Executive Summary / Key Takeaways

• Weibo Corporation is undergoing a significant AI-driven transformation, particularly in its search and recommendation systems, which is enhancing user engagement and content consumption efficiency. The intelligent search product, powered by large language models, saw its MAUs surpass 50 million in June 2025, signaling a strategic shift towards broader search capabilities.
• The company delivered a resilient financial performance in Q2 2025, with total revenues up 2% year-over-year to $444.8 million and non-GAAP operating income reaching $161.8 million, representing a healthy 36% margin. Net income attributable to Weibo increased by 13% year-over-year to $143.2 million.
• Weibo's advertising business, a core revenue driver, is adapting to market shifts by solidifying its position as a go-to platform for content marketing and new product launches, especially in the e-commerce and automotive sectors. AI integration is already yielding higher eCPM for performance-based ads.
• Despite facing macroeconomic headwinds and intense competition from platforms like Tencent and ByteDance, Weibo maintains a strong competitive edge in hot trends, entertainment, and celebrity-driven content, leveraging its unique social attributes.
• The company's balanced capital allocation strategy, supported by stable operating cash flow (approximately $600 million in 2024), allows for continued investment in AI and product innovation while also providing predictable shareholder returns through an annual cash dividend of $0.82 per share.

The Evolving Landscape of Chinese Social Media

Weibo Corporation, established in 2009 and rebranded in 2012, has long been a foundational social media platform in China, primarily known for its microblogging capabilities and real-time content discovery. Its journey began with a timeline-based content distribution, evolving to a sophisticated recommendation system that now prioritizes interest-based content, a testament to its continuous adaptation to user behavior. This strategic evolution is critical as Weibo operates within a highly dynamic and competitive digital landscape.

The competitive arena in China's social media and digital advertising sectors is dominated by formidable players. Tencent (TCEHY), through its ubiquitous WeChat ecosystem, offers an integrated platform encompassing messaging, social networking, payments, and mini-programs. This ecosystem approach provides Tencent with superior user retention and diversified revenue streams, often leading to higher engagement and retention compared to Weibo's more specialized focus. ByteDance, with its short-video platform Douyin (the Chinese TikTok), excels in AI-driven algorithmic content recommendation, appealing to younger demographics and driving viral engagement. While Weibo offers a broader array of content formats, Douyin's algorithmic edge can translate to superior efficiency and potentially higher margins through advanced user data monetization. Alibaba (BABA), primarily an e-commerce giant, integrates social elements into its platforms like Taobao, making its offerings transaction-oriented. Weibo, as a pure social media play, focuses on content discovery without heavy e-commerce ties, which can lead to faster user experiences in social sharing but may lag in revenue diversification. Kuaishou, another short-video platform, emphasizes community building, posing competition in entertainment-focused user engagement.

Weibo's unique value proposition lies in its established role in real-time news, trending topics, and social commentary, particularly around celebrity and entertainment content. This focus has allowed it to build strong network effects and proprietary content algorithms that foster user loyalty and recurring advertising revenue. The company's agility in content-focused updates and its regulatory licenses in China also serve as significant barriers to entry for new competitors. However, Weibo's dependence on the Chinese market exposes it to regulatory risks, and while it is making significant strides in AI, potential technological gaps in certain specialized AI applications compared to rivals like ByteDance could present challenges.

Technological Differentiation and Innovation: Weibo's AI Imperative

Weibo's strategic response to the evolving competitive landscape and user demands is deeply rooted in its aggressive pursuit of technological differentiation, particularly through Artificial Intelligence. Over the past two years, the company has methodically built foundational AI capabilities by integrating various large language models (LLMs), enabling swift model switching for product innovation. This approach allows Weibo to adapt rapidly to advancements in AI technology and apply them across its platform.

A cornerstone of this technological push is Weibo's AI-powered intelligent search product. In Q1 2025, Weibo integrated the DeepSeek-R1 model, and by June 2025, it had also connected to the Ali Q1 model to improve output speed. This integration significantly upgraded its search capabilities, allowing the product to organize and summarize information from multiple perspectives, including technical details and public sentiment, and to suggest key follow-up topics. The tangible benefits are evident: the intelligent search product's MAUs surpassed 30 million in March 2025 and grew to over 50 million by June 2025. Daily active users and average daily search queries increased notably quarter-over-quarter in Q2 2025, with growth rates exceeding 100% for DAU and user queries. This transformation is repositioning Weibo search from primarily a hot trend and real-time search engine to a more general and vertical search market player. This shift improves results relevancy and content consumption efficiency, enabling Weibo to address long-tail search needs more effectively.

On the monetization front, AI is being actively integrated to streamline ad creation, accelerate review processes, and improve ad targeting. In Q2 2025, Weibo launched its AI ad creative platform, "Linchong," with over 10% of consumed ad assets already generated by AI. This initiative successfully drove higher eCPM (effective cost per mille) for real-time business feed ads in Q2 2025, showing single-digit growth. For performance-driven e-commerce advertisers, AI-powered feed ads demonstrated double-digit growth in offerings, with click-through rates (CTR) for leads increasing by approximately 20% and for apps by over 10%. Even for brand ads, AI testing has shown click rates increasing similarly to performance-based ads, with interaction rates "basically doubled." These advancements enhance Weibo's competitive edge in the advertising market by offering more efficient and effective solutions to advertisers.

Furthermore, AI is bolstering Weibo's content ecosystem and social interactions. The company has enhanced its recommendation system by leveraging LLMs to improve the quality of recommended content and overall user experience. A strategic revamp of the homepage information feed in the first half of 2025 made the interest-based feed the primary interface, leading to a 17% improvement in the proportion of recommended content consumed by users, reaching 43%. AI assistant features for Key Opinion Leaders (KOLs) and important accounts aid in content generation and summarization, with a retain rate exceeding 85% for trial users. Internally, AI is applied in the technology department to facilitate product R&D, with the V-code feature actively used in Q4 2024 to increase coding efficiency. These technological differentiators contribute to Weibo's competitive moat by driving user engagement, improving content quality, and enhancing monetization capabilities, thereby supporting its long-term growth strategy.

Financial Performance and Operational Resilience

Weibo's financial performance in the second quarter of 2025 demonstrated resilience amidst a challenging macroeconomic environment. The company reported total revenues of $444.8 million, a 2% increase year-over-year. Advertising and marketing revenues, the primary revenue driver, also grew by 2% year-over-year to $383.4 million. This growth was primarily fueled by strong performance in the e-commerce, internet services, and automobile sectors, which benefited from consumption stimulus policies and intensified competition among platforms. Notably, the automobile vertical sustained healthy growth, with major OEMs increasing their budget allocation to Weibo for new EV model launches, covering over 60% of such launches in the first half of 2025.

Despite these positive trends, certain sectors faced headwinds. The FMCG category experienced a year-over-year decline, although early signs of recovery were observed as some brands began reallocating budgets towards celebrity product launches and content IP creation. The online game, luxury, and entertainment sectors underperformed, with the online game segment particularly soft due to tough comparisons and a lack of blockbuster releases. Value-added services (VAS) revenues saw a modest decrease of 2% year-over-year, reaching $61.4 million, mainly due to a slight dip in membership services.

Profitability remained robust, with non-GAAP operating income reaching $161.8 million, translating to a non-GAAP operating margin of 36% in Q2 2025. Net income attributable to Weibo shareholders increased by 13% year-over-year to $143.2 million, achieving a net margin of 32%, primarily driven by higher net interest and other income. For the full year 2024, Weibo reported total revenue of $1.75 billion, remaining relatively flat year-over-year, with total ad revenue decreasing by 2% to $1.5 billion. However, VAS revenue for the full year 2024 increased by 13% to $256 million, benefiting from upgrades to its membership services. The full year 2024 non-GAAP operating income was $584.1 million, maintaining a 33% operating margin.

Weibo's consistent profitability metrics, including its healthy operating and net margins, underscore its operational efficiency and ability to convert revenue into earnings despite market fluctuations.

Weibo's liquidity position remains strong. As of June 30, 2025, cash, cash equivalents, and short-term investments totaled $2.11 billion. This figure decreased from $2.35 billion at the end of 2024, primarily due to the purchase of long-term wealth management products and the payment of an annual dividend of approximately $200 million in the first half of 2025, partially offset by operating cash flow. Cash provided by operating activities in Q2 2025 was $24.8 million. The company's commitment to shareholder returns is evident in its annual cash dividend policy, which saw a $0.82 per ordinary share payout for fiscal year 2024. This balanced capital allocation strategy supports both long-term growth investments, particularly in AI, and predictable shareholder returns.

The trend in cash and cash equivalents, while showing a recent decrease due to strategic investments and dividend payments, reflects the company's overall financial flexibility and capital management decisions.

Operationally, Weibo continues to focus on user growth and engagement. In June 2025, MAUs reached 588 million and average DAUs reached 261 million. The strategic revamp of the homepage information feed, which made the interest-based feed the primary interface, has been rolled out to nearly all users, with the proportion of recommended content consumed increasing to 43%, a 17% improvement. This shift, coupled with the transition to a vertical content-based operation model, aims to deepen user engagement and content consumption, with vertical content accounting for 60% of interest-based feed consumption in Q2 2025.

Strategic Outlook and Future Growth Drivers

Weibo's strategic outlook for 2025 is firmly anchored in enhancing user value, solidifying its leadership in trending topics and entertainment, and reinforcing its social products. A significant portion of this strategy involves beefing up AI investments to further enhance its recommendation system and develop vertical and video content ecosystems. Management anticipates continued strong growth in the e-commerce and automotive sectors in the latter half of 2025, with healthcare also emerging as a growing area. The company plans to intensify sales efforts in these sectors, focusing on brand-plus-content marketing and leveraging its real-time bidding feed ad products to capture incremental budgets.

The intelligent search product is a key long-term growth driver. While immediate commercialization is not the primary focus, with tests potentially commencing in Q4 2025, the company is prioritizing expanding its user base, increasing stickiness, and boosting traffic. This involves increasing budget allocation for computing power and external cooperation to support user growth. The revamp of the homepage information feed and the strengthened vertical content ecosystem are expected to amplify the synergy between content and monetization operations, thereby reinforcing Weibo's competitive edge in the advertising market.

However, the outlook is not without its challenges. Weibo faces a tough comparison in Q3 2025 due to the high base from last year's Olympics. Advertisers from consumption-related industries remain conservative in their budget allocation amid geopolitical and macro uncertainties. The FMCG category is expected to face continued pressure, and the cell phone industry, despite stabilized budgets, faces declining sales and uncertainty without additional national subsidy policies. The gaming industry remains the most uncertain sector for 2025, with management not optimistic about a significant number of blockbuster game launches. Despite these headwinds, Weibo is cautiously optimistic about the overall advertising market, particularly with government stimulus measures expected to gradually take effect and potentially reignite consumption sentiment.

Conclusion

Weibo Corporation stands at a pivotal juncture, actively transforming its platform through deep AI integration to drive future growth and enhance its competitive standing. The company's strategic focus on AI-powered search and recommendation systems, coupled with its established leadership in hot trends and content marketing, positions it to unlock new avenues for user engagement and monetization. While macroeconomic uncertainties and intense competition present ongoing challenges, particularly in certain advertising verticals, Weibo's resilient financial performance, healthy operating margins, and robust cash flow provide the necessary flexibility to invest in its technological roadmap and deliver consistent shareholder returns. The successful execution of its AI strategy and the continued evolution of its content ecosystem will be critical in solidifying Weibo's unique value proposition and sustaining its long-term growth trajectory in China's dynamic social media landscape.