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An Investor’s Quick Overview of Weibo’s Income Sources

Weibo Corp (NASDAQ: WB) is a leading social network and microblogging company in Mainland China – effectively known as China’s “Twitter”. Its highly-popular microblogging platform – Sina Weibo – has monthly active users of 486 million as of the end of June 2019.

In this article, I’ll try to understand how the company generates its revenue. This will help investors better understand the attractiveness of Weibo’s business model and whether its shares are worth investing in. Let’s begin with some numbers.

Latest financial performance

Source: Weibo Q2 2019 Results Announcement

From the above, we can see that Weibo operates mainly under two segments – advertising and marketing, and value-added services. The former can be further broken down into Alibaba and others.

Advertising and marketing accounts for 86% of Weibo’s total revenue during the period (note – I’ll focus mainly on the financials for the first six months of 2019 throughout the article) while the rest are from value-added services (14%).

For its advertising and marketing segment, Weibo derives income mainly from various marketing and advertising solutions provided to its customers to promote their brands and conduct effective marketing activities.

These solutions include social display advertisements and promoted feeds, promoted accounts and more. As for its value-added services, Weibo generates fee-based income through services like VIP membership, live streaming, game services, and other value-added services.

One thing worth mentioning here is that Alibaba has been a significant revenue source for Weibo through special arrangements and tie-ups. Yet, the importance of this relationship has declined over the years, which can be seen from the financials above. For example, for the three months ended 30 June 2019, Alibaba accounted for only 6% of Weibo’s revenue.

Key takeaway

So there you have it; a quick summary of how Weibo generates its income. By breaking down Weibo’s income into different categories, investors can better forecast the expected performance of each category in the near future, which should help investors make a better-informed investment decision.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.