Weibo Corporation Q1 FY2026 earnings call

- User Growth & Engagement - In March 2026, Weibo's MAU reached 262 million, with a modest sequential decline driven by proactive rationalization of low-quality channel spend and a shift in focus to converting new users to active core users; DAU saw modest sequential quarter-over-quarter growth supported by stronger core user retention. - Core user metrics (scale, engagement frequency, retention) remained solid, with positive improvements in core user content consumption and interaction metrics starting in March 2026 following 2025 product upgrades. - Total video watch time achieved double-digit year-over-year growth, with per-capita video watch time growing even faster, establishing a stronger foundation for overall user retention and time spent on platform.

- Product Optimization - Information Feed: Q1 2026 optimization focused on balancing distribution of social content, trending topics, and vertical interest content, strengthening distribution of authentic original content while increasing governance of low-quality and overly promotional content. The strategy delivered positive month-over-month improvements in user engagement and time spent for socially engaged users by March. In Q2 2026, optimization will shift to improving content matching for recommendation-reliant user groups via algorithm upgrades. - Video Business: Strategy focused on two core priorities: (1) Distribution: optimizing video recommendation efficiency across core feed scenarios, reducing distribution of low-quality repetitive content to shift watch time growth to high-quality content; (2) Supply: investing resources to attract top creators, incentivize high-quality original video production, with double-digit year-over-year growth in both the number of verified accounts posting original videos and total original video volume. Weibo also launched AI-powered content creation tools for creators, integrated copyright materials from 20+ top TV/variety IPs, and attracted ~3,000 creators to produce ~8,000 pieces of AI-derived content, lowering content production costs. - Ecosystem Competitiveness: Management retains long-term focus on three core pillars: trending topics, social network, and search. Q1 improvements included: optimized trending list ranking and content quality, driving year-over-year increases in per-user time spent and discussion volume in Hot Trends scenarios; Supertopic community feature upgrades and standardized operations drove year-over-year growth in usage and engaged users; AI-powered Intention Search was upgraded to support multi-turn follow-up queries and multi-modal content understanding, with AI agent capabilities tested in public figure and hot trend search scenarios to improve search experience.

- Monetization - Continued execution of two core strategies: expanding Weibo's unique content marketing value across more industries, and improving ad conversion efficiency via AI integration. Ad revenue growth was led by verticals including internet services, local services, and automobiles, with robust growth from AI company marketing spend for new product launches, brand education, and word-of-mouth building. Apparel and footwear delivered double-digit growth driven by Winter Olympics-related sports brand campaigns. Celebrity and IP content marketing demand continued its recovery trend, with solid year-over-year revenue growth; Weibo rolled out tailored end-to-end services for celebrity marketing campaigns, with positive early pilot results.

- Other Operational Highlights - MSCI upgraded Weibo's ESG rating from BB to AA, recognizing progress in sustainability and social responsibility.

Weibo operates two core business segments: Advertising and Marketing, and Value-Added Services. 1. Advertising and Marketing: Revenue reached $369.8 million in Q1 2026, a 9% year-over-year increase (3% on a constant currency basis), accounting for 87.8% of total company revenue. The largest contributing verticals to growth were internet services, automobiles, and local services: internet services grew on the back of increased marketing spend from AI large language model players; the automobile sector delivered double-digit year-over-year growth driven by new electric vehicle launches and industry content ecosystem development; the handset (3C) segment recorded only modest year-over-year growth. Revenue from Alibaba, a key advertiser, was $43.3 million, a 2% year-over-year increase (a 4% decrease on a constant currency basis) due to lapping a high comparison base from 2025's Spring Festival sponsorship and prior-year AI-related budget. 2. Value-Added Services: Revenue was $51.6 million in Q1 2026, an 11% year-over-year decrease (15% on a constant currency basis), accounting for 12.2% of total company revenue. The decline was primarily driven by falling game-related revenue. Total consolidated net revenue for Q1 2026 was $421.3 million, a 6% year-over-year increase (1% on a constant currency basis). Non-GAAP operating income was $119.8 million, with a non-GAAP operating margin of 28%. Net income attributable to Weibo was $91.9 million.

- Management reaffirms its strategy of balancing near-term operational execution with long-term investment in product, AI, and content ecosystem development, while maintaining discipline around investment ROI and profitability. - For Q2 and full-year 2026, management expects divergent ad budget trends across verticals: automotive will maintain faster new product launch cycles (especially for electric vehicles) that support steady ad demand; the handset industry will see increased high-end new product launches in the second half of 2026, though overall budget pressure remains amid intensifying competition and rising component costs; FMCG ad demand is seeing sequential stabilization, and Weibo expects to capture incremental budget from upcoming large event opportunities like the World Cup. - AI integration is expected to continue driving improvements to ad targeting, creative generation, and conversion efficiency, while growing AI-related content ecosystem activity is expected to create a flywheel supporting long-term monetization growth. - Weibo will continue a disciplined approach to capital allocation, balancing shareholder returns with the financial flexibility needed to fund long-term strategic initiatives.

- Weak consumer sentiment and intensifying industry competition create ongoing uncertainty for core ad demand, with key vertical customers facing profitability pressure that may constrain their future marketing budgets. - Rising component and memory costs have pressured handset manufacturer profitability, which may lead to reduced ad budgets from this vertical in coming quarters, despite continued new product launches. - User adoption of the revamped information feed is still progressing, with lingering user acceptance challenges that create near-term uncertainty for MAU growth. - Public acceptance of AI-generated advertising and content remains unproven, with existing emotional and perception barriers that may delay broad commercialization of AI-powered ad products. - User acquisition costs have risen amid the AI application boom, creating near-term pressure on user acquisition ROI.

Q: What is the outlook for Weibo's advertising in Q2 2026, what updates are there to 2026 advertising strategy, and how does AI benefit advertising and monetization? / A: Management noted that while core consumption vertical customers face ongoing profitability pressure, ad demand trends differ across segments. Automotive will see more frequent new electric vehicle launches than last year, supporting steady ad spend. Handset brands will increase high-end new product launches in H2 2026, but budget pressure remains amid rising component costs and intensifying competition. FMCG has seen sequential demand recovery, and Weibo expects to capture incremental budget from the upcoming World Cup. AI already powers ~40% of ad materials for performance ads, driving double-digit growth in feed ad performance. AI is still in small-scale testing for brand and celebrity marketing, due to public acceptance barriers for AI-generated brand content, with broad commercialization pending further testing.

Q: What is the impact of the information feed update on user growth and activity, what is the progress of the 2026 video strategy, and what are the latest user-facing AI developments? / A: The modest Q1 MAU decline is driven by strategic cuts to low-quality channel acquisition, not product changes. The feed update's long-term goals are to unlock the value of Weibo's quality content via algorithmic optimization, improve user engagement depth, and accelerate video consumption growth. Core user engagement already improved in Q1, with further gains expected in Q2. For video, the new recommendation feed has driven double-digit year-over-year growth in total video watch time, and helped attract external creators to expand Weibo's video content supply, with strong early results. For user-facing AI, conversational AI search launched in Q4 2025 saw 100% user growth in Q1, though the current user base is only in the millions. Weibo also launched an AI Creative Center for creators to generate text, images and short videos, currently rolled out only to verified users with further internal consolidation before broader expansion.