that Sina is the contributing shareholder of Weibo it’s only natural that we will work very closely with Alibaba in many initiatives including media area, including the increasing our market share in mobile media segment together. And of course we're also working together with some of the -- in the areas of sharing the data and the content. And so hope that answer your question.
Thank you. Our next question comes from the line of Wendy Huang from Macquarie. Please go ahead.
Thank you. Can you share more color on your Sina News App what kind of revenue contribution are you seeing from the Sina News App at the moment? And also earlier I think Weibo mentioned that they started getting attraction with lots of big media accounts, just wonder if that actually makes resulting any content end user cannibalization with portal, the media content given that portal has been well known for the big media resources.
And also lastly, I just want to hear your update on the verticalization strategy that you started mentioned things several quarters ago. So where the Sina is standing in terms of the implementing that strategy right now? Thank you.
I take the first one on the Sina News App. Right now our revenue metrics we don't break further down to each product line. Like other than Sina News App we do have other individual apps like sports, finance, blog each of them have revenue contribution to the total pie. However we have aggregate those numbers in asset through the external reporting purpose has aggregated all those revenue into our mobile numbers. So we don't separately disclose the figures or stand on revenue for individual Apps.
The second question, I'm not too sure I understand your question, what do you mean by the big content partner did you say media?
I think Weibo mentioned they start seeing the big increase in maintenance [ph] for the big media accounts who are quite producing the high quality. And I think the Sina portal and it was the news also we are knowing for having the good relationship with those big media, they also perceived as…
Yeah I see, I see, I think let's make it clear here. I mean we always has a lot of larger media partners and accounts there, almost all the media companies and media has account with Weibo. I think what they're saying in the Weibo's conference call is that more and more actually media company decided or started to contribute more exclusive content or like more media content on Weibo like what the CCTV file they have given down big games that generate huge traffic and fan base for them. And given that Weibo has reached a critical mass in term of scale and network really show that it is a good distribution channel for content and for the distribution of content.
And so that more and more media actually begin actually to contribute more exclusive content on Weibo that actually help to attract Weibo users and then make out attention of users actually at a lower cost. Effectively that was being talked about on the conference call here.
And with Sina I think we are also increasing our presence on Weibo, I mean social kind of distribution of our content. We are actually operating more accounts there and also we’re contributing more content through the social media. And not only on Weibo, but also on different kind of social platform as WeChat and other the news app. So we would look at this as like -- Sina is like we actually, we have news app, we have our portal, ourselves is content distribution channel ourselves but also we are producing content for multiple channels, so that we can actually increase the distribution for the content we created.
So basically we’re not only distributing content on our news channel, our news app portal for the Weibo, WeChat, many other news app to increase the presence and distribution of the content we created. And so the impact there is not really -- there is not kind any cannibalization in between, but really I think there is no I mean actually any conflict here for other media to increase their content contribution on Weibo, but also for Sina to contribute more content on Weibo too.
So hope that answer your question this one. And the verticalization, you third question. I think we are still in the process of as we said we slow down this process little bit in the previous two quarters, we’re still in the process of re-examining this area and especially in the internet finance area because there are lot of regulations coming out, lot of restrictions. So we are as we mentioned in last quarter that we’re in the process of applying some of the licenses that required all personnel been this in the Fintech over internet finance world in China.
I think we are getting pretty close some of these, but still working pretty hard on some others and the idea is that any new business in the Fintech business and any internet finance business will be required of the certain license. And so that’s something we’re doing and we believe that we still have strong advantage here in terms our user base and traffic in finance area and once we get license we still have a product and business ready and once we have the license we’ll be able to start our business very quickly.
And -- but in terms of other areas, autos we are experimenting the vertical areas I mean in terms of go beyond brand advertising and focus on more performance based advertising, sales leads and so on so forth with the collaboration between the Weibo and Sina and we are making pretty good progress here. And so we are going to go deeper in this area by forming a more independent unit in auto business. And in the sports area its more complicated given that the higher act of this the copy rights of the sports and we have to looking for opportunities to explore the business opportunity in that area. But there are not too much actually elaborate at this point. So hope that helps.
Thanks Charles and Bonnie. Thank you.
Thank you. Our next question comes from the line of Piyush Mubayi from Goldman Sachs. Please go ahead.
Thank you Charles, Bonnie. Could you just give us a sense of what the impact of the Olympics was during the quarter? And second from an inventory perspective, could you give us a sense of what the news app ad loads were during the quarter or if there is another metric you would like us to focus on and how that’s evolving? And third a question for Charles, Charles you distributed Weibo shares during the quarter, which is very well received by the market. How should we think about your level of comfort with the percentage shareholding you would like to see eventually in Weibo for Sino?
You mean the Sina’s shareholding in Weibo or my shareholding in Sina.
No, no, well could comment on the latter too. So both since your put.
Well actually I mean obviously, we have strong confidence in Weibo’s future to the extent we can, we want to hold as many Weibo shares we can I mean but the given that if that market does not recognize the value of the Sina as an aggregate value here, there is still room for us to distributing shares further. Because actually by doing so at increase the value for Sina shareholder and on the other hand does not hurt any value for Weibo shareholder basically. So it's a win-win situation. But having said that I would hate that to actually hope less Weibo share as Sina shareholder. Actually we believe this is -- these share has great value in the future.
And so your first question on Olympic Games, and historically indicates very important role for our portal business. But given that actually the content the sports event kind of reporting end user engagement really have moved to the mobile and to the social and to the video. And we are seeing actually Olympic Games actually have impact on Weibo this year. And given the trust we have generated, the user engagement we have generated and also advertising dollar we have generated from the campaign, it's quite exciting actually.
And so as four year ago when at none of the games we foresee that 2016 will be a year for Olympic Game for social media and it really happen. And on the portal side, the impact actually is less than before and still it's meaningful, I mean not for us but it's nearly not important in terms of percentage of total revenue any more. So that gives you some broad color on the impact on Olympic Games on our business. And maybe Bonnie can take the second question about the news app.
Yeah for the news app load for the quarter it's close to 8%.
Thank you, Bonnie. Thank you, Charles.
Thank you. Our next question comes from the line of Karen Chan from Jefferies. Please go ahead.
Thank you management for taking my question and congratulations on the strong quarter. Couple of question here, first can management update what's the current mix between PC and mobile traffic? And with the mobile traffic what's the mix between the news app and web? Secondly noticed that net cash excluding Weibo is sitting over $1.1 billion now, so is there any plan on the use of cash for example cash dividend or share repurchase of among some of the available options. And thirdly just wondering what's management view on the portal act outlook for next year on a constant currency basis? Thank you very much.
In terms of traffic between the mobile and PC on the portal side, I think on a total basis our traffic have surpassed 65% on mobile. Yes, it's close to 70% on mobile right now that including obviously news app and H5 base portal. And between H5 and the news app, I mean the metrics are a little bit complicated because we use DAU for the news app purpose with UV for the H5 purpose, UV including the people actually access our website directly also including the UV actually coming from other property like search engine or social media for example.
And so it's a little bit complicated and they're not really the comparison we can draw. But obviously Bonnie has mentioned that I think I also mentioned in my opening remarks that 280 something percent increase of our app kind of DAUs on a yearly comparison basis and also 30 something percent of the UV increase on yearly basis for H5 property.
And so that is one question what’s the other question?
Second is cash position.
Okay. So maybe Bonnie can comment on that.
Yeah so I think right now it's interesting time, I think a lot of you know our net cash position it's about $1.1 billion. And we continue to own some of those investments that we previously held. I think I indicated in the -- in my prepared remarks that we have disposed our entire shareholding in Generali Total [ph] which that’s a great financial returns we made a great financial return through the two years period. And we -- but on the other side we’re still looking into good opportunity to invest in other companies areas like online financing, online education, which is another important segment we’re taking looking into.
I think Charles indicated in his prepared comments that our investment strategy is looking is two folds, one is looking for companies that has good synergy to our core business that could have be companies that works well in the Weibo ecosystem or companies that’s supplemental or provide a value to our portal or vertical areas, particularly the online financing.
So, some other investments could be just good for financial return point of view, but that’s very small percentage of it. But with that bear in mind then we probably would not stop here, right now we believe in the market there still the areas we’ll continue to looking for opportunities that includes machine learning, artificial intelligence these areas. So we’re differently pulling out resources and the focus.
So, that’s our sort of view on that and also in terms of your question on the further return to the investors, I think we talked about potential future dividends at a time that we believe it’s right, and also bear in mind, we have a stock repurchase program $500 million share repurchase program implies and this program will last until the period of next year the second quarter end of next year. So, if the market or share price is not performing to the bar what we are like or we expect, we definitely have the tool to buy more shares back from the market. So, hopefully that would provide more values and supports to our share position.
Third one is the portal outlook.
Outlook, and I think the portal is still I mean going through the process of shifting from PC to mobile internet user migration in traffic and so and so forth. So the focus would still be I mean in terms of increase our user base and the scale of our mobile business specially in news app and also on the mobile portal H5 and we believe that the monetization of portal -- on the mobile portal and news app will be mainly from the news feed and based on recommendation and on native ads so on so forth. So the scale is actually very important factor in terms of generating revenues and high CPM going forward.
So scale is everything I think we are making good progress this year in terms of increasing our scale of our business on the mobile side and we are going to continue to do so, and once you actually reach certain point I think as the monetization will actually increase at a faster rate and then the user increase and we have a strong hope for that for next year. And on the meanwhile on the overall basis on the portal we are going to I mean actually revisit our cost structure to make our entire cost more efficient and cost effective going forward to adapt to the new business model and new product model going forward.
So, I think in terms of overall, I think our total revenue adverting will still have some China in near future, but once we have surpassed that point our mobile user have reached certain point we believe that our advertising revenue will grow again. Especially I think we plan to work closer, I mean portal side reaching Weibo and this year actually Weibo generate a lot of traffic for the portal. And going forward we believe that given the size and scale of Weibo monetization and its channel for sales, it will actually help I mean portal to have a much more efficient kind of monetization system.
And that will help overall margin for the portal business going forward. So I hope that answers your question. I think we’re probably out of time already here.
Thank you. That's all we have for questions today. I'd now like to hand the conference back to today's presenters for closing remarks.
Thank you all for joining our conference call. We see you next quarter.
Ladies and gentlemen that does conclude our conference for today. Thank you for participating. You may all disconnect.
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