Weibo Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 19, 2026

Key Takeaways

  • Neutral Sentiment: Q2 revenue rose 2% year over year to $453.8 million, while non-GAAP operating income reached $125.4 million and net income attributable to Weibo was $102.7 million. However, operating margin declined to 28% from 36% a year earlier as costs increased 16%, mainly due to higher advertising production and marketing expenses.
  • Negative Sentiment: Advertising revenue fell 1% to $381 million amid subdued consumer demand, cautious advertiser budgets, and pressure in sectors including handsets, cosmetics, gaming, e-commerce, and food delivery. Management expects these headwinds and difficult year-ago comparisons from last year’s food-delivery price war to pressure Q3 advertising growth, with limited expectations for local services and food delivery.
  • Neutral Sentiment: User engagement trends were mixed: June MAUs reached 561 million and DAUs 254 million, with DAUs broadly stable quarter over quarter, while low-frequency users continued to face retention and visit-frequency challenges following the homepage feed redesign. Core-user time spent and interaction improved, but lower handset pre-install shipments and the shift toward recommendation-based feeds are making new-user acquisition and low-frequency-user retention more difficult.
  • Positive Sentiment: Video consumption and supply both showed double-digit growth, supported by improved recommendation algorithms and a broader creator ecosystem. Weibo expanded its video creator base, reported roughly 70% ongoing weekly production retention among newly recruited creators, and plans to increase investment in creator acquisition during the second half.
  • Positive Sentiment: AI initiatives are improving platform efficiency and monetization: AI-generated creatives represented 50% of promoted-feed ad consumption in June, while AI-optimized e-commerce ad materials reduced negative feedback by more than 30%. Management also cited stronger engagement in Super Topics and continued progress in AI search, although Weibo’s AI search usage declined sequentially amid stronger competition from large language model platforms.
AI Generated. May Contain Errors.
Earnings Conference Call
Weibo Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good day, and thank you for standing by. Welcome to the Weibo Report Second Quarter 2026 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please note that today's conference is being recorded. I would now like to the conference over to a speaker, Sandra Zhang, IR. Please go ahead.

Sandra Zhang
Sandra Zhang
Investor Relations Officer at Weibo

Thank you, operator. Welcome to Weibo Second Quarter 2026 Earnings Conference Call. Joining me today, our Chief Executive Officer, Gaofei Wang, and our Chief Financial Officer, Fei Cao. This conference call is also being broadcasted on Internet and is available through Weibo's IR website. Before the management remarks, I would like to read you the Safe Harbor statement in connection with today's conference call. During today's conference call, we may make forward-looking statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors would cause actual results to differ materially from those contained in any forward-looking statements. Weibo assumes no obligation to update forward-looking statement in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's annual report on Form 20-F and other filings with the SEC.

Sandra Zhang
Sandra Zhang
Investor Relations Officer at Weibo

All the information provided in this press release is occurring as of the day hereof. Weibo assumes no obligation to update such information, except as required under applicable laws. Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which exclude stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and future prospects. Our non-GAAP financials exclude certain expenses, gains or losses and other items that are not expected to result in future cash payments or are non-recurring in nature or are not indicative of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measures. Following management prepared remarks, we open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Thank you. Hello, everyone. Welcome to Weibo Second Quarter 2026 Earnings Conference Call.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On today's call, I will share with you highlights on Weibo's product and monetization in the second quarter 2026.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On the user front, in June 2026, Weibo's average MAUs reached 561 million, and average DAUs reached 254 million. This year, we have proactively rationalized our channel budget allocation strategy. Instead of scaling up user acquisition, we shift our focus toward improving the conversion rate of newly acquired channel users into active users. And currently, as the homepage information feed revamp is still in the phase of continuous optimization, some low-frequency user will need time to adapt to the changes. As a result, our DAU base declines slightly year-over-year in June, but remain largely flat quarter-over-quarter. Now let me walk you through the financials.

Translator

Our total revenue in the second quarter reached $453.8 million, an increase of 2% year-over-year. Our total ad revenue reached $381 million, a decrease of 1% year-over-year. That revenue reached $72.9 million, an increase of 19% year-over-year. Although our advertising business was impacted by the consumption market headwinds and tightened budget from advertisers in certain industries, advertising revenue from Automobile, internet service, and food and beverage still achieved solid year-over-year growth this quarter. Ad revenues from celebrity marketing also maintained year-over-year growth trend. Our non-GAAP operating income in the second quarter reached $125.4 million, representing a non-GAAP operating margin of 28%.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

In 2026, we will continue to enhance user experience, improve platform operating efficiency and content quality, continuously stepping up AI investment in product operation, and strengthening user retention and long-term engagement. On the product and operation front, we will continue to refine the homepage information feed. By leveraging trending topic dissemination, social interaction and hot topics discussion, we aim to ensure that users gain timely access to the key trending content worth discussing and sharing, as well as high quality posts tailored to their interests when they access Weibo. Furthermore, we will continue to strengthen product capabilities across core consumption scenarios such as video, interest-based community, and search, thereby enrich user experience in video content consumption, interest-driven interaction, and information discovery, and further enhance the platform's long-term competitiveness.

Translator

The use of AI in both product and operation this year has also delivered tangible results in new feature and product development, as well as operational strategy optimization.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On the user growth and engagement front, we continue to optimize the homepage information feed product in the second quarter. While maintaining a stable social consumption experience in the relationship-based feed, we focus on strengthening the capability of interest-based feed to distribute relationship-based content, trending topics, and video content, and sustain user engagement and consumption. By doing so, we aim to improve content matching efficiency, while further highlighting Weibo's differentiated advantages in social interaction, trending topics, and opinion discussion, which ultimately increase users' willingness to open Weibo and stay engaged.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Specifically, with the continuous improvement of distribution capability of the interest-based feed, the platform has strengthened its ability to better organize and distribute content. Social content that users have a strong demand for, trending discussions, and high-quality video content receive greater exposure through the interest-based feed. This in turn drove overall increase in the time spent, the number of engaged users, and the interaction for the homepage information feed since second quarter. At the same time, we have observed that for some low-frequency users, they still take time to adapt to new product format, and thus the recovery of their visit frequency and retention continue to lag behind the improvement in the overall consumption metrics, posing challenges in time spent and retention.

Translator

Going forward, we will continue to optimize product experience, keeping a better balance between improving recommendation efficiency and accommodating different users habits, thereby strengthening the homepage feed ability to drive user visits and long-term engagement.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On the video front, in the second quarter, we continue to optimize video distribution and supply, with a focus on improving video consumption efficiency and expanding the supply of high quality video content. On the distribution side, with enhanced recommendation algorithm of interest-based feed, we are able to more effectively identify and distribute high quality video content, shifting traffic towards the high quality content. This helps reduce the negative impact of repetitive and low quality videos on the user experience. In the second quarter, total time spent on video views continued to grow double digit year-over-year, and average time spent per user on video views grew even more meaningfully, indicating deeper video consumption. On the supply side, the supply of high quality video content across the platform continued to grow double digit quarter-over-quarter in the second quarter.

Translator

As the upgraded interest-based feed continued to drive greater distribution and consumption of high quality video content, we further beef up our efforts to expand the video content creator base and strengthen content operation. By improving our content creator acquisition mechanism, enhancing traffic support, and sustaining operation, we have gradually established a clearer framework for creator onboarding, content production, and creator retention. As a result, the scale of video production from newly acquired content creators and their corresponding users, the consumption performance has largely met our expectations and gradually forming a positive cycle between video content supply and consumption.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

In the second half of this year, we will further step up our efforts to expand our video creator base, accelerating the onboarding of the high quality creators with stable production capabilities and strong content influence. We will also leverage traffic support to strategically supplement key video content in alignment with our users' consumption needs. At the same time, through our ongoing operation, we will help video content creators better understand the type of content that resonates on Weibo's platform and establish consistent production. As the supply of high quality video content expands, the recommendation algorithm will also be able to better understand users' video consumption preference, improving the efficiency of matching quality content with targeted users.

Translator

By simultaneously improving video creator supply, content distribution, and content consumption, the video business will more sustainably drive user time spent, long term engagement, and monetization efficiency, while further enhancing the vitality and the competitiveness of the platform's content ecosystem.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Moving on to content ecosystem competitiveness. Throughout 2026, we will continue to focus on three core areas: trending topics, social network, and search, while further enhancing the health and core competitiveness of our content ecosystems.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On social attributes, super topics is a core interest based community on Weibo and an important area for strengthening our competitiveness in the interest based social engagement. In the second quarter, we accelerated product and feature integration around the core needs of users across different interest based communities, aiming to further reinforce Weibo's competitiveness in the interest based social scenarios. For example, in celebrity super topics, we enhanced the checking experience and introduced a celebrity memory album feature as well as online to offline engagement initiatives. In sports and e-sports super topics, we introduced features for event reviews, ratings, and discussion, and leveraged the World Cup to strengthen user awareness, driving a significant increase in the sports super topic user base. These new features further encourage users to move from content consumption to interaction and deeper participation.

Translator

As a result, both daily active users and the number of users participating in discussion on super topics saw double-digit year-over-year growth in the second quarter.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On search, building on the scaled rollout of Weibo Zhisou last year, our focus this year has shifted further toward deepening the use of multi-term conversations and integrating AI search more naturally into content consumption experience. In the second quarter, we continue to enhance Zhisou ability to understand context and user intent in multi-term conversations, with a particular focus on enhancing the search experience in areas where Weibo has differentiated content strengths, such as trending topics, public figures, and IPs. At the same time, we are embedding search entry points more deeply into user journey for browsing posts, videos, and trending topics, allowing us to promptly address search needs as they arise during content consumption, and continuously improve the efficiency and user experience of information discovery.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On monetization. In the first half of the year, our advertising product and sales team focused on two key strategies. First, we sought to bring Weibo unique content marketing value to more industries and advertisers. Second, we systematically enhanced advertising performance and conversion through AI integration. In the second quarter, the recovery in the domestic consumption market remained relatively subdued, with divergent trends across industries and advertisers. Some advertisers continue to face challenges such as limited recovery in consumption demand, intensifying industry competition, and rising costs and margin pressures. As a result, they become more cautious with their marketing budgets, placing greater emphasis on measurable returns and ROI certainty. Although Weibo continued to be well-positioned to capture advertising budget in areas such as new product launch, celebrity marketing, and sports event marketing, these aforementioned factors weighed on our advertising business to a certain extent.

Translator

Consequently, Weibo's ad revenue experienced temporary pressure in the second quarter and decreased 1% year-over-year.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

By industry, advertising revenue from the Automobile sector grew year over year, driven by the intensive launch of new energy vehicles. The Internet service sector continued to book solid growth, primarily benefiting from the increased demand among AI and software service advertisers for performance-driven advertising and content distribution. The food and beverage sector also delivered growth, mainly fueled by the World Cup, celebrity marketing, and the promotion of key new products. On the flip side, some industries continue to face headwinds. Following intense competition last year, the e-commerce sector has gradually returned to a more normal market condition. Despite overall stable ad spend during the 618 shopping festival, the relatively high revenue base from certain business lines last year posed a noticeable pressure on revenue growth this year.

Translator

In the handset sector, overall ad budget contracted amid cost and margin pressure, but Weibo's wallet share within the sector remained largely stable. In light of advertisers' budget trends, in the second half of the year, we are focused on further strengthening our content marketing products and services. By offering more standardized product solutions and more convenient advertising tools, we aim to lower the barriers for advertisers across content planning, resource allocation, and information feed placement, thereby further enhancing Weibo's ability to capture ad budgets.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Among these marketing scenarios, celebrity marketing was one of our key focus areas in the second quarter. We are pleased with the growing demand from advertisers for celebrity marketing. In the first half of the year, we not only supported advertisers with celebrity marketing campaigns on Weibo, but also became involved earlier in campaign planning and resource matching, providing more comprehensive service aligned with their brand objectives and communication goals. Leveraging measured resource investment and enhanced service capabilities, we successfully expanded their ad spend on celebrity marketing products. Taking one of these partnerships with Erling Haaland as an example, we helped match the brand with the right celebrity resource and worked with both the brand and the celebrity to co-create content and drive engagement around key event-related topics.

Translator

During the World Cup, topics related to Erling Haaland attracted broader attention on Weibo, generating over 5 billion topic views and 1.4 million discussions. Wang Lao Ji also further enhanced its brand exposure and user engagement, thanks to the celebrity content and World Cup-related discussion. During the campaign, Weibo effectively integrated celebrity resources, event-related trending topics, and social discussion to provide the advertiser with one-stop service spanning resources matching, content co-creation, and campaign execution. This empowered the brand to extend a single celebrity collaboration into sustained content buzz and brand exposure.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On advertising products, we will continue to apply AI across key stages of the advertising process, focusing on creative supply, intelligent ad placement, and creative quality management to improve advertisers' campaign efficiency and user experience. In the second quarter, driven by the advancement of video generation models, we automatically generated viable ad creatives for e-commerce advertisers facing a shortage of video materials, resulting in solid improvement in the coverage and usability of AI-produced videos for target products, with continued gains in the efficiency and quality of AI creative production. On the ad placement front, the consumption share of AI-generated ad creatives in the promoted feed ad offerings and the real-time bidding system continued to increase, reaching 50% in June. Meanwhile, we used AI to identify ad creatives with low quality and those generating high levels of negative feedback, and applied targeted optimization accordingly.

Translator

In the e-commerce sector, AI-optimized materials saw a drop of over 30% in negative feedback rates compared with clients' original materials, effectively enhancing the user experience in ad content consumption. Going forward, leveraging an increasingly mature creative quality evaluation system and implementing differentiated generation strategies for various distribution scenarios, we aim to continuously improve the adaptability of AI creatives to their respective scenarios. With these initiatives, we hope to further improve advertising performance and campaign efficiency.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Looking ahead to the second half of the year, we believe the recovery in consumer demand will take some time, while pressure on advertisers from cost profitability, industry competition is likely to persist. Competition for advertising budget is also expected to remain intense. It's worth mentioning that the food delivery price war in the third quarter of last year created a relatively high revenue base for comparison. Moreover, due to factors such as primary match broadcast times, and the advertiser dynamics during this year's World Cup, the incremental boost to the related ad budget was lower than that of the previous tournament. These factors are expected to put some pressure on year-over-year advertising revenue growth in the third quarter.

Translator

Faced with this market environment, we will continue to invest in building Weibo's differentiated commercial service capabilities, keep pace with shifts in clients' marketing needs and budget structures, reinforce our content marketing value proposition, and ad conversion effectiveness, and enhance our capability to capture clients' ad budget with more certainty to stabilize our overall ad revenue base.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

With that, let me turn the call over to Fei Cao for a financial review.

Fei Cao
Fei Cao
CFO at Weibo

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's second quarter 2026 earnings conference call. Let's start with user metrics. In June 2026, Weibo's MAUs and average DAUs reached 561 million and 254 million respectively. During this quarter, our user strategy continued to focus on improving user quality, driving retention and deepening engagement. While MAUs saw a modest sequential decline, DAUs remained resilient and broadly stable quarter-over-quarter. We continued to see solid engagement among our core users, along with improving consumption and engagement in the recommendation feed. Video consumption also continued to improve, supported by better content distribution within our revamped feed. AI continued to serve as an important enabler across our product, content, and monetization systems, helping us better understand user interests, improve ad targeting and delivery, and enhance operating efficiency. Turning to financials, as a reminder, my prepared remarks will focus on non-GAAP results.

Fei Cao
Fei Cao
CFO at Weibo

All monetary amounts are in U.S. dollar, and all comparisons are on a year-over-year basis, unless otherwise noted. Now, let me walk you through our financial highlights for the second quarter 2026. Weibo's second quarter 2026 net revenues were $453.8 million, an increase of 2% or a decrease of 4% on a constant currency basis. Operating income was $125.4 million, representing operating margin of 28%. Net income attributable to Weibo reached $102.7 million, and the diluted EPS was $0.38. Let me give you more color on the second quarter 2026 revenue performance. Weibo's advertising and marketing revenues for the second quarter 2026 were $381 million, a decrease of 1% or 6% on a constant currency basis. The decrease was mainly reflecting softer demand in certain key advertising verticals and was partially offset by the favorable foreign exchange impact on reported numbers on a year-over-year basis by industry.

Fei Cao
Fei Cao
CFO at Weibo

Our top three verticals were FMCG, e-commerce, and Automobile. In terms of growth, internet services and Automobile were primary contributors. Despite softness in overall Automobile sales, ad revenues from the auto sector delivered solid year-over-year growth, supported by Weibo's strong content ecosystem and frequent new energy vehicle launches during the quarter. Advertising revenues from internet companies also increased, driven by stronger marketing demand for AI-related products and services as leading internet platforms increased the marketing activities around their AI offerings. As for industries facing headwinds, the handset sector remained under pressure in the second quarter. Softer ad demand continued to weigh on smartphone shipments, while rising component costs put additional pressure on handset manufacturers' profitability and marketing budgets. As a result, advertising revenues from the sector declined year-over-year. The FMCG sector saw divergent performance during the quarter.

Fei Cao
Fei Cao
CFO at Weibo

Food and beverage delivered solid growth, benefiting from the early release of World Cup related marketing budgets during the quarter. The cosmetics vertical remained soft as certain international brands reduced the marketing spend amid weak sales and intensified competition. In addition, game developers remained cautious on advertising spend amid continued softness in the online game market. By ad product, promoted feed ads remained our largest format, followed by social display ads and search and topic ads. eCPM continued to improve both year-over-year and for the quarter, supported by deeper AI integration in creative generation, targeting, and bidding. These improvements helped enhance ad delivery efficiency and advertise ROI. Our IP and content marketing solutions also continued to see solid demand. Ad revenues from Alibaba for the second quarter was $39.2 million, an increase of 10% or 3% on a constant currency basis.

Fei Cao
Fei Cao
CFO at Weibo

During the quarter, higher spending on AI-related activities more than offset softer spending in local services. As we have noted previously, Alibaba's advertising spend on Weibo is closely tied to its own marketing priorities and pace of product launches, which may therefore vary from quarter to quarter. Value-added service revenues were $72.9 million in the second quarter, an increase of 19% or 12% on a constant currency basis. The increase was primarily driven by one-off ticket purchases from offline activities held by Weibo, solid growth from membership services, as well as favorable foreign exchange impact on reported numbers on a year-over-year basis. Turning to costs and expenses. Total costs and expenses for the second quarter were $328.4 million, an increase of 16%, mainly due to higher ad production costs and marketing expenses.

Fei Cao
Fei Cao
CFO at Weibo

Operating income in the second quarter was $125.4 million, representing operating margin of 28%, compared to 36% in the same period last year. Turning to income tax under GAAP. Income tax expenses for the second quarter were $23 million compared to $31.7 million last year, mainly due to lower income before taxes. Net income attributable to Weibo in the second quarter was $102.7 million, representing a net margin of 23%. Turning to our balance sheet and cash flow items. As of June 30th, 2026, Weibo's cash equivalents, and short-term investments totaled $2.64 billion compared to $2.41 billion as of December 31st, 2025. In the second quarter, cash provided by operating activities was $15.5 million. The decrease in operating cash flow for the quarter was primarily resulted from settlement of corporate income taxes, collection schedule of receivables, as well as payment schedule of any rebate compared with the prior quarter.

Fei Cao
Fei Cao
CFO at Weibo

Capital expenditures totaled $3.1 million, and depreciation and amortization expenses amounted to $15.7 million. We remain disciplined in capital allocation with measured capital spending and continue to support shareholder return. We closed the first half of 2026 with continued progress across our product, content, and monetization initiatives. While softer consumer demand and intensified industry competition continued to weigh on advertising demand, we are encouraged by measurable improvements from our product revamp and AI initiatives, particularly in user engagement and advertising efficiency. Entering the second half, we will focus on advertising opportunities with better budget visibility while carefully managing the pace of investment and maintaining our focus on operating efficiency. Our priority remains to balance near-term growth with sustainable profitability and financial flexibility, while strengthening the foundation for Weibo's long-term development. With that, let me now turn the call over to the operator for the Q&A session.

Operator

Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Once again, please press star one one to ask a question, and to withdraw your question, please press star one one again. Thank you. We are now going to proceed with our first question. Our first question comes from the line of Timothy Zhao from Goldman Sachs. Please ask your question.

Timothy Zhao
Timothy Zhao
Analyst at Goldman Sachs

Great. Thank you, Margaret, for taking my question. My question is regarding the outlook of the advertising revenue into the second half of this year. I was wondering, can management share more detail on your expectations on the ad revenue growth and what is the trend for different sub-sectors, and what is the latest updates on your advertising strategy? Most specifically on AI, just wonder if you can share more color, how AI has increased the overall eCPM of the advertising business and what other operating metrics that you may share.

Timothy Zhao
Timothy Zhao
Analyst at Goldman Sachs

[Non-English content]

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Yeah. Thank you very much for the question. First of all, I'd like to talk about my expectations over the second half of this year. First of all, as I have already stated just now for the performance in Q2, except for some of the verticals that were increased in the performance, for instance, the Automotives and food and beverages. For the rest of the other verticals, we did see some of the stressful situations. It was because of the overall macro economy, especially on consumption. We have seen some of the customers were decreasing their budget on advertisement. OK.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Let's talk about some of the performance in the second half of the year. First of all, there are still a lot of uncertainties. First, in terms of the Automobile industry, we did see less sales and also poorer performance in terms of the sales and production of the first half of the year. But still, in the first half of the year, we did see a lot of launches and new energies launch and available to the market. Weibo is actually a very strong platform in doing the advertisement for the new product launches and new product availability. You can see that on this front, we did see actually an increase in ad revenue for that, and that particular increasement and that particular momentum could be kept until the second half of the year.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[No-English content]

Translator

Next, I would like to talk about the internet industry, especially the vertical of the software and application services. We believe that the second half of the year will be quite similar to that of this year. But still, because the customers are having high requirements over the ROI as well as the allocated budgets on advertisements. As a result, we do not expect too much of the growth in the second half of the year. I believe that this particular industry, the software and application services, are going to be having a flat performance or a little bit increase in the second half of the year.

Translator

Next vertical is the handset industry. In the first half of the year, we did see the down performance and mainly due to the decrease for most of the customers. Except for Apple, the rest of the other handset makers were having double digit decrease in terms of the total performance. In the second half of the year, of course, we might be expecting some of the new products launch in the market. But still we are observing that in September for the Apple new product launch event, whether or not this is going to trigger more allocation of the budgets from the other handset makers to launch or to allocate to the new product availability, the medium to high ends of the products. In Q3, we have not that optimistic view on this handset industry, but still keeping observation into the Q4 performance of this year.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

Next, in the second half of the year, we had some of the really bad expectations over the industries of e-commerce and the food delivery as well. You know that last year, primarily the food delivery price war was happening in about Q3 and Q4. That actually did have a lot of impacts on the ad revenues to this. This year still, we have been seeing some stressful situations. In the second half of the year, I believe that the anti-monopoly policies from Chinese government will continue on this one. This is going to be weakening this competition among different food delivery brands. As a result, this was impacting our overall ad budget for this year as well.

Translator

It is still uncertain for the industries like the local service or local lifestyle and also food delivery and e-commerce, etc. We had actually a low expect.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

On this particular ad related strategies, first of all, in terms of the performance base, of course, we did see an eCPM increase quarter by quarter, but that does not represent that the ad revenue was going to also increase. Because last year we had a lot of restructuring of the ad products, so that did impact some of the core users. In the first half of this year and also second half of last year, we have been doing some of the optimizations of this part. For instance, in terms of this bad user experience of the ads and some of the inactive experience the products, have some elimination process conducted. So, reduce the exposure of those low frequency ad users or low frequency users exposure. That caused a stressful situation to our ad logs.

Translator

In the second half of the year, while we are seeing a tendency of increased time user spend and also the other relevant situations, we are expecting to have a little bit improvement and also a little bit release of the ad log to this. So, the eCPM a little bit increase does not represent an overall growth momentum of this site.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

In terms of the brand based ads, we can see that except for having an optimized pricing schemes, we believe that the most important parameter here is the sales rate of our core resources. So you can see that this particular parameter has been shown a decline tendency if we're comparing that with the ad revenue trend. Because of the decrease the demand from our ad users or on ad customer side. Of course, at this current stage, that's the very reason why we are now trying to actually focus more on the celebrity based or KOL based marketing or the content based marketing. Especially for those ad customers, that may actually have the budget of in between RMB 5 million and RMB 20 million.

Translator

I believe that the KOL based marketing would be the best option for these customers, and they're going to be putting most of their available budget or ad budget with Weibo so that, for instance, especially the example of Wang Lao Ji of having most of their budget left on the Weibo platform to actually use the KOL marketing, because this is going to help them to actually really help to catch the attentions of those medium level users and the consumers. This is actually going to help us to increase also the budget attraction as well as the ad revenue on this front. The very important core part is to improve the parameter of the sales rate of the core resources.

Timothy Zhao
Timothy Zhao
Analyst at Goldman Sachs

[Non-English content]

Translator

Okay. Thank you.

Operator

We are now going to proceed with our next question. The question comes from the line of Jenny Yuan from UBS. Please ask your question.

Jenny Yuan
Jenny Yuan
Analyst at UBS

[Non-English content] So let me translate myself. Could you please provide an update on user growth and engagement trends, including content and consumption, time spend and usage frequency, etc.? In addition, in terms of our visualization strategy and AI initiatives, could you please share the latest progress and the main areas of focus for the second half of the year? Thank you.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

For this question, first of all, for the previous two quarters of this year, we did see, as I have already indicated just now, we have some of the adjustments of our product structure. In the last year, second half, this did have some of the low frequency users as well, especially because of the changes of their using habits. This year, of course, in terms of the core users, we did see a very good trend of increasing the time spent on Weibo as well as the interactivity with Weibo. But still, this is quite stressful for the low frequency users still because of two reasons. First reason is that previously we were pretty much focused on the pre-installed app of Weibo in those handsets. But this year we had lower shipments of those handsets with a pre-installed app.

Translator

That did help us to impact the overall parameter of attraction of new users using those pre-installed app. This had around 10% of the impact onto our overall business. The second reason is that now at the current stage, we are primarily focusing on the recommendation-based feed. Because of that, these are competing with our peers. We do not see that much of a difference if we are talking about the low-frequency users attraction. That did give us actually a quite stressful situation. But I believe that in the second half of this year, we are going to focus on this particular issue and hope to have some better achievements in the second half of the year. Okay.

Gaofei Wang
Gaofei Wang
CEO at Weibo

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Translator

The next part is about the video related consumption. As we have already stated in the prepared market, time spent on the Weibo video and production as well as the consumption of Weibo video, we do see actually a double digit growth on these parameters. Especially after Q2, we do see some of the particular resources and investments invested by us in order to attract those video users or video accounts to be created and enter the Weibo, or we are attracting the video content creators from other platforms to enter the Weibo platform. But of course, in the past it was quite difficult to actually create the new accounts if it was purely based on the relationship base seed.

Translator

But at the current stage, we are now converting to the recommendations that they seed, and that really give us an advantage of giving more traffic to those video content creators so that they are more willing to opening accounts on our Weibo platform. I believe that at the current stage, the overall trend is pretty good in terms of video content created and also the consumption as well. So we are going to keep investing on this front. Okay.

Gaofei Wang
Gaofei Wang
CEO at Weibo

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Translator

In terms of the number of those video content creators at the current state, or accounts at current stage, it is amounting to around 10,000 of them. In terms of the retention rate, it is about 70% or so. Meaning that those accounts keep updating the video-related contents now. The second part is about incentives that we are providing to those content creators or the video content creators. The ROI then was about 70% to 100%. This did help to contribute a lot to the analog of the current year. Also of course, that we believe in terms of the impact of this part to the growth margin of Weibo of a little bit negative.

Gaofei Wang
Gaofei Wang
CEO at Weibo

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Translator

But still, if you are talking about. Sorry.

Gaofei Wang
Gaofei Wang
CEO at Weibo

OK. [Non-English content]

Translator

Sorry. And also in terms of the long term, I do believe that there is going to be a lot of benefits added to our overall business, because this did help us to increase the analog at the same time, having better attraction to the users and improve.

Gaofei Wang
Gaofei Wang
CEO at Weibo

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Translator

OK. I think that now I would like to talk a little bit about the Weibo intelligence search. So we've been launching this in the past years, and especially the Agentic AI and AI intelligence search. In terms of the year-on-year performance, we did see actually an increase. But here if you're talking about the quarter-by-quarter performance, this did have some of the negative trends. Still, in Q1, we had a massive update of the capabilities of LLM, and at that stage, we are focusing on the upgrading of the technology as well as improving the user experience, especially changing the user behaviors from those fixed box based and type in a kind of a search to an interactive search and Q&A based search or the introduction based or guidance or guided search in this front.

Translator

Hopefully that we are going to see a very positive overall trend of this particular user behavior and some of the other relevant areas.

Gaofei Wang
Gaofei Wang
CEO at Weibo

[Non-English content]

Translator

The next part is about the AI application and its overall impact to enhance the R&D efficient operation and maintenance as well. At the current stage, we did see some of the positive impacts of AI use to facilitate the R&D of the products. But first of all, in terms of the core product R&D, there is not much to be shared because this is actually kind of quite standardized. But especially on the product of the super topics, I think that this is really important in my opinion. For this super topics, because of the efficiency of generating the super topics has by AI, we did see more sub apps to be created by those content accounts like from the game industry or sport industry, etc.

Translator

You can see that this particular super topic interaction and the activity rate at the current stage is already reaching the historical high status just because of this facilitation by the AI technology to this particular area. We are seeing a very good trend of super topic.

Gaofei Wang
Gaofei Wang
CEO at Weibo

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Translator

Thank you for that.

Operator

We appear to have no further questions at this time, so I will now hand back to Sandra Zhang for closing remarks.

Sandra Zhang
Sandra Zhang
Investor Relations Officer at Weibo

This wraps up our conference call today. Thank you all for joining us. We will see you next quarter.

Operator

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Executives
    • Sandra Zhang
      Sandra Zhang
      Investor Relations Officer
    • Gaofei Wang
      Gaofei Wang
      CEO
    • Fei Cao
      Fei Cao
      CFO
Analysts
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