Sina Corp. (SINA) said its Twitter-like Weibo service is close to breaking even as advertising sales at the operator of China’s biggest microblogging service climb and the company’s profit more than doubled.
Third-quarter net income rose to $25.4 million from $9.88 million a year earlier, Shanghai-based Sina said in a statement. That beat the $16.2 million average of nine analyst estimates compiled by Bloomberg. Sales gained 21 percent to $184.6 million, surpassing the average estimate of $178 million.
Advertising revenue climbed 26 percent to $151.6 million from a year earlier. The company is collaborating with Alibaba Group Holding Ltd., China’s largest e-commerce operator and a shareholder in Sina’s Weibo service, in areas of advertising and payment systems to better compete with Tencent Holdings Ltd. (700)
“Weibo’s strong growth was facilitated by value-added services such as games and also membership fees,” Jodie Ding, an analyst at Shanghai-based Internet consulting group IResearch, said by phone. “Cooperation with Alibaba Taobao also helped with growth.”
Sina Weibo’s daily active users reached 60.2 million from June to September, said Chairman and Chief Executive Officer Charles Chao. Sina Weibo’s advertising revenue more than doubled to $43.7 million in the quarter, and value-added services revenue for the unit more than doubled to $9.7 million yuan.
“Although it looks like we are approaching the break even line for our Weibo business with the momentum of Weibo monetization, our long-term goal is to build an ecosystem surrounding the Weibo social media platform,” said Chao.
Sina Weibo is also allowing subscribers to use Alibaba’s third party payment system Alipay on its site, Chao said.
Profitability was “driven primarily by strong momentum in Weibo monetization,” Chao said. “Teaming up with Alipay, we will be able to connect tens of millions of users to build up the scale of our Weibo mobile payment much more quickly.”
Sina Weibo revenue from Alibaba reached $20 million, said Herman Yu, the company’s chief financial officer. The service had about 400,000 corporate accounts, he said.
The company forecast fourth-quarter non-GAAP sales of $190 million to $194 million, including advertising revenue of $160 million to $162 million.
Sina rose 3.6 percent in extended trading after the results. The stock declined 2.2 percent to close at $75.91 in Nasdaq Stock Market trading.
Sina agreed in April to sell 18 percent of Weibo to Alibaba for $586 million. The two companies will also collaborate in areas including online marketing and payment as more users turn to e-commerce on smartphones and tablets from personal computers.
In August, Alibaba began allowing shoppers to log on to its Taobao Marketplace e-commerce website using their Weibo accounts, after suspending sellers’ access to Tencent’s WeChat instant-messaging service.
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