Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

SINA (NASDAQ:SINA)

Q2 2012 Earnings Call

August 15, 2012 9:00 pm ET

Executives

Lidan Feng

Guowei Chao - Chief Executive Officer, President and Director

Yu Herman - Chief Financial Officer and Principal Accounting Officer

Analysts

Richard W. Ji - Morgan Stanley, Research Division

Wallace Cheung - Crédit Suisse AG, Research Division

Alicia Yap - Barclays Capital, Research Division

Jiong Shao - Macquarie Research

Ravi Sarathy - Citigroup Inc, Research Division

Tian X. Hou - T.H. Capital, LLC

Eddie Leung - BofA Merrill Lynch, Research Division

Yu Jin - China International Capital Corporation Limited, Research Division

Operator

Good day, ladies and gentlemen, and welcome to SINA Corporation's Second Quarter 2012 Earnings Conference Call. [Operator Instructions] I would now like to turn the presentation over to your host for today's conference, Ms. Cynthia [ph] Feng, Investor Relations Associate. Please go ahead, ma'am.

Lidan Feng

Thank you. Good morning. Welcome to SINA's earnings release for the second quarter 2012. Joining me today, our President and CEO, Charles Chao; and our Chief Financial Officer, Herman Yu. This conference call is also being broadcast on the Internet and is available through the Investor Relations section of the SINA website.

Before the management presentation, I would like to read you the Safe Harbor statement 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 facts, including statements about our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainty. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. SINA assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Further information regarding these and other risks is included in SINA's annual report on Form 20-F for the year ended December 31, 2011, and its other filings with the Securities and Exchange Commission.

Additionally, I'd like to remind you that our discussion today includes non-GAAP measures, which excludes stock-based compensation and certain other items. We use non-GAAP financial measures to gain a better understanding of the SINA 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 payments or that are nonrecurring in nature or may not be indicative of our core operating results and business outlook.

Please refer to our press release for more information about our non-GAAP measures. Following management's prepared remarks, we'll open the lines for a brief Q&A session.

With this, I would like to turn the call over to our President and CEO, Charles Chao.

Guowei Chao

Thank you, Lidan. And good morning, everyone. Welcome to SINA's earnings conference call for the second quarter of 2012.

The official results for SINA on an overall basis for the second quarter were mixed. On one hand, we saw quite strong traffic growth across all terminals and all major product lines, including Weibo, PC Internet portal and the mobile Internet portal in the month of June. On the other hand, the advertising market in China continued to be challenging due to the soft macroeconomic conditions in China. The advertising revenues grew by 12% year-over-year and by 31% quarter-over-quarter in the second quarter.

In the month of April, we launched Weibo display advertising systems for brand advertising. The new system incorporates social and interest graphs recommendation engine, which allows advertising to be more targeted and relevant. The initial response from our customers and advertising agencies has been encouraging. The advertising revenues from Weibo accounted for approximately 10% of our total advertising revenues in the second quarter.

We expect the advertising revenue contribution from Weibo will accelerate in the second half of the year, which will help our overall advertising growth rate as compared to the market.

As social media advertising is relatively new in China, it will take some time to educate the market. And in the meanwhile, we will need time to fine-tune the recommendation engine as user data accumulates. In addition to Weibo, online video advertising also contributed to the growth of advertising revenues this quarter, as revenues from online video grew by 126% in the second quarter, as compared to the same period last year.

As we entered into the third quarter, the advertising market continued to be soft. But with the help of London Olympic Games, as well as the more adoption of Weibo advertising, we expect that our advertising revenue growth will accelerate in the third quarter.

During the second quarter, we are pleased to see that the user base and the user activities for Weibo have all experienced strong growth, despite tightened regulatory environment. The total number of registered accounts for Weibo reached 368 million at end of June, up 13.6% from 324 million at the end of March. More importantly, the average number of daily active users, or DAU, grew by 21% from the month of March to the month of June and reached 26 -- reached 36.5 million. The average number of daily active users as a percentage for the registered account increased to 10% in the month of June, as compared to 9% in the month of March, a strong indication of increased user activeness for Weibo platform. Among the daily active users, 69% used the mobile terminals to access the Weibo in the month of June, as compared to 64% in the month of March.

While the overall market sentiment was still soft when we entered the second quarter, it is slightly better than we experienced in the first quarter. The time spent per active user per day increased slightly but remained at approximately one hour for the month of June for Weibo. During the London Olympic Games, Weibo played a prominent role in news reporting, content distribution, as well as user participation for Olympic-related topics and events.

During the Olympic Games, tens of millions of users posted hundreds of millions of messages on Weibo, making Weibo the social media platform for Olympic Games in China. As some media reports pointed out, this is a Weibo Olympic. Our success in the Olympic Games coverage on Weibo will have a profound impact on future media coverage on major events, as the world is increasingly moving towards social and mobile. As we discussed before, we'll continue to invest heavily on Weibo in the year 2012. Our primary goal for this year is still to grow user base and user stickiness through product innovations and the user experience improvement.

Recently, we launched a new product called the Weibi, which is fully connected to Weibo and allow users to participate based on topics and interests as opposed to user relations. We believe this product will be highly complementary to Weibo, which helps to increase overall user stickiness.

Towards the end of third quarter, we plan to launch version 5 of Weibo. The new version will have significant changes to our existing personal profile page and which also allows users to have the ability to share information and content among close circles privately.

In terms of Weibo monetization this year, in addition to the Weibo display advertising system we launched, we also plan to build or improve the basic infrastructure, such as payment system, credit system and data system for Weibo monetization this year. Our monetization for Weibo primarily comes from advertising this year, and to a less degree, from a fee-based service and the revenue share for selling digital products.

We recently launched paid membership service on Weibo. Our paid membership -- the objective for this membership service is not so much to monetize our membership fee, rather we want to create a paid user base for future fee-based services. We also plan to launch a self-support advertising system for SMEs and for individual users in the fourth quarter this year.

As we've said before, we do not expect that total monetization on Weibo will be significant this year, rather our main objective will be building the systems and infrastructure for monetization to take off in larger scale next year. Given the lower-than-expected advertising revenues, we incurred significant operating loss in the first quarter. We also incurred a small operating loss on a non-GAAP basis in the second quarter. Although we expect that we'll return to profitability in the third quarter on operating levels, we do not expect that we'll generate significant operating profit for second half of this year as we continue to invest in our Weibo platform.

As we discussed at the beginning of the year, it will be another year of investment for SINA. We believe that the scale of monetization for Weibo will largely depend on the scale of the user platform. We hope that our investment and effort in building a more dominant social media platform and a strong ecosystem surrounding the platform would generate much higher return over the longer-term for investors.

With that, I'm now turning to Herman, our CFO, for financial review.

Yu Herman

Thank you, Charles, and thank you, all, for joining our conference call today. Let me take you through our financial highlights for the second quarter of 2012.

SINA's non-GAAP net revenues for the second quarter of 2012 came in at $126.9 million, representing an annual growth rate of 11%, which is within our guidance between $126 million and $129 million. Non-GAAP net income attributed to SINA for the second quarter was $3.7 million or $0.05 in non-GAAP diluted net income per share. SINA's second quarter's operating results included approximately $38 million in Weibo-related costs, which compose mostly of personnel-related costs, infrastructure-related expenses and marketing expenditures.

Let me now run through the other key financial statement items, starting with online advertising revenues. Online advertising revenues for the second quarter of 2012 came in at $103.1 million, which is within our guidance of between $103 million and $105 million.

Despite a challenging macroeconomic environment, especially towards the second half of the quarter, SINA's online advertising business grew 12% year-over-year and 31% sequentially, which is an improvement in growth rate from the first quarter.

The momentum that Weibo.com has generated, coupled with the soft launch of Weibo advertising contributed to the relatively strong performance of SINA's online advertising in the quarter. During the second quarter, we saw advertising solid growth coming from fast-moving consumer goods, Internet, and telecom services, while auto and financial services did not fare as well. On the product side, our video advertising continued to grow over 100% on a year-over-year basis.

Turning to nonadvertising. For the second quarter of 2012, we generated $23.8 million in nonadvertising revenues. Although our mobile value-added service business declined 9% year-over-year to $17.7 million, our other revenue category, which consists mainly of fee-based revenues, including online game distribution from the game channel on our portal and online reading doubled from the prior year to allow us to have a net increase of 6% year-over-year in the nonadvertising segment.

Turning to gross margin. Our non-GAAP gross margin for the second quarter of 2012 was 52%, compared to 56% for the same period last year. Non-GAAP online advertising gross margin for the second quarter was 54%, compared to 60% from last year. The decrease in non-GAAP advertising gross margin was mainly due to increased spending on production labor, infrastructure and content. MVAS gross margin for the second quarter of 2012 was 39%, unchanged from the same period last year.

Turning to operating expenses. Non-GAAP operating expenses for the second quarter of 2012 were $66.8 million, an increase of 19% from the same period last year. The increase in non-GAAP operating expenses was primarily due to the increase in personnel-related expenses and infrastructure-related spending, partially offset by a decrease in marketing expenditures. These changes were mostly related to Weibo.com.

Non-GAAP loss from operations in the second quarter of 2012 was $0.8 million, compared to a non-GAAP operating income of $8.1 million from last year. Nonoperating income for the second quarter of 2012 on a non-GAAP basis was $5.7 million, compared to $6.5 million for the same period last year. Non-GAAP earnings from equity investments for the second quarter of 2012 was $0.9 million, compared to $2.3 million for the same period last year.

Turning to taxes. Provision for income tax expenses for the second quarter of 2012 was $1 million, compared to $1.3 million for the same period last year.

Turning to net income. Non-GAAP net income attributed to SINA for the second quarter was $3.7 million, compared to $13.3 million for the same period last year. Non-GAAP diluted net income per share attributed to SINA for the quarter was $0.05 compared to $0.20 last year. Non-GAAP net income attributed to SINA of $3.7 million in the second quarter was a significant improvement from the first quarter, which had a non-GAAP net loss of $14 million.

The improvement in our operational results can be attributed to the sequential growth in revenues, as well as expense rationalization that we have put in place. Although we expect to return to profitability in the third quarter, as Charles mentioned, this will be another year of investment for SINA. In addition, while our brand advertising revenues in the third quarter will benefit from the London Olympics, we also expect incremental costs associated with such coverage.

Now let me briefly review our balance sheet and cash flow items. As of June 30, 2012, SINA's cash, cash equivalents and short-term investments totaled $716.3 million compared to $673.5 million as of December 31, 2011. For the second quarter of 2012, cash used in operating activities was $8.1 million. Capital expenditure was $2.8 million and depreciation expenses were $7.6 million.

A few words on the merger between CRIC and E-House. On April 20, 2012, CRIC merged into and became a 100% subsidiary of E-House. As a result, our 34.4% interest in CRIC was converted into 29.3 million ordinary shares of E-House, equivalent to a 24.9% interest and $85.6 million in cash. We also recorded a onetime gain of $45.3 million resulting from this transaction, which we excluded from our non-GAAP results. Going forward, we expect to report earning and loss from E-House one quarter in arrears, which is consistent with how we recorded earning and loss from CRIC. License agreements with CRIC will remain effective, and we expect to continue to recognize related deferred revenues on a straight-line basis at a quarterly rate of $4.7 million.

Turning now to Q3 2012 guidance. For the third quarter of 2012, we are targeting non-GAAP total revenues between $145 million and $148 million, representing an increase of 15% to 18% year-over-year. For non-GAAP advertising revenues, we are targeting between $120 million and $122 million, representing an increase of 19% to 21% year-over-year. For non-GAAP nonadvertising revenues, we are targeting between $25 million and $26 million, representing an increase of 2% to 6% year-over-year. Non-GAAP net revenues and non-GAAP nonadvertising revenues exclude the recognition of $4.7 million in deferred license revenue related to SINA's equity investment in CRIC, E-House.

This concludes the written portion of our call. We are now ready for questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Richard Ji with Morgan Stanley.

Richard W. Ji - Morgan Stanley, Research Division

I have one question. First of all, let's start with Weibo-related advertisements. Can you shed some light on the profiles of your advertising customer on Weibo? And who are those people? And also, we are very curious about the top advertising category on those social media ads. And can you also comment on the advertising pricing trend in the Web, especially relative to your portal advertisement?

Guowei Chao

Rich, I did not get the second part of your question. What trend, pricing?

Richard W. Ji - Morgan Stanley, Research Division

Advertising pricing trend on the social media, as relative to the portal advertising.

Guowei Chao

Okay, I see. Richard, this is the first quarter we started to offer, I mean, the advertising on Weibo, I mean, separately, I mean, meaning we have a separate product and separate pricing. And so I think, as we said, I mean, in the opening remarks that the initial response has been kind of encouraging. And so the first wave of our, I mean, customers, I mean, for Weibo, obviously, our existing, I mean, customers, especially in the categories like automobiles, like FMCG, these are the major categories. And obviously, I mean, we are also attracting some new customers through the social media, especially those who actually never tried our portal advertising before. And so if you look at the numbers, I think there's about 80 customers who have, I mean, spent money on social Weibo advertising in the second quarter. And I would say about 80% -- 75% to 80%, our existing customers with an overlapping, I mean, spending, I mean, between portals and also on Weibo. And by the way, we've also got around 20 -- 20-something percent of new customers, I mean, who actually never tried our product advertising before. And those probably, for example, in categories like luxury goods. And this is a big market in China. And we are able to attract some of these customers who actually never spent money with us before. So I think this is kind of encouraging, meaning that not only we were able to extend our new services to our existing customers, but also we were also able to attract new customers who have never spent money on us. And so I think this trend is going to continue. I mean, we're going to see more customers coming to our Weibo in the second half of the year and the number of customers probably will double, I mean, in the second half of the year. And we're also expecting some of new customers, who will try out the advertising on Weibo. And in terms of the relationship between portal and the social platform, I think, as I said before, inevitably, there will be a degree of cannibalization, meaning that some of the customers who have spent money on Weibo more may not spend as much on portal anymore. But I think, overall, if you look at the numbers, our gross rate on an overall basis in a competitive market, I think, still, I think, that we were able to grow, I mean, the advertising value on an overall basis faster, I mean, compared to the market. And I think, it's -- I mean, there's no question that Weibo, I mean, advertising will add a lot in terms of our overall advertising growth in the future. Hope that answered your question.

Richard W. Ji - Morgan Stanley, Research Division

That's helpful. And the second question is regarding your third quarter advertising outlook. Obviously, you guided for a reacceleration of advertising sales in the third quarter, which is quite encouraging, especially in this kind of slow market. And can you help us understand a little better about the impact of Olympics? And also, how should we be thinking about the content cost involved in Olympics?

Guowei Chao

Okay. I think as I said that the overall market for advertising is still quite soft in China in the third quarter as we have experienced. But with the help of Olympic Games and with the help of a few more adoption of Weibo advertising, I mean, we are able to grow faster and accelerate our growth rate a little bit in the third quarter. And historically, advertising from these major events has been our advantage. I mean, we have been doing quite well in all these major events, marketing plus advertising revenues. And so there's no exception this year. And I think that we probably is the leader in advertising revenues for Olympic Games for the third quarter in the market, in China market. But historically, you also saw the same pattern that when some of the big customers spend more time and more budget on the Olympic events, they tend to spend a little bit less, I mean, their normal spending on portal. And so this is the same trend here. So you see the pickup from Olympic Games. But on the other hand, as some of the customers who spend money on Olympic Games who have spent less money on their normal advertising campaign. But overall, I think Olympic Games is a plus, as you saw from our guidance and also from our past experience. And in terms of the cost of advertising for the content, inevitably we have to increase our cost for the major events. I mean, this time, of course, video is a big cost for advertising in terms of content. And also, we have to buy a bunch of other content from different media companies to provide a vast coverage of the Olympic Games. So this is probably onetime event in terms of content spending. And this probably would reflect in our, I mean, numbers this year -- this quarter for our profits. But I think we're going to have a profit increase -- I mean, a return to profitability on the operating level this quarter because the revenue increase will actually surpass -- exceed the increase in the cost line basically.

Operator

[Operator Instructions] And your next question comes from the line of Wallace Cheung with Credit Suisse.

Wallace Cheung - Crédit Suisse AG, Research Division

On the Weibo revenue, I just wanted to make sure I heard it clearly. It's like 10% of the total advertising revenue. If that's the case, can you try to break it down? Like how much of it is coming from more like just pure branding basis or sponsorship type of revenue? Or is the majority coming from what we talked about, the targeted advertising revenue? And we move on to the third quarter guidance. Are we seeing -- as you indicated, Weibo is likely to kind of like break-even. So are we going to see this big jump on advertising revenue, or is actually together with other nonadvertising revenue from Weibo as well?

Guowei Chao

I'm not sure I got your entire question. We do not say that Weibo is going to break even in the third quarter. And so what was your -- exactly the question was, I mean, in terms of your question regarding the advertising for Weibo in the second quarter?

Wallace Cheung - Crédit Suisse AG, Research Division

I'm sorry about that. So what I mean is, like what is the breakdown in terms of the advertising revenue between the branding, sponsorship type? Or this is pretty much purely based on the targeted advertising systems? For the first quarter, what is the trend of this kind of advertising growth? Sorry, I take it wrongly on your call on the break-even point. Sorry about that.

Guowei Chao

Well, I think that we do not really distinguish, I mean, branding and sponsorship too much in detail. I mean, obviously, some of the campaign will be most focused on the sponsorships. Some of the campaigns will be more on the branding side, I mean, which is sold on an CPM basis and so on and so forth. And I think, overall, I think Weibo advertising system makes the advertising campaign more targeted. I mean, it's not like we are selling a particular campaign on a target basis, some other campaigns on other basis. I think Weibo is more on a CPM basis versus we used to more on, what I call, on a timing-base, I mean, advertising on the portal. So Weibo is more performance-based on CPM, basically. So in large categories, I mean, most of these will be on CPM and most of these customers are branding customers. Some of these will include some sponsorship kind of arrangement. Some of these don't, purely on a performance basis. But I don't have the breakdown. And we actually, obviously, don't do that internally either. So hopefully, when we have more data in the future with more revenues for Weibo, we'll be able to categorize these category better in the future. I think that similar trend will be continued in the third quarter, except with more customers and also more spendings by customers -- per customers in the third quarter. And obviously, for the Olympic Games and more of this spending, I mean, will be on a sponsorship basis by some our big customers buying a category for Olympic title and specific areas of sponsorship. That's pretty common for major event selling and this is the same as portal. But on the Weibo side, obviously, for the first time, we actually were able to sell more on the mobile terminal side. I mean, there's a lot of experiment in that area also, which we're pretty excited about.

Wallace Cheung - Crédit Suisse AG, Research Division

Just one quick follow-up is what we're seeing in the first quarter, how do we see the nonadvertising Weibo revenue? Like either the VIP membership and games platform...

Guowei Chao

Okay. As I said in my opening remarks, I mean, the fee-based service -- I mean, the paid membership, I mean, we started, I mean, in the month of June. And it's just a starting point. And frankly speaking, we do not really expect to get too much membership fee as our revenue, I mean, right now or in the future. But rather, I mean, we try to view our paid user base through this kind of membership service. And in the future, we'll launch new paid fee-based services, we'll be able to apply to these paid membership-ers. And so in a degree, we are able to kind of set up kind of paid relationship between us and some of our members so that we'll be able to launch them on fee-based services in the future. And that number, I mean, up to now is quite small. But our objective, obviously, is to get more members in the future so that, I mean, when we launch new services, we'll be able to get more revenues in the future. And the gaming, we started, I mean, really -- when we first started our gaming platform on Weibo, that was about a year ago. And initially, our policy was that most of these, we do not really get too much earnings share. We really tried to help the market to grow and try to attract more developers to develop games for the game platform for Weibo. And the charging -- the revenue share really started, I mean, in the month of June and also just part of it. And so we expect to get some more revenues from game share, as you can see, from our guidance for net advertising. I mean, revenues, I mean, a big portion of it, will be coming from game revenue share, I mean, on the Weibo platform basically.

Operator

And your next question comes from the line of Alicia Yap with Barclays.

Alicia Yap - Barclays Capital, Research Division

My question is regarding the monetization opportunity on your SINA Palm, the mobile news app. We actually saw some advertising during the Olympics period. So is that already monetizeable? Or is that still in the testing phase? And how is SINA positioning your news app versus your Weibo apps on mobile going forward?

Guowei Chao

Well, I think, I mean -- on an overall trend, obviously, mobile is becoming more and more important for all product lines. I mean, if you look at our traffic, I mean, I said at the beginning of my opening remarks that we see strong traffic growth across terminals and across all our major products, especially in the mobile areas. I mean, if you look at Weibo, a lot of traffic growth is coming from mobile terminals. And also, our mobile Internet portal, I mean, we see very strong traffic growth. In fact, I think during the Olympic Games, our mobile Internet, I mean, traffic is very much close to our PC Internet traffic Olympic coverage. So that tells you, I mean, a lot about the traffic growth coming from mobile. And historically, we actually did not really place a focus on mobile advertising, partly because the market was not quite ready. And of course, the effect and the measurement on mobile advertising is in a very early stage. And so I think Olympic Games served as a good starting point, I mean, for us to develop mobile advertising product, not only on Weibo but also on the product you mentioned, like our SINA Palm, which is a mobile application on smartphones and also our -- as you probably can see, we also placed a lot of advertising on our mobile Internet portal, I mean, for the Olympic coverage. So I think adding all these terminals together, all the product together, Weibo plus the mobile applications on the smartphones, and as well as on the mobile Internet portal, I mean, the total traffic actually is quite significant. But I think having said that, I mean, we believe that mobile advertising will take off in the future. But I think it would take some time because, as I said, I mean, the measurement for mobile, I mean, advertising is still in a very early stage. And how to measure the effectiveness and what kind of customers are suited for mobile advertising, I think it takes some time to develop this market. But overall, I think we will find a way to monetize them, our mobile traffic on an overall basis in the future. But probably this year, it would still not be very significant. But I think this could be another potential area we can grow advertising revenues in the next year and for the future years.

Operator

And your next question comes from the line of Jiong Shao with Macquarie.

Jiong Shao - Macquarie Research

Could you talk about when the promotional tweets will get started to monetize on Weibo? Could you also talk about the current number of corporate accounts and what's your expectation by the end of the year?

Guowei Chao

In terms of promote tweets, I think if you look at the social network -- social media space, overall, I mean, you have Twitter, you have Facebook. And so Facebook is more on a social air basis, and Twitter, because majority of the users spend time on the news feed, on the tweets. And so promotion -- promote tweet is more effective, I mean, for this kind of social media platform, and especially, on a mobile terminal. And if you look at the advertising inventory space, most of these will be concentrated in the area of news feed, basically. And so inevitably for us, I mean, we do have, I mean, a lot of inventories. But I would say that for our users, majority of time they spend will be in the news feed area. And inevitably, this is going to be a focus of monetization or advertising product in the future. And so I think we are in the process of developing the product. And I think the first trial period will be sometime in the fourth quarter this year. And as I said, probably this year, I mean, still the product development and experiment is our focus for monetization. But definitely promoted tweets, or advertising products within the news feed itself, is going to be the focus for future advertising development. And we expect, hopefully, in the future this particular area will generate more revenues than our current display advertising system on the Weibo platform, basically. I mean, in terms of the customer trend, I talked a little bit -- already talked about it, I mean, in the previous questions. Basically, I mean, the adoption rate is quite encouraging. And we had about 80 customers in the second quarter. We expect probably close to double that in the second half of the year. And hopefully, I mean, not only we were able to extend this service to our existing customers, I mean, our real hope is to attract more new customers who have never placed ads with us in the past. And it seems like this trend looks pretty good. But at this point, I don't have too much detail I can offer as of now. And hopefully, we'll be able to give you more color in the next conference call.

Operator

And your next question comes from the line of Ravi Sarathy with Citi.

Ravi Sarathy - Citigroup Inc, Research Division

It’s Ravi Sarathy at Citi. A quick housekeeping question. First of all, I may have missed it, but was wondering what the total amount of investment was for the quarter in Weibo for the same way that you sliced that in previous quarters. My second question, the real question is to follow up around mobile. I think you mentioned that for Q1, about 1/3 of your portal traffic was on mobile. I wondered if you could give us -- and you also mentioned that during the Olympics, the mobile side may have been at least as large as the fixed side. I was wondering if you could give us an update on the total -- the percent of total Weibo traffic which is mobile. I know that you mentioned that the users do log in, but in terms of total traffic. And I also wondered if you had any early ideas around pushing that lever for mobile monetization. Early days, globally, in terms of mobile form factors for display advertising, I was wondering if you had any early thoughts of how you might start that process of monetization on mobile across both the portal and, of course, Weibo.

Guowei Chao

Did you hear the first question?

Yu Herman

Yes. Okay, Ravi. So the first question on Weibo. For this quarter, we have approximately $38 million related to Weibo costs.

Guowei Chao

I think on the second question on the advertising side for -- I'm sorry, on the traffic side for mobile and with the PC, I think I pretty much covered except in the areas that you just asked that what is the traffic split between the mobile and the PC? I think this is a difficult question in a way that what is the right measurement for traffic. Because if you use the page view, probably it's not the most accurate way of describing that because the mobile terminal, I mean, is much smaller than PC. So each page view on mobile, I mean, they're not equal to a page view on PC, basically. But if you just look at the pure numbers, I would say it's -- I mean, look at the total mobile access, as I said, in the month of June was 69%. But there's about 30% of mobile -- 30% of our daily active users actually use both terminals, meaning there's overlap between mobile and PC. And so the pure mobile is about 40%. And then the 30% split between -- 30% of overlapping between mobile users and PC users. And so in terms of traffic, I would say, right now, I mean, it's -- mobile is slightly higher than PC because, on a overall basis, I mean, if you look at the pure mobile, you have about 40% and pure PC, meaning only PC, no mobile Internet access is about 30%. So mobile is slightly higher but not too much higher in terms of total traffic, basically. Hope that helps. And in terms of the advertising -- Weibo advertising on mobile, I think I talked to this a little bit, I mean, in the previous question that because of the nature of mobile that, I mean, there are not too much inventory space for advertising other than, I mean, the main concentration of people's time spent will be in the area of news feed. So I think in the future, the mobile advertising on Weibo will be more focused in the areas of news feed. And so this is area of focus for our advertising product development. And hopefully, that, over the longer-term, will generate a much larger revenue in terms of scale and more long tail-based advertising will be generated in those areas, I mean, for mobile. And another area of focus for mobile, obviously, is the location-based information. I mean, if you look at the difference between mobile and the PC, obviously, in addition to people's profile, their interest and so on and so forth, and their social relationship. But adding to that, another element of information, which is location-based information, which allow people to push information advertising, I mean, based on location and on a more timely basis. And net probably will be even more in the future. But that is a trend that's inevitable. In our opinion, that's going to happen, and which will make the mobile advertising more relevant. And so this is the kind of trend that we're looking at. And this is the product and the system we are developing. And hopefully, in the future, that will generate more revenues for our total Weibo platform, basically.

Ravi Sarathy - Citigroup Inc, Research Division

Very quick follow-up. On the pure portal side, do you have any thoughts on mobile monetization there away from news feed and the social dynamics?

Guowei Chao

Yes. I mean, on the pure portal side, I mean, obviously, I mean, we are also seeing the revenues, I mean, for advertising probably will triple this year, I mean, compared to last year but off a very small base from last year. And as I said, the traffic, I mean, on the mobile Internet on the portal side, I mean, is quite significant. But on the other hand, I mean, people have not really developed a habit or measurement is not ready for this kind of advertising in the China market. I mean, and -- but I think with some more -- our assessment is that with more in enterprises and business account using Weibo as a foundation for their marketing base, I mean, meaning that the Enterprise Weibo will have their display page and so on and so forth, especially on the mobile. I mean, then the mobile Internet advertising may take off because in the past, part of the hurdle for mobile advertising on the portal is because most of the enterprises and the business do not have a base for display advertising or to show their information so that you have to customize a lot of advertising campaigns on a case-to-case basis, which is not scalable and is not cost-effective. But I think in the future, there is a possibility that all the enterprises will have Enterprise Weibo and also have mobile page. Then that will help to solve the problem and accelerate the page for adoption for mobile advertising on the portal side.

Operator

And your next question comes from the line of Tian Hou with T.H. Capital.

Tian X. Hou - T.H. Capital, LLC

Just one question related to the enterprises account. So I just wonder how many enterprises account do we have at the end of second quarter? And so there's -- every single enterprises has a Weibo account. How does SINA help them to manage the seizeout in the petras [ph] Weibo site? And how do we make money out of it?

Guowei Chao

Tian, that's a good question. And first, about a number. And at the end of the second quarter, I mean, total enterprise accounts were about close to 200,000. And obviously, this is still very early. And we were -- we're a little bit behind in terms of getting more number of enterprise accounts, mainly because some of the major product is still in development. And we are planning to launch a new Enterprise Weibo product after new version, version 5 is introduced. So we are planning on this new version to be launched so that we can launch a new enterprise product, which will, I mean, help not only to -- for enterprises accounts to tweet and interact with their customers but also incorporate a lot of features like display activities and also, I mean, to have multiple function, as official kind of Web page for any enterprises. And so in other words, it will incorporate, I mean, the Weibo function plus a page function, I mean, for Weibo accounts and for enterprises. And with that product ready, then we probably will try to promote the Enterprise Weibo more aggressively and to use our channels to develop -- to get more customers for our Enterprise Weibo. And in terms of Enterprise Weibo monetization, I think, it's still going to be a base for their social advertising for any kind of -- whether it's big customers or small, medium customers, I mean, I think the Weibo accounts for enterprise can be a base for their social advertising in the future. And they can also be a base for their display advertising on portal and on the Internet mobile in the future, as I explained a little bit, I mean, in the previous question. And so it can be an official site for any enterprises. And I think that, in the future, I mean, will create demand not only for the social advertising but also create demand for the mobile advertising in the future. And obviously, in the future, I mean, some of these customers, who want to sell a product, like e-commerce players, they can do so on Weibo. And so this is kind of a more long-term plan. But I think the key is to have a home for enterprises on Weibo. And that particular product can develop in the future for multiple purpose. And we, obviously, will benefit from, I mean, more participation for enterprises on the social media. And the more activity we have -- the more promotion activity we have, the more advertising revenue we will be able to generate from those kind of activities. Hope that answers your question.

Tian X. Hou - T.H. Capital, LLC

That's helpful. And also the total amount of investment in Weibo. So previously it was about $170 million. So is there any changes on that number?

Yu Herman

Yes. Initially, at the beginning of the year, our guidance was approximately $160 million, plus or minus. I think right now, if you look at our first quarter and second quarter, I think we're along that trajectory right now.

Operator

And your next question comes from the line of Eddie Leung with Merrill Lynch.

Eddie Leung - BofA Merrill Lynch, Research Division

Could you share with us more about the progress with your third-party social application developers? For example, how many partners you have right now, the number of applications and percentage of users that consistently using some type of social apps? Any colors along that line would be helpful.

Guowei Chao

Eddie, what you meant was the third-party developers, right, application, right?

Eddie Leung - BofA Merrill Lynch, Research Division

Yes.

Guowei Chao

Yes. I think at the end of June, we probably had, I think 240,000 in the pipeline. But of the active applications already there, the active ones were about -- if I remember correctly, it was about 28,000. And so a portion of the traffic are coming from the third-party applications and also from the connected website, who will have our share button. I mean, that number, 28,000, including the number of websites were connected on the Weibo through our sharing button, basically. And so I think right now, it's still -- I will say that the number of applications are quite big. But in terms of the overall usage, I mean, it is still a small percentage of our total Weibo activities. And I think, what's really important in the future is that once we have the monetization going, meaning that once we have the revenues from our global platform, we'll be able to share those revenues with our third-party developers. Then that market will really take off because if you look at the ecosystem, the core, probably is the revenue and the monetization itself. And so I think we are waiting for our - as I said, so that's why the building the infrastructure for monetization is very important. And basically, we have to share the revenues with our third-party developers, whether it's fee-based or advertising. And that means we need the advertising system to be more robust and the payment system rating for this kind of revenue share. And so I think we're going to, I mean, develop a new policy on the opening platform in the fourth quarter so that will make our policy more clear, and so developers will have more incentive to develop applications on Weibo platform.

Operator

And your next question comes from the line of Yu Jin with CICC.

Yu Jin - China International Capital Corporation Limited, Research Division

Actually, I have an open question regarding to Weibo platform. So of the users of products, I can find that with the evolution of the Weibo platform, we can see a clear trend that the company is adding more and more business to the platform. From my perspective, I think, while on one hand, it's very encouraging to improve the scalability of the platform, but on the other hand, it seems that Weibo becomes more and more heavy and too complicated to users. So my question is will the management consider streamlining different services at some time to make the Weibo platform more distinct and friendly to both users and business partners? So how do you think on that side?

Guowei Chao

I'm sorry. I did not get the second part of your question. I mean, you said that Weibo will become more and more what? Heavy, heavy for users. Oh, I see. So you're saying that we are adding too many functions on the product to the Weibo so that it becomes more heavy?

Yu Jin - China International Capital Corporation Limited, Research Division

Yes. So what I mean is whether Weibo will consider streamlining some different services that are more distinct or user-friendly to users and the business partners. So that's my question, yes.

Guowei Chao

Yes. I think -- yes, as I said, I think your observation is obviously correct, that we are developing other products on Weibo. And some of these are within the functions of the key -- our main product, Weibo, and some of these are the products that connect to Weibo, I mean, which try to -- utilizing its user and user relationships, I mean, contents, so on and so forth. And a lot of these actually -- I mean, some of the core product like, for example, Weibi and Weicon, and a lot of the group products, so on and so forth, and the photo album, for example, we believe, and also, as well as the communication product like IM, and so on and so forth, we believe are an essential, integral part of this particular product. But having said that, I mean, obviously, I mean, we do recognize that in order to make the platform more robust, which we want to incorporate more and more developers and the third-party partners, we want to make sure that we will have enough space leaving for the partners, the third parties to develop. And our focus should be more concentrated on the core product and the core platform in terms of openness. And so as I said, when I answered the question to Eddie, that this is the area where we're reviewing right now. And so with the launch of version 5, our next step will be doing our opening policy, as well as the areas, I mean, that we believe that we should be leaving to the partners, too. And I think, in a way, I mean, Weibo is very open. On the other hand, I mean, I think that right now, the policy in terms of what we do, what we don't do is not as clear as people would have expected. And so this is the area we're reviewing and this is an area we're going to have more kind of change or make it clear to our third-party partners in the fourth quarter. And so hopefully, we'll get this policy done and we'll make this policy more clear. And as you said, I mean, it's not an area that we wanted to do everything ourselves. It is something that we'll just have to make a decision in terms of what we do, what we don't. And so hopefully, that we will make it clear in the near future.

Yu Jin - China International Capital Corporation Limited, Research Division

It's very helpful. I believe that part of that if we can have some breakthrough on the infrastructure and architecture level, that will be very helpful. Yes.

Operator

And at this time, there are no further questions in the queue. And I would now like to hand the call over back to Cynthia [ph] Feng for closing remarks.

Lidan Feng

That concludes our call for today. Thank you for joining us. We'll see you next quarter.

Operator

And ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: SINA Management Discusses Q2 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts