Sina Corporation (SINA)

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SINA Corporation (SINA)

Q3 2008 Earnings Call Transcript

November 12, 2008 8:00 pm ET


Cathy Peng – IR Manager

Charles Chao – President and CEO

Herman Yu – CFO


Jason Brueschke – Citigroup

Wallace Cheung − Credit Suisse

Eddie Leung − Merrill Lynch

Ming Zhao − SIG

Dick Wei − JP Morgan

Tian Hou – Pali Capital

Muvi Lee [ph] – Morgan Stanley

Vivian Li – Piper Jaffray

Echo He – Oppenheimer

Wendy Huang – RBS

Paul Woo [ph] – Nomura



Good day, ladies and gentlemen, and welcome to SINA Corporation’s third quarter 2008 earnings conference call. At this time, all participants are in a listen-only mode; however, we will be facilitating a question-and-answer session towards the end of this conference. I would now like to turn the presentation over to your host for today’s conference, Ms. Cathy Peng, Investor Relations Manager. Please go ahead, Ma’am.

Cathy Peng

Thank you. Good morning. Welcome to SINA's earnings release for the third quarter 2008. Joining me today are 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 web site.

Before the management’s presentation, I would like to read to 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 uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements.

SINA assumes no obligations 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, 2007, and its other filings with the Securities and Exchange Commission.

Additionally, I would like to remind you that our discussion today includes non-GAAP measures which exclude stock-based compensation, as well as other items. We use non-GAAP measures to exclude certain items that are not expected to result in future cash payments that are non-recurring or that may not be indicative of our core operating results. For further explanation of our non-GAAP measures and detailed reconciliations between our GAAP and non-GAAP results, please refer to our earnings release.

Following management’s 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 President and CEO, Charles Chao.

Charles Chao

Thank you, Cathy, and good morning everyone. Welcome to SINA’s third quarter 2008 financial results conference call. I am very pleased to report another strong quarter with record revenues and earnings. We are very excited at the momentum that both our core businesses in online advertising and mobile business has continued to accelerate in the third quarter helped by Beijing Olympic Games and the continued improvement of the upgrading environment for mobile business.

For the third quarter, our total revenues grew by 64% year-over-year to reach $105.4 million and for the first time in SINA’s history, our total quarterly revenues exceeded $100 million. Our advertising revenues grew by 66% year-over-year and 17% quarter-over-quarter, to reach $76.2 million. Our mobile revenues grew by 63% year-over-year and 11% quarter-over-quarter to reach $27.1 million. The non-GAAP net income totaled $26.8 million for the third quarter, representing a 40% increase from the same period last year.

Now, let’s take a closer look at our performance for the third quarter. During the third quarter, we successfully executed our Olympic strategy by delivering an excellent multimedia interactive coverage for our users and providing a powerful marketing platform for our advertising clients. Despite a very competitive market, SINA once again demonstrated its leadership position and execution ability in major sports event.

In some ways, SINA has showcased the world the very best that Internet media can do for major sports coverage. During the Olympic game period, our video platform recorded over 200 million viewerships for game-related video clips and our browsing platform produced millions of game-related browse.

According to various independent third-party research and surveys, SINA’s Olympic site ranked no.1 in both number of visitors and traffic during the Olympic Games. One important third-party report was mentioning – the report issued by ChinaRank which ranked SINA Olympic site no. 1 with significantly higher number of visitors than the second place in China.

ChinaRank together with its partner, Nielsen/NetRatings is officially authorized third party to provide such rank in China during the games. Not only did we deliver the best coverage for our users, we have also provided most powerful online marketing platform for our clients. Although there is no official comparison of advertising revenues among Internet portals, we have full confidence that SINA generated significantly high advertising revenues from Olympic event than any other web site in China.

Needless to say, our successful execution of Olympic strategy has helped us to further solidify our competitive edge among Internet portals in China by enhancing SINA brand of connection, bringing more users and advertising clients.

In terms of advertising revenues, we had a great quarter with year-over-year growth of 66%. SINA’s strong verticals continued to perform well. Advertising revenues from automobile, finance, and real estate – our three top verticals grew between 87% to 98% on a year-over-year basis. However, those three verticals only accounted for 52% of our total revenues, total of the advertising revenues for the third quarter, down from 58% for the second quarter. We have two more growth drivers this quarter. Advertising revenues from telecom service grew 154% year-over-year. Other ad revenues from FMCG grew approximately 100% year-over-year for the third quarter. These two categories accounted for 16% of total ad revenues for the third quarter.

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