Weibo posts 516% leap in Q2 net profit

Two entertainers wear cartoon clothes stand in front of an exhibition booth of Sina Weibo at the 2016 Global Mobile Internet Conference (GMIC) at the National Convention Center in Beijing, 28 April 2016. [Photo/IC]

Weibo Corp, the Chinese counterpart of Twitter Inc, expects a strong financial performance in the third quarter of the year, after the company saw more than fivefold increase in its net profit in the second quarter, driven by robust advertising revenue.

Weibo, majority owned by Chinese online media company Sina Corp, said on Monday its net profit surged to $25.9 million in the second quarter to June 30, marking a year-on-year growth of 516 percent.

Its revenue reached $146.9 million, beating analyst's average estimates of $146.7 million.

CEO Wang Gaofei said the company had been given a major boost from the rising popularity of the social networking-based marketing.

"Revenue from big corporate clients surged by 73 percent and that from small and medium-sized firms by 107 percent."

The company expects third-quarter revenue of $168 million to $173 million, with analysts estimating an average $164.6 million. US shares of the Nasdaq-listed firm rose 3.65 percent to $37.17 in after-hours trading on Monday.

Weibo has been wrestling with Tencent Holdings Ltd's WeChat for supremacy in China's booming social networking market.

In June, Weibo boasted about 282 million monthly active users, up by 33 percent from a year earlier. In comparison, WeChat has about 700 million active users.

Unlike WeChat, which focuses on promoting communication between friends and colleagues, Weibo is an entirely open platform where strangers can talk with each other.

According to its CEO, the Shanghai-based group is also gaining momentum in the live-streaming sector, which is currently one of the most popular destinations for investments in China.

"Our users of short videos and live streaming also surged," Wang said.

In November, Weibo led a $200 million investment in the startup yixia.com, which runs one of the most popular video live-streaming platforms in China. Since then, Weibo has been partnering with yixia to target young people.

Analyst Pang Yiming, at Beijing-based internet consultancy Analysys, said the partnership had dramatically accelerated the user growth of Weibo.

"In the past, small online clothing retailers contributed a significant amount to Weibo's advertising revenue but it is now making a big effort to attract big brands," Pang said.