Weibo - Earnings Call - Q2 2021

Transcript

Speaker 0

Good day, and thank you for standing by. Welcome to the Weibo Reports Second Quarter twenty twenty one Financial Results Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. And please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your first speaker for today, Ms. Floris Sun. Thank you. Please go ahead.

Speaker 1

Thank you, operator. Welcome to Weibo's second quarter twenty twenty one earnings conference call. Joining our call today are our Chief Executive Officer, Gaofei Wang and our Chief Financial Officer, Fei Cao. The conference call is also being broadcast on the Internet and is available through Weibo's IR website. Before the management remarks, I'd like you to review the Safe Harbor statement in connection with today's conference call.

During today's conference call, we may make forward looking statements, 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 could cause actual results to differ materially from those contained in any forward looking statements. We will assume no obligation to update the forward looking statements 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.

All the information provided in this press release is occurring as of the date hereof. We will assume no obligation to update such information except as required under applicable law. Additionally, I'd 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 financial excludes certain expenses, gains or losses and other items that are not expected to result in future cash payment or non recurring in nature or 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 will open the lines for a brief Q and A session. With this, I would like to turn the call over to our CEO, Cao Fei Wang. Thank you. Hello, everyone, and welcome to Weibo's second quarter twenty twenty one earnings conference call.

On today's call, I will share with you highlights in Weibo's user, products and monetization in the 2021. On the user front, Weibo's MAUs reached five sixty six million and average DAUs reached two forty six million in June 2021, adding approximately 43,000,016 users year over year and quarter over quarter respectively, which represented the highest net addition number among the recent four quarters. In June, 94% of Weibo's MAUs came from mobile. On the monetization front, leveraging further optimization in our competitive strategy and ad product offerings for key industries, our total revenues reached million in the second quarter, an increase of 48% year over year. Advertising and marketing revenues reached $502,300,000 an increase of 47% year over year.

94% of our ad revenues came from mobile. Our non GAAP operating income in the second quarter reached million. Next, let me elaborate on our progress made in the areas of products and monetization in Q2. On the product front, starting from 2021, we further enhanced Weibo's differentiated competitiveness in key features such as social functions and hot trends. Coupled with the effective channel strategies, we have further grown our user base and engagement.

Meanwhile, we'll be thoughtful investments in video products to reinforce users' mindset of using Weibo for video posting and consumption, so as we enhance our product competitiveness. On the channel front, we set up our channel investment with focus on improving user engagement, leveraging Weibo's advantage in user acquisition costs. Meanwhile, we reinforced the synergy between channel investments and subsequent content consumption and thereby improving user engagement and retention. With better consumption experience and retention of our channel users, we stepped up cooperation with major channel partners, such as handstand manufacturers and operators in the areas of social features, call trends and vertical content in the second quarter. Built upon such partnership, we do not only increase Weibo's user acquisition scale from major channels and elevate our brand influence, but also create synergies to both parties' ecosystems, which enabled us to further strengthen our partnership.

As a result, the number of users we acquire from channel partners more than doubled in June year over year with nice user engagement level. On the product front, I would like to share with you our key initiatives Weibo's information fees and video. On information fees, our core strategy in 2021 is to enhance Weibo's key social features and competitiveness and thus drive user stickiness and interaction among Weibo's core user group. For relationship based speed, in the second quarter, we further strengthened the data mining and distribution of quality social content and thus improved our content diversity and the consumption experience. With stronger social attributes, we're pleased to see significantly higher social interaction level leading to better consumption and retention based on relationship based fee.

In addition, DAUs of our super topic product continued to grow rapidly in the second quarter, particularly we're encouraged to see notable growth in verticals such as gaming, TV series and variety show and campus, etcetera, demonstrating users robust demand on the interest based social front. The super topic product has not only driven users' social stickiness on Weibo, but also shed light on our roadmap to further optimize our feed product. For interest based feed, in the second quarter, thanks to tech optimization in our recommendation system, we give more ways to video content in content distribution for interest based feed to further serve users consumption. We're testing a new version of interest based fees based on the revamped video recommendation system, which hopefully will be launched in the second half of the year.

Speaker 2

Moving on to videos.

Speaker 1

In 2021, we focused on accelerating the content visualization for Weibo's content creators through our video accounts program and thus increased video content generation and consumption. Meanwhile, we'll emphasize on cultivating users' mindset of using Weibo for video consumption through content operation in key verticals, leveraging ongoing progress made in our video accounts program. We are pleased to see the further visualization trend among content creators. As of June, the number of registered video accounts surpassed 10,000,000 mark, among which over 30,000 already had more than 1,000,000 followers. As a result, the number of original video submission under the video account program more than doubled quarter over quarter.

The substantial growth in video account not only enable us to enhance video content exposure and consumption in core feed, but also help us to continuously optimize our recommendation capabilities around video content as steps to further improve the overall video distribution efficiency, especially in video community and the video recommendation fees. Currently, we're pleased to see an uplift in users consumption best in our video community and video recommendation fees compared with the end of last year, which also brought forth incremental ad inventory in video recommendation fees. On live streaming, we launched the feature of joint mic live streaming in the first quarter and continuously refined its functions. We are encouraged to see a wider recognition among Weibo's top content creators on the product in the second quarter. Top media agencies and a number of KOLs have already used this feature for regular content generation to build up IPs and boost fan stickiness as such format nature could be effectively lower the barrier of video and live streaming generation for those traditionally tax and picture based authors.

Looking forward, we will step up our investment around key joint mic live streaming IPs to strengthen the brand recognition of Weibo's live streaming feature and further drive user engagement. Let me share with you more color on our monetization strategies and the progress made this quarter. In 2021, we will further strengthen the competitive edge of our social ad products, solidify our industry specific marketing capabilities and unleash the potential and efficiency of traffic monetization. So as we improve Weibo's monetization scale and market competitiveness. From an industry perspective, our ad revenues increased 47% year over year in the second quarter, benefiting from the recovery of overall marketing demand as well as improvements in our industry specific ad offerings for key sectors, leveraging our unique competitive edge in the market.

We continue to deliver robust year over year growth in key sectors. For example, FMCG sector such as food and beverage and beauty and personal care booked solid growth in the first half of the year. Based upon years of experience in these key sectors and our platform value proposition, Weibo has developed a unique marketing playbook and refine our service capabilities and thus continuously improve our ad performance. In addition to the conventional brand industry, we have also beefed up our capabilities to serve the brand plus performance marketing needs of sectors such as gaming and e commerce. With the further synergies as our sales and operation team, our ad offerings and service earned better recognition among customers, leading to strong growth in both the branding and the performance driven ad dollars from these key sectors.

On the ad product front, in the second quarter, we'll continue to enrich Weibo's differentiated content marketing offerings, while optimizing feed ad products to enhance our monetization efficiency. On content marketing, in 2021, apart from sectors such as FMCG, automobile and cell phone, we have also gradually extended content marketing to the gaming industry, which used to be a purely performance driven sector. We hope customers drive more topic discussions around their newly launched games, as well as accumulate social assets and engagement. As a result, we successfully tapped into higher ad wallet in the gaming sector as such content marketing offerings resonated greatly with customers' needs. For example, half a month upon launch of the blockbuster game, Most World, the cumulative views and discussions around related topics reached around billion and over 1,300,000 respectively.

Followers of its official accounts increased by nearly three times within half a month. These content marketing ad offerings effectively entice customers to raise their brand and content budget on Weibo. On feed ad product, leveraging refined traffic distribution capabilities, we could better match traffic of higher conversion potential with performance driven industry, so as to maximize our feed monetization efficiency. Moreover, we continue to improve our tech capabilities of ad products for performance based industry, such as gaming and e commerce, leading to a notable growth in eCPM of each of these industries on an annual basis. Next, let me share our thoughts on the regulatory impact facing the overall advertising industry.

In the 2021, government departments have gradually tightened regulation on the launch screen ad format and we have taken a proactive approach in product rectification accordingly. In the short term, we expect that such rectification may impact on the launch screen campaigns of certain performance driven customers. That said, as for Weibo, revenue contribution from performance based launch screen ad is relatively low and such impact on our overall advertising revenue is manageable. We also believe that an industry norm on ad format will facilitate the healthy growth of top Internet companies in the long run with such standards gradually affected and implemented in the entire market. Also, let's talk about education.

In the context of more rigid compliance requirements facing the overall Internet industry, The tightening regulation on K-twelve educators faced impact on their marketing demand with top tier education customers cut back or even cease their campaigns. That said, the education sector only took less than 2% of our total ad revenue in the first half of the year and thus our risk exposure is quite limited. In light of recent policies, we will take steps to further optimize our sales structure for customers in the Internet sector and default our efforts to tap into the incremental ad wallet of the emerging consumption economy. Finally, we pointed out Apple's new IDFA policy as a potential headwind last quarter and let me give you an update so far. Leveraging model training and optimization, our alternative approach delivered solid attribution results and thus have earned recognition among our customers gradually.

As such, the impact from IDSA changes has been less than widely feared as well as our own expectation. Lastly, let me take this opportunity to share with you the momentum we've seen during the recent Tokyo Olympic Games, leveraging Weibo's unique positioning to serve public conversation and our massive user scale. We're encouraged to see strong momentum in key metrics such as top trends, topic discussion and engagement of athletes' accounts. Build upon years of cultivation on our sports ecosystem around athletes, media and professionals, Weibo has become the go to platform for Chinese Olympic teams to join and for our users to find media updates and discuss around Olympic related topics. As a result, Weibo's MAUs traffic and the interaction all reached record high in July 2021, giving us confidence in further reinforcing our competitive mode based on unique value proposition.

Furthermore, on the monetization front, we are delighted to see the solid momentum in the first half of the year continuing into the third quarter. For instance, our differentiated social marketing playbook featuring how trends and athletes endorsements resonated briefly with the Olympic Games sponsors such as AnTa, which enabled us to capture higher brand plus performance at customers and their wallet. With such good momentum, we are well positioned to tap into incremental market opportunities in the second half of the year. With that, let me turn the call over to Fei Cao for a financial review.

Speaker 2

Thank you, Gao Fei, and hello, everyone. Welcome to Weibo's second quarter twenty twenty one earnings conference call. Let's start with user metrics. In June 2021, Weibo's MAU and average DAUs reached the $566,000,000 and $246,000,000 respectively, both surpassing the peak level in March 2020 during the pandemic outbreak. On annual basis, we had a net addition of approximately 43,000,000 MAUs and 16,000,000 DAUs, a notable reacceleration compared with prior quarters.

Leveraging our strength in serving public conversation initiatives on video front as well as the effective channel investment. Turning to financials, as a reminder, my prepared remarks would focus on non GAAP results and all the comparisons on a year over year basis, unless otherwise noted. Now, let me walk you through our financial highlights for the 2021. Weibo's second quarter twenty twenty one net revenues was $574,500,000 an increase of 48%, exceeding the high end of our guidance. Operating income was 2 and $23,200,000 an increase of 83% representing an operating margin of 39%.

Net income attributable to Weibo reached $182,800,000 an increase of 60%, representing a net margin of 32. Diluted EPS was $0.19 was sorry, $0.79 compared to $0.15 in second quarter twenty twenty. Now let me give you more color on revenues. Weibo's advertising and marketing revenues for the second quarter twenty twenty one increased 47 to $502,300,000 Mobile ad revenues were 470,300,000.0, contributing approximately 94% of total ad revenues, up from 89% last year. On top of good user momentum, Weibo delivered strong ad revenue growth with monetization scale reaching a record high.

We are delighted to see broad based trends across key verticals. In terms of revenue contribution, our top three verticals were FMCG, e commerce and 3C products. Leveraging the e commerce peak season, Maple reinforced its unique value proposition to advertisers in serving their integrated branding plus performance needs and that tapped into incremental ad wallet of these pillar industries. In terms of growth, the fastest growing verticals were luxury and 3C products as Weibo has become the go to platform for these sectors to capture the hearts and the minds of Generation Z users who hold the next generation of consumption power in China. From the ad product perspective, promoting fees continues to be the largest part followed by social display ad and other ad offerings such as promoted trends and topics.

Our first form of social marketing products delivered a competitive ROI and resonated greatly with brands and the merchants, leading to healthy growth for each of these product categories. In particular, revenues from promoted trends and the topic products continue to lead growth among major ad products with customers embracing the swift growth of our traffic and utilize the differentiated native ad format for brand exposure, interest, cultivation and conversion. Additionally, we also delivered robust video ad growth built upon a higher penetration of video content and ongoing optimization of video ad offerings. Overall speaking, we are pleased with current demand versus supply dynamics, where our ad revenue was driven by both incremental monetizable traffic and a positive eCPM trend on a year over year basis. Ad revenues from Alibaba for the second quarter increased 12% to $40,000,000 a moderate slowdown in terms of growth rate.

As communicated earlier, ad spend from Alibaba highly correlated to its own marketing strategies and that may fluctuate quarter to quarter. That said, our cooperation with Alibaba positions as well to capitalize on ongoing digitalization trend and drive value for brands and the more tenants on both platforms. Value added service VAS revenues were $72,100,000 in the second quarter, an increase of 54%, primarily attributable to the revenues derived from the interactive entertainment company acquired in November 2020, as well as increasing revenue generated from our gaming business. Turning to costs and expenses, total costs and expenses for the second quarter were $351,200,000 an increase of 32%. The increase was primarily due to step up in marketing spend and higher personnel related costs.

Operating income in the second quarter increased 83% to $223,200,000 Operating margin was 39%, up from 31% last year, exceeding our expectation. We are pleased with the further operating efficiency achieved by our platform this quarter and we will focus on keeping good balance between investment for growth and margin performance for the company's development in the long run. Turning to income tax. Under GAAP net income tax expense for the second quarter was $46,900,000 compared to $40,700,000 last year. Net income attributable to Weibo in the second quarter was $182,800,000 representing a net margin of 32% compared to 30% last year.

Turning to our balance sheet and cash flow items, as of 06/30/2021, Weibo's cash, cash equivalents and short term investments totaled $2,900,000,000 compared to $3,500,000,000 as of 12/31/2020. The decrease was primarily resulted from investment activity we made during the 2021 and was partially offset by cash provided by operating activities. In the 2021, cash provided by operating activities was $94,100,000 capital expenditures totaled $9,500,000 and depreciation and amortization expenses amounted to 13,600,000.0 Lastly, let's talk about our financial outlook. We anticipate our 2021 revenues to increase by 20% to 25 year over year on a constant currency basis. This forecast also reflects Weibo's current and the preliminary view and is subject to change.

With that, let me now turn the call over to the operator for the Q and A session.

Speaker 0

Thank you. The first question is from the line of Thomas Chong of Jefferies. Your line is open. Please go ahead.

Speaker 3

Thanks management for taking my questions and congratulations on a very strong set of results and strong revenue guidance. I have three questions. My first question is about the second half advertising outlook. And followed after that, can management also comment about our assessment about the impact on the pop up ads in open app ads as well as education regulations together with more cautious industry outlook in the property, auto, as well as the travel sector? And my third question is about our feed app.

Can management comment about the growth drivers such as pricing as well as inventory? And thank you.

Speaker 4

So thank you very much for your question. So let me first of all answer the question about the drivers of the growth in the second half of this year. So as you can see that even though we had the factor that last year we had a pandemic and our base number was pretty low. However, if we're talking about the year on year performance comparing with the same period in 2019, we're still enjoying 36% to 40% of the growth. And also in Q1 we are also accelerating the growth overall speaking.

As a result what you can see is that talking about our strong abilities especially talking about the commercial marketing capabilities and especially we have a marketing strategy of focusing on the content and hot topic marketing and also the combination of brand and performance. So what you can see is that in almost all industries we enjoy pretty good growth on the ad. And especially in FMCG which is a very promising industry we enjoy over 50% of the growth. And also in those not that promising kind of industries for example in digital and also automobile still we enjoy 50% and more growth. So as a result what you can see is that we really focus on a lot the sales and also products as well and especially targeting those industries with a great amount of combination and synergy between brand and performance as well.

So this particular method has been highly recognized by the customers. And also second of all, I would like to comment on the other aspects especially talking about the inventory and also the product of the ad. So we can see this that in the remark we already mentioned that in the first half we had actually a very good inventory created for the because of the increase on the video part and the video consumption. And also the ad load etcetera of that particular new inventory is very high. And also another thing is that for the Tokyo Olympics which happened in July and also August what you can see is that we reached the historical high and also peak on the traffic and data.

And also this particular traffic is still increasing even after the pandemic, I mean Olympics. And also this is a very good direction for the future. And also third of all we are talking about the kind of products. So not only we are talking about the particular ad products of combining ad performance and also the branding as well But also we are talking about the marketing related ad for brand and content as well. This has been also highly recognized by our customers and also becoming one of the major drivers for our further growth.

Okay. And also what you can see is about the price. So since the second half of last year, what you can see is that we were increasing the demand from industries and also because of the improvement of our Sicheng FFT we can see that the performance increased. And also talking about those others like performance driven industries like the gaming and also e commerce because we have optimized our technologies and also service provided we can see a very good growth on the ECM and especially in joining a double digit growth on the ECM. All right.

And also as you have talked to us about some negative factors happening in the second half, especially to the education industry and also real estate. So of course that it is true that we have been seeing a decrease over the planning on the customers in those industries in terms of their marketing plans. However, as I have already stated, for example education industry only accounted for about only less than 2% of our total product. So I think that this particular impact was pretty much controllable. And also lastly talking about the flash ad or the pop up ad.

So I think that it is true that the ratification of this pop up ad really had a big impact or some of the impact over the whole industry including Weibo. So majorly reflected in a factor that the click rate actually has been reduced. And also that is primarily impacting and influencing those customers with the performance oriented plan. However, what you can see is that our major ad customers are still focusing on the branding and also the final effectiveness. So they would like to care more about exposure rather than the clicks.

So and also percentage wise is pretty much limited. So as a result, I think that the impact is pretty much within the control scope. Okay. And also from the Weibo's own perspective, I think that in the guidance that covering the Q3 performance, we have already truthfully reflected and also evaluated the most strict regulations happening now in the education industry and also the pop up ad industry. So that is to say that without those kind of factors we should have been enjoying a higher and stronger growth in Q3 and also 2021.

So however still from the Weibo's perspective we're going to continue the optimization of our ad model and especially talking about the pop up ad we're going to actually have a better research over the new models and also the new recommendation algorithms for example try to minimize the impact to the lowest level. So of course those kind of plans are still in the implementation and research phase so that we're not showing them in the new guidance for the future growth. Okay.

Speaker 3

You and congratulations again.

Speaker 0

Thank you. Our next question is from the line of Alex Ko of Morgan Stanley. Your line is open. Please go ahead.

Speaker 5

Let me translate into English. So thank you management for taking my question and congrats on the solid results. So on the user front, we had a strong quarter with accelerated pace of growth. Can management share what we have observed quarter to date and the expectation in the following quarters? We're also aware Weibo recently launched a rectification on fandom.

So how would that impact the user growth and traffic in the second half of this year? Thank you.

Speaker 4

And also first of all, I'd like to comment on the very first part of the question especially talking about the growth in the talking about our traffic and also the future users. So since Q4 of last year, we have already stated that we are going to invest and also focus more on the users acquisition as well as the users cost of acquisition and also the retention as well. So first of all in terms of the channels we have been collaborating more widely with those different brands and also operators as well as the other apps. So the user volume from this particular channel has been increased for about two times. And also the next thing is that in terms of the strategy on optimization as well as our improvement over the user retention etcetera, we have been reducing the overall cost of the user acquisition.

So as a result what we can see is not a significant increase in terms of investment paid into this particular area. Okay. And also what we can see is that talking about the products. So as we have already stated that because of the generation of the interest feed and also the super topic and also growth on that as well as the very good growth over the relationship based feed what we can see is that we have further improved the activity engagement of the users as well as the total kind of a user number. So for example because of a lot of hot topics and also some of the big events happening, what we can see is that comparing with those platforms offering short videos or long videos on Weibo we can have a better attention track to the customers and also users and also we are going to trigger a better discussion and wider discussion and more focus on Weibo on those super topics and important events.

So that is the result that after the Olympics we can actually have a very good retention of the users and also very good increase on the users volume. So what we can see is that we can forecast a pretty good result in this particular area in Q3 and also even forward. So that is to say that even though Weibo already had a pretty high Internet penetration, however still we think it's quite promising for Weibo to actually grow the user and also the user retention in the second half and also in the medium to long term. And also second of all, you have mentioned something about the eradication of the fandom. So what we can see is that if you pay close attention to the announcement made by Weibo, we do not actually start paying attention to this particular fandom rectification starting from this year.

But actually from twenty twenty Q2, we already started paying attention a lot and started rectification over the fandom in this particular industry. So that is to say that for example we are already changing and adjusting the operation of this particular area especially we are managing those KOL agents as well as their fans as well. So we are encouraging more KOLs to really participate in those charity programs and activities as well as those positive energy oriented activities. So that is to say that as of medium of last year until as of now, we have been already publishing over 40 different announcements of the working related to the ratification of the fandom. And also Weibo, it is true that Weibo is actually a kind of ecosystem and also a kind of a user platform that is pretty much focusing on one of the important verticals which is entertainment.

And of course since last year we've been seeing that because of this justification and adjustment made on those functions as well as the new launch of some of the products we did receive some of the impacts to this particular entertainment and also to our performance because of something happening in the entertainment industry. However the thing is that talking about for example last year second half and also Q1 of this year we've been closing down some of the accounts and also try to rectify the content and also try to manage the fans and also the KOLs etcetera. So that is to say that a very good example would be that among the hot research and hot topics entertainment accounted for used to accounted for about 30% to 40%. But now in Q2 of this year entertainment topics only accounted for about 25% of those hot research and hot searches. So that is to say that from the second half of last year until the Q1 we did receive some of the impacts, but we believe that this particular rectification and also regulation is pretty much important to really strengthen and try to regulate the whole ecosystem that Weibo has.

And also talking about this particular ratification of the fandom, I think that this is a very important thing happening to regulate the whole kind of entertainment industry. And also as a platform that has been operating in this world for about ten years already, we have been already witnessing the fluctuations and ups and downs of the entertainment industry. And also what we are trying to do is also try to observe a further optimized regulation post against this entertainment industry. And also during the past ten years also we've been collaborating actively and communicated actively with the government to really try to understand the latest trend and also try to understand the latest requirements post upon the ecosystem that we have. So we are very much proactively optimizing and also changing our operating strategies.

So not only this is really helpful for us to regulate Weibo internally, but also this is a very good thing to regulate the whole industry and also beneficial to the whole industry to really grow on a sustainable course.

Speaker 0

Thank you. Our next question is from the line of Miranda Zhuang of Bank of America. Please go ahead.

Speaker 6

Thank you. Thank you, management. So my question is about the video business. Can management elaborate more on the initiatives for Weibo's video ecosystem? For example, the expansion of the content category, assistance for the content creation and content distribution?

And how does Weibo video compete with other video platforms with different value proposition? And also, can you provide more color on the development of the video ad monetization? Thank you.

Speaker 4

Okay. And also, first of all, about the whole ecosystem. So as we have already stated that in 2021, our ecosystem will be pretty much focusing on the development of the video accounts. And also we are encouraging more video creators to opening up their accounts and also further to boost the consumption as well as the supply of the video products. So as we have already stated that we have already exceeded 10,000,000 as a threshold of all the video creators and also 30,000 of them had already the followers of reaching 1,000,000.

So that is to say that in Q2 quarter on quarter we can see that we nearly doubled this particular volume of the videos created. Okay. And also next thing is about the kind of total consumption of the videos. So that is to say that we are still leveraging the advantage of Weibo as a social media platform and which is a very important one and to really trigger the consumption of the videos and also the other kinds because what you can see is that go along with the consumption of videos we also have the assumption, I mean consumptions by the users to the text and images etcetera. And also what you can see is that we are really triggering more kind of topics as well as the consumption of videos around the social media platform.

And also we are really encouraging more KOLs and also the other media to really disseminate those knowledges and also those videos as well as the content as well. So that is to say that we are trying our best to diversify the content that we are providing through Weibo. So a very good example is that during the Olympics what you can see is that not only we can see people's and also users consumption around the videos, short videos for example as well as the other live streaming. But also all the discussions triggered by that is pretty much around the video as a product. So that is one of the major differentiating strategies and also unique selling points of Weibo.

All right. And also third of all in terms of the ad monetization, what we can see is that with the increasing of the number of video accounts and also the increasing traffic, we can see a very good contribution to our ad inventory. And also we see more customers actually post their ads on us and also place their ads on us. So with also the enabling of the full screen ad we can see a kind of more placement as well as the enhancement over the efficiency of the advertisement. So that is to say that in Q2 we had enjoyed a higher growth on the video ad than the other format of the ad.

And now the video ad already accounted for about one third of our total ad products and formats.

Speaker 0

All right. Thank you. As there are no further questions, I'd like to hand the conference back to the management for closing remarks. Please continue.

Speaker 1

Yes. Thank you for joining us today. See you next quarter.

Speaker 0

Thank you. And this concludes today's conference call. Thank you for participating. You may now all disconnect.