SINA Reports Second Quarter 2014 Financial Results

SHANGHAI, August 15, 2014 /PRNewswire-FirstCall/ -- SINA Corporation (the "Company" or "SINA") (NASDAQ GS: SINA), a leading online media company serving China and the global Chinese communities, today announced its unaudited financial results for the second quarter ended June 30, 2014.

Second Quarter 2014 Highlights

• Net revenues increased 19% year over year to $187.0 million. Non-GAAP net revenues increased 21% year over year to $184.4 million, exceeding the Company's guidance between $177 million and $182 million.
• Advertising revenues grew 29% year over year to $155.8 million, exceeding the Company's guidance between $152 million and $155 million.
• Non-advertising revenues were $31.2 million. Non-GAAP non-advertising revenues were $28.6 million, exceeding the Company's guidance between $25 million and $27 million.
• Net income attributable to SINA was $16.6 million, or $0.25 diluted net income per share attributable to SINA. Non-GAAP net income attributable to SINA was $12.1 million, or $0.17 non-GAAP diluted net income per share attributable to SINA.

"We are pleased with SINA's second quarter results." said Charles Chao, Chairman and CEO of SINA. "Weibo is executing well with strong financial performance, solid traffic growth and measurable progress toward building out a social commerce platform and offering native ads to large brand customers. On the portal side, we are making progress in building new businesses and leveraging SINA's brand and media influence to capture mobile and vertical opportunities."

Second Quarter 2014 Financial Results

For the second quarter of 2014, SINA reported net revenues of $187.0 million, compared to $157.5 million for the same period last year. Non-GAAP net revenues for the second quarter of 2014 totaled $184.4 million, compared to $152.8 million for the same period last year. Online advertising revenues for the second quarter of 2014 were $155.8 million, compared to $120.6 million for the same period last year. Non-advertising revenues for the second quarter of 2014 were $31.2 million, compared to $36.9 million for the same period last year. Non-GAAP non-advertising revenues for the second quarter of 2014 were $28.6 million, compared to $32.2 million for the same period last year. The year over year decline in non-advertising revenues was mainly due to a decrease of $13.6 million in mobile value added services ("MVAS") revenues, partially offset by the $10.0 million increase in Weibo Value Added Services ("VAS") revenues.

Gross margin for the second quarter of 2014 was 61%, compared to 54% for the same period last year. Advertising gross margin for the second quarter of 2014 was 59%, compared to 53% for the same period last year. Non-GAAP advertising gross margin for the second quarter of 2014 was 60%, compared to 57% for the same period last year, as the proportion of advertising from higher margin Weibo advertising increased from the same period last year, partially offset by the purchase of World Cup related content in the second quarter. Non-advertising revenues gross margin for the second quarter of 2014 increased to 67% from 55% for the same period last year. Non-GAAP non-advertising revenues gross margin for the second quarter of 2014 increased to 64% from 49% for the same period last year, primarily due to a shift in revenue mix from low-margin MVAS to higher margin Weibo VAS.

Operating expenses for the second quarter of 2014 totaled $138.6 million, which included a goodwill impairment of $14.5 million related to online reading business, compared to $102.5 million for the same period last year. Non-GAAP operating expenses for the second quarter of 2014 totaled $116.9 million, compared to $75.4 million for the same period last year, primarily due to higher labor-related costs, marketing expenditures and infrastructure spending.

Loss from operations for the second quarter of 2014 was $25.2 million, compared to $18.2 million for the same period last year. Non-GAAP loss from operations for the second quarter of 2014 was $5.4 million, compared to a non-GAAP income from operations of $8.8 million for the same period last year.

Non-operating income for the second quarter of 2014 was $31.2 million, compared to $8.2 million for the same period last year. Non-operating income for the second quarter included: 1) a gain of $29.1 million from Tencent's acquisition of a 15% equity interest in Leju, a subsidiary of E-House, on a fully diluted basis from E-House; 2) a $6.8 million loss from the change in fair value of investor option liability in connection with Alibaba's investment in Weibo; and 3) $2.9 million, or $5.2 million on a non-GAAP basis, in earnings from equity-method investments, which are accounted for under the equity-method and reported one quarter in arrears. Non-operating income for the second quarter of 2013 included a $1.3 million, or $4.2 million on a non-GAAP basis, in earnings from equity-method investments and a $0.9 million gain from the change in fair value of investor option liability.

Net income attributable to SINA for the second quarter of 2014 was $16.6 million, compared to a net loss of $11.5 million for the same period last year. Diluted net income per share attributable to SINA for the second quarter of 2014 was $0.25, compared to a diluted net loss per share of $0.17 for the same period last year. Non-GAAP net income attributable to SINA for the second quarter of 2014 was $12.1 million, compared to $14.2 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA for the second quarter of 2014 was $0.17, compared to $0.21 for the same period last year.

As of June 30, 2014, SINA's cash, cash equivalents and short-term investments totaled $2.3 billion, compared to $1.9 billion as of December 31, 2013. The increase in cash, cash equivalents, and short term investments was mainly due to the cash received from Alibaba in connection with the option exercise of approximately $347 million and the net proceeds from Weibo's IPO of approximately $301 million in the second quarter of 2014, partially offset by investments and repurchases made during the first half of 2014. For the second quarter of 2014, net cash used by operating activities was $9.0 million, capital expenditures totaled $17.5 million, and depreciation and amortization expenses amounted to $11.0 million.

Other Developments

On August 8, 2014, the Company held its annual general meeting of shareholders, where the shareholders re-elected Mr. Pehong Chen and Mr. Lip-Bu Tan as directors of SINA. The shareholders also approved and ratified the appointment of PricewaterhouseCoopers Zhong Tian LLP as the Company's independent auditors for the fiscal year ending December 31, 2014.

As of August 13, 2014, the Company has purchased approximately 1.3 million shares in the open market for a total consideration of approximately $58 million under the $500 million share repurchase program approved by the Company's Board of Directors in April 2014. The Company expects to continue to execute the repurchase program when appropriate.

Business Outlook

SINA estimates that its non-GAAP net revenues for the third quarter of 2014 will be between $193 million and $199 million, which excludes the recognition of $2.6 million in deferred license revenues from E-House. The foregoing forecast reflects SINA's current and preliminary view, which is subject to change.

Non-GAAP Measures

This release contains the following non-GAAP financial measures: non-GAAP net revenues, non-GAAP non-advertising revenues, non-GAAP advertising and non-advertising gross margin, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP net income (loss) attributable to SINA and non-GAAP diluted net income (loss) per share attributable to SINA. These non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with U.S. GAAP. The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.

The Company's non-GAAP financial measures exclude recognition of deferred revenues in relation to the equity investment in E-House, stock-based compensation, amortization of intangible assets net of tax, adjustment for GAAP to non-GAAP reconciling items on the share of equity method investments, gain (loss) on the sale, deemed disposal and impairment on business, investment and non-controlling interest in a subsidiary, change in fair value of investor option liability, adjustment for GAAP to non-GAAP reconciling items for the gain (loss) attributable to non-controlling interests, convertible debt issuance cost and impairment of goodwill. The Company's management uses these non-GAAP financial measures in their financial and operating decision-making, because management believes these measures reflect the Company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. The Company believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: (i) in comparing the Company's current financial results with the Company's past financial results in a consistent manner, and (ii) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains/losses and other items (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of the Company's core operating results and business outlook.

Use of non-GAAP financial measures has limitations. The Company's non-GAAP financial measures do not include all income and expense items that affect the Company's operations. They may not be comparable to non-GAAP financial measures used by other companies. Management compensates for these limitations by also considering the Company's financial results prepared in accordance with U.S. GAAP. Reconciliations of the Company's non-GAAP measures to the nearest GAAP measures are set forth in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."

Conference Call

SINA will host a conference call at 10:10 p.m. - 10:50 p.m. Eastern Time on August 14, 2014 (or 10:10 a.m. - 10:50 a.m. Beijing Time on August 15, 2014) to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available through the Company's corporate website at http://corp.sina.com. The conference call can be accessed as follows:

A replay of the conference call will be available through morning Eastern Time August 22, 2014. The dial-in number is +61 2 9003 4211. The passcode for the replay is 84192495.

About SINA

We are an online media company serving China and the global Chinese communities. Our digital media network of SINA.com (portal), SINA mobile (mobile portal and mobile apps) and Weibo (social media) enables Internet users to access professional media and user generated content in multi-media formats from desktop personal computers and mobile devices and share their interests with friends and acquaintances.

SINA.com offers distinct and targeted professional content on each of its region-specific websites and a full range of complementary offerings. Our mobile portal, SINA.cn, provides news information and entertainment content from SINA.com customized for mobile users in WAP (mobile browser) and mobile application format. Weibo is a leading social media platform for people to create, distribute and discover Chinese-language content. Based on an open platform architecture, Weibo allows users to create and post feeds up to 140 Chinese characters and attach multi-media content, as well as access a wide range of organically and third-party developed applications, such as online games.

Through these properties and other product lines, we offer an array of online media and social media services to our users to create a rich canvas for businesses and advertisers to effectively connect and engage with their targeted audiences.

Safe Harbor Statement

This press release contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described, without limitation, in the "Business Outlook" section and in quotations from management in this press release). SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "confidence," "estimates" and similar statements. SINA assumes no obligation to update the forward-looking statements in this press release and elsewhere. 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 statement. Potential risks and uncertainties include, but are not limited to SINA's limited operating history in certain new businesses; condition of the global financial and credit market; the uncertain regulatory landscape in China; fluctuations in the Company's quarterly operating results; the Company's reliance on online advertising sales and value-added services for a majority of its revenues; failure to successfully develop, introduce, drive adoption of or monetize new features and products, including portal, Weibo and MVAS products; failure to enter and develop the small and medium enterprise market by the Company or through cooperation with other parties, such a Alibaba; the Company's reliance on mobile operators in China to provide MVAS and changes in mobile operators' policies for MVAS in China; failure to successfully integrate acquired businesses; risks associated with the Company's investments, including equity pick-up and impairment; and failure to compete successfully against new entrants and established industry competitors. Further information regarding these and other risks is included in SINA's annual report on Form 20-F for the year ended December 31, 2013 and other filings with the Securities and Exchange Commission.

Contact:

Investor Relations
SINA Corporation
Phone: 8610-82628888 x 3112
Email: ir@staff.sina.com.cn