SINA

Sina Corporation (SINA)

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Sina Corporation (SINA)

Q42012 Earnings Call

February 19, 2013 8:00 pm ET

Executives

Cathy Peng - Investor Relations Manager

Charles Chao - Chairman of the Board, President and Chief Executive Officer

Herman Yu - Chief Financial Officer

Analysts

Richard Ji - Morgan Stanley

Eddie Leung - Merrill Lynch

Alex Yao - Deutsche Bank

Ming Zhao - 86Research

Wallace Cheung - Credit Suisse

Tian Hou - T.H. Capital

Dick Wei - JPMorgan

Gene Munster -Piper Jaffray

Alicia Yap - Barclays Capital

Andy Yeung - Oppenheimer

Presentation

Operator

Good day, ladies and gentlemen, and welcome to SINA Corporation's fourth quarter and fiscal year 2012 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 the 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 fourth quarter and fiscal 2012. Joining me today are our CEO and Chairman, 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 uncertainties. 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 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 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 non-recurring 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.

During the call, we may discuss costs related to Weibo.com, which is our best estimate of the direct cost incurred by Weibo. These numbers have not been audited and may exclude certain items including those used to derive non-GAAP measures, overhead allocations and intercompany transactions. 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 CEO and Chairman, Charles Chao.

Charles Chao

Thank you, Cathy, and good morning, everyone. Welcome to SINA earnings conference call for the fourth quarter and full year 2012. The year 2012 has been challenging and yet exciting year for SINA. During the year, despite tightened operating environment and much heated competition, we continue to see strong growth in our social media platform Weibo.com, with total number of registered accounts increasing by 73% to reach 503 million by the end of the year, and with daily active users, or DAU, increasing by 82% to reach 46.2 million for the month of December for the year 2012. In addition, Internet portal traffic continued to grow during 2012. Of course, the traffic grow much faster on mobile terminals for both, portal and Weibo.

While all figures on annual basis comparison were impressive, we did see a slowdown in active user growth for Weibo in the fourth quarter. The average daily active user grew by 9% from the month of September to the month of December in 2012 lower than our previous quarters. Also, in the fourth quarter, we experienced a slight decrease in average time spent for our daily active user Weibo. In large part, we believe this was due to the competition from other popular mobile SMS applications such as WeChat.

As we discussed on the previous conference call that the competition for time spent on different application on mobile will be inevitable in the future. Despite a slowdown in growth rate, we believe that Weibo has reached a critical mass, and will continue to grow in user base and user activities given the network size, especially with the more adoption of mobile Internet and the formation of ecosystem surrounding Weibo platform.

For the month of December, 75% of our active users used a mobile terminal to access Weibo. During the year of 2012, we were off to a good start for Weibo monetization. Starting the second quarter of 2012, we started to monetize Weibo traffic through advertising and Weibo value added service such as gaming, revenue share and a membership fee.

For the year, total revenues generated from Weibo amounted to approximately $66 million of which 27% was from advertising and 23% from Weibo value added service.

For the fourth quarter, Weibo related advertising revenues were $21.3 million, up 10% from that of the third quarter. The sequential growth rate was not significant mainly because a significant portion of Weibo related advertising revenues were from Olympic Games campaigns in the third quarter.

One of the bright spots for Weibo monetization came from Weibo related value added service, which grew 65% fourth quarter to $7.2 million in revenues.

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