Weibo Corporation (WB) Earnings

Management highlights

- User Strategy and Metrics * As of June 2026, Weibo had 561 million monthly average users (MAUs) and 254 million daily average users (DAUs). DAUs declined slightly year-over-year but remained flat quarter-over-quarter, as low-frequency users are still adapting to the revamped homepage information feed. The company shifted strategy from scaling user acquisition to improving conversion of new users into active users. Core user engagement metrics (time spent, interaction volume) have improved following product optimization. - Product Optimization * The company is refining the homepage information feed, balancing relationship-based content with improved interest-based recommendation of trending topics, social discussion, and video content. The revamped feed has driven overall growth in time spent and user engagement, though low-frequency user adaptation remains gradual. - Video Business Development * Enhanced AI-powered recommendation algorithms have shifted traffic to high-quality video content, reducing exposure of low-quality/repetitive videos. Total video watch time grew double-digit year-over-year, with average time per user growing even faster. High-quality video supply grew double-digit quarter-over-quarter, and a structured onboarding and retention framework for new video creators has delivered expected results, creating a positive cycle between content supply and consumption. - Content Ecosystem Enhancement * Weibo continues to focus on its three core competitive advantages: trending topics, social networking, and search. New features for interest-based super topics (including celebrity, sports, and esports categories) drove double-digit year-over-year growth in both DAUs and user discussion participation. AI-powered intelligent search has been enhanced to support multi-turn conversational context understanding, with deeper embedding into content consumption journeys to improve information discovery efficiency. - Advertising Monetization and AI Integration * Management focused on two core ad strategies: expanding Weibo's unique content marketing value to more industries, and improving ad performance via AI integration. In Q2, the company expanded its end-to-end celebrity marketing services, offering early campaign planning, resource matching, content co-creation, and execution support; a campaign example with celebrity Erling Haaland and brand Wang Laoji generated over 5 billion topic views and delivered strong brand exposure. AI is integrated across the ad workflow: AI-generated ad creative consumption reached 50% of information feed ad spend in June 2026, and AI optimization of low-quality creatives reduced negative feedback by over 30% in the e-commerce vertical, improving both advertiser ROI and user ad experience.

Guidance

- Management expects the recovery of consumer demand to be gradual, with persistent pressure on advertiser budgets from cost, margin, and competitive pressures, and continued intense competition for ad budgets. - Year-over-year advertising revenue growth in Q3 2026 is expected to face pressure, due to a high comparison base from last year's Q3 food delivery price war, and lower-than-expected incremental ad budget from this year's World Cup compared to the prior tournament. - By vertical, automotive ad revenue is expected to remain strong in H2 2026 driven by ongoing new energy vehicle launches; internet software and services ad revenue is expected to be flat to slightly positive; handset sector performance will depend on Q4 new product launches, with a muted outlook for Q3; e-commerce and food delivery are expected to see year-over-year revenue declines due to the high prior-year comparison base, with continued uncertainty from industry competition trends. - In H2 2026, the company will prioritize improving the balance between recommendation efficiency and low-frequency user experience for the homepage feed, accelerate onboarding of high-quality video creators, and continue expanding AI capabilities across products and advertising to drive long-term user engagement and monetization.

Segment performance

Weibo operates two primary business segments, with total Q2 2026 revenue of $453.8 million (up 2% year-over-year, down 4% on a constant currency basis). 1. Advertising and marketing revenue: Q2 2026 revenue of $381 million, which accounts for 84% of total revenue. This represents a 1% year-over-year decrease (a 6% decrease on a constant currency basis). By vertical, the top three verticals were FMCG, e-commerce, and automobiles. The automobile and internet services verticals delivered solid year-over-year growth, while handset, cosmetics, and online gaming faced headwinds. Promoted feed ads remain the largest ad format, followed by social display ads and search/topic ads, with eCPM improving year-over-year due to deeper AI integration. 2. Value-added service revenue: Q2 2026 revenue of $72.9 million, which accounts for 16% of total revenue. This represents a 19% year-over-year increase (a 12% increase on a constant currency basis), driven by revenue from offline event ticketing and membership services growth. Non-GAAP operating income for Q2 2026 was $125.4 million, with a non-GAAP operating margin of 28% (down from 36% year-over-year). Net income attributable to Weibo was $102.7 million, with diluted EPS of $0.38.

Risks & headwinds

- Domestic consumption demand remains weak, with many industries facing continued pressure that has led advertisers to reduce marketing budgets and become more cautious about spend, creating near-term pressure on ad revenue growth. - Low-frequency users have been slow to adapt to the revamped homepage information feed, and their recovery in visit frequency and retention lags overall platform metrics, creating ongoing user engagement challenges. - Intense industry competition for ad budgets continues, with many advertisers prioritizing measurable short-term ROI over long-term brand marketing, creating uncertainty for revenue growth. - Pre-installed user acquisition volumes have declined alongside lower handset industry shipments, creating an approximate 10% headwind to overall user traction. - Current investments in video creator acquisition and incentives create near-term modest downward pressure on gross margin, even as they deliver long-term platform benefits.

Analyst Q&A

• Q: What is your outlook for H2 2026 ad revenue by vertical, how is AI impacting eCPM, and what are the latest updates to ad strategy? /

  A: Management expects continued uncertainty across most verticals. Automotive will remain strong driven by new energy vehicle launches, internet services will deliver flat to slight growth, handset has a muted Q3 outlook with potential improvement in Q4 from new product launches, and e-commerce/food delivery will see year-over-year declines from last year's high comparison base. AI integration has driven a modest sequential increase in eCPM for performance ads, but near-term ad inventory growth remains constrained following recent product optimization and low-quality ad reduction. For brand ads, the core strategic focus is growing sales of core resources via expansion of celebrity and content marketing, which has proven effective at capturing budget from mid-sized advertisers.

• Q: What are the latest trends for user growth and engagement, and what are your H2 priorities for video and AI initiatives? /

  A: Core users have shown strong recovery in engagement and time spent following product adjustments, but low-frequency users continue to lag due to habit adaptation and lower pre-installed user acquisition volumes, which created a 10% year-over-year headwind. H2 2026 will focus on optimizing the experience for low-frequency users to balance recommendation efficiency and differentiated user needs.

• Q: What progress have you made in the video business, and what are your targets for creator retention? /

  A: The shift to interest-based feed distribution has allowed Weibo to attract more high-quality video creators from other platforms, with approximately 10,000 new high-quality creators onboarded so far and a 70% ongoing content update retention rate. The current creator incentive program has an expected ROI of 70% to 100% this year, with modest near-term gross margin pressure that is offset by long-term benefits of increased user engagement and ad inventory.

• Q: What is the latest progress on AI-powered intelligent search? /

  A: Weibo launched AI-powered search earlier than other product lines, and after a Q1 2026 LLM capability upgrade, the focus is shifting from pure technology improvement to changing user behavior to encourage more interactive, conversational guided search within content consumption scenarios, with early quarter-to-quarter growth showing positive trends.