Weibo - Earnings Call - Q4 2021

Transcript

Speaker 0

Good day, and thank you for standing by. Welcome to WaveBoard Corporation Fourth Quarter and Fiscal Year twenty twenty one Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

And now I'd like to turn the call over to the management team of Weibo Corporation. Thank you. Please go ahead.

Speaker 1

Thank you, operator, and welcome to Weibo's fourth quarter and fiscal year twenty twenty one earnings conference call. Joining me today are our Chief Executive Officer, Gao Phi 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 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, 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. Weibo assumes no obligation to update the forward looking statement in this conference call and elsewhere. Further information regarding these 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.

Weibo assumes 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 excludes 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 the future prospects. Our non GAAP financials exclude certain expenses, gains and losses and other items that are not expected to result in future cash payment or are non recurring in nature or are not indicative of our core operating result and outlook. Please refer to our press release for more information about our non GAAP measures.

Following management 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, Gao Fei Wang. Thank you. Hello, everyone, and welcome to Weibo's fourth quarter twenty twenty one earnings conference call. On today's call, I'll share with you highlights in Weibo's user product monetization, review the progress made in 2021 and elaborate on our strategies for 2022.

Let me start with our fourth quarter financial results. In the first quarter, we achieved solid revenue growth on both annual and quarterly basis, mainly attributable to our enhanced sales capability on key advertising industries, as well as our efforts to further improve our monetization efficiency, despite macro and industry headwinds on the advertising business. Our total revenue reached million in the fourth quarter, an increase of 20% year over year. Advertising and marketing revenues reached million, an increase of 21% year over year, with 94% of our revenue coming from mobile. In the fourth quarter, non GAAP operating income reached million, representing a non GAAP operating margin of 36%.

For full year 2021, Weibo's total revenues reached billion, an increase of 34% year over year. Advertising and marketing revenues were RMB1.98 billion, an increase of 33% year over year. Non GAAP operating income reached million, an increase of 43% year over year, representing a non GAAP operating margin of 37%. On user front, Weibo's MAU reached $573,000,000 and average DAUs reached $249,000,000 in December 2021, an increase of ten percent and eleven percent year over year respectively. 95% of Weibo's MAUs came from mobile.

As we review 2021, Weibo navigates through industry changes and deliver solid results on user growth product and monetization, leveraging our core positioning as a social media platform and differentiating market competitiveness. On product front, we sharpen our edge in core functions like hot trend and social attributes coupled with effective channel investment. We achieved double digit percentage growth of our user base year over year, exceeding the peak level we achieved during COVID-nineteen outbreak in 2020. On monetization, our revenues reached billion, up 34% year over year, representing a strong rebound from 2020. We further increase Weibo's share of wallet in the advertising market this year, made attributable to traffic growth and efficient improvement, stronger sales capability in key verticals as well as more competitive ad product metrics.

Next, let me share with you our progress made in product monetization in the fourth quarter and lay out our key initiative for 2022. In the 2021, on product operation, we focus on improving Weibo's monetization efficiency by strengthening our competitiveness in core features such as culture and social attributes coupled with effective channel investment, we delivered solid user growth and deepened user engagement, which in turn improved monetization efficiency. On channel investment, in the fourth quarter, we continue to leverage Weibo's advantage in user acquisition cost and kept focusing on improving user frequency. While maintaining the number of users acquired, our channel strategy has tilt towards channels that could effectively drive user frequency and a scale of targeted users. Consequently, the number of users acquired from channel collaboration with smartphone manufacturers and operators continue to grow.

And meanwhile, we further improve our product offerings to better serve users acquire through channel. On the one hand, we optimized our content quality and distribution capability of interest based video feed to improve users experience and frequency to consume content. On the other hand, we enhanced our capability to accurately identify channel users interest and the characteristics and tailor product strategy to gradually lead user to shift toward community based products such as super topic, while enhancing users content consumption aiming to cultivate their mindset of using Weibo and thus improve their willingness to proactively visit us and increase onboard frequency. Turning to social attributes, in Q4, we continue to enhance social functions of our products aiming to sustain the scale and engagement of our core users. On relationship based feed, we further enhance capability of discovering and distributing high quality social contents and effectively promoted user consumption and interaction in the relationship based feed by product tactics such as emphasizing exposure of social post with high engagement in the top spot of the relationship based feed, especially among users with low and medium user frequency.

And meanwhile, we continue to optimize content structure of relationship based feed and enhance social attributes through increasing content exposure from high quality video accounts and super topics by optimizing the distribution mechanism in the relationship based feed. As a result, the number of engagement per thousand impression delivered grew double digit percentage compared with that of December 2020. On community based product, it has become an increasingly vital part within Weibo's ecosystem. Upon ensuring compliance of entertainment business operations, we have largely enriched the content verticals of super topics with emphasis on gaming, sports and campus verticals and upgrading product framework leading to the consumption of community based content by a broader use of broader user group and enrichment of more verticals. At this stage, the post generated from super topic has reached nearly 20% of our total post on a daily basis.

In December 2021, we saw the number of users who consume community based content in sports gaming and campus verticals achieved notable growth year over year. This achievement give us confidence that our investment in these products will further enhance users social stickiness and engagement on Weibo and create growth opportunity for us in the new area. On video front, we continue to focus on expanding the scale of video accounts and improving their engagement as well as facilitating video content creation and consumption, so as to deepen user engagement. As of December 2021, there were over 25,000,000 video accounts and the number of video accounts uploading videos on a monthly basis increased multiple times on an annual basis. On operation and user engagement, we focus on original video content creators who can better drive user engagement interaction and incentivize them to generate content to traffic and operational resources support, especially for those in the key content verticals.

On product side, we continue to enhance video production functions and motivated top KOLs to create contents through providing them with more interactive features. Meanwhile, as the number of video accounts increases, we continue to improve content quality and distribution accuracy of the recommend recommended video feed, further improving recommendation efficiency, user engagement and video ad inventories. On live streaming, we kept improving product features and user experience of joint mic, joint mic live streaming in multiple scenarios and further integrated joint Mac live streaming with key IPs and events in core verticals such as entertainment, sports and gaming in order to further cultivate users consumption behavior. In December 2021, the DAUs of Weibo's live streaming grew more than doubled year over year. Let me briefly lay out our strategy for 2022 on the product and operational front.

We will strive to further grow Weibo's user base and engagement from the flowing three aspects. First, on channel investment, in view of Weibo's current user scale and a competitive landscape, we will put more emphasis on keeping the balance between user acquisition cost and the monetization per user and improving ROI of users acquired through channels and thus to keep the total user acquisition cost within a reasonable range in 2022. Second, on Weibo's core competitiveness, we will continue to beef up our operational efforts around hot trends and social attributes aiming to further solidify Weibo's competitive mode in our core features. To elaborate for one thing, we will strengthen our strategic cooperation with partners in the media, entertainment, gaming and sports sectors, advocating media and IP holders to lead topic discussion and facilitate the build out of social assets, so as to enrich the supply of discussion materials around trending topics and IPs on our platform. For another, as another key initiative in 2022, we will upgrade product functionality for super topic through expanding content verticals for interest based communities aiming to attract broader user base, especially younger generation to consume content and engage to continue product and capturing incremental market share from users.

For instance, many shares how much we've made during the Beijing twenty twenty two winter Olympic Games that just concluded. The game attracted big attention and engagement from the general public. Leveraging strategic cooperation with the sports administration center, we invited all Chinese national teams and athletes to join Weibo and share moments and interact with Weibo's users making Weibo's social platform for social interaction among Chinese athletes. During the they are 176 athletes related to the topics being initiated and over 2,500 coaches generated from athletes worldwide and nearly $45,000,000 accumulated for these assets. And meanwhile, we also strengthened cooperation with partners at the State Media and Midgroup on Authentic related trading topics.

As a result, we are pleased to see the overall traffic in Winter Authentic Games on Weibo platform, the Tap, Total Authentic Games with the total number of properties and discussion around Winter Authentic Games reached over billion and nearly RMB300 million times respectively. Giving us confidence that Weibo's unique value proposition has enabled to further reinforce our competitive on the product front. Leading to nearly 50% growth in a number of top content creators who monetize using Weibo's ecosystem. Looking forward to 2022, we will further optimize the monetization model and enhance monetization efficiency for top content creators to drive higher earnings for them, which would increase more quality content generation and drive user engagement in the term. Finally, on the video front, we will continue to leverage our video account program to improve the video production experience and enthusiasm for Weibo's core content creators and thus accelerating the visualization trend among content creators.

Meanwhile, we will focus on operation and content generation of key verticals such as TV series and variety shows, gaming and sports in the hope of cultivating users' mindset for choosing Weibo for differentiated video consumption experience so as to deepen user engagement. Monetization front, our ad revenues continue to build solid growth in Q4, up 21% year over year despite external factors such as macro environment and industry policies. The relative resilience in our advertising business was mainly attributable to two things. First, Weibo benefited from a relatively balanced industry mix with limited risk exposure to those sectors hit hard amid regulatory crackdown last year, such as education and online finance. Secondly, our integrated brand plus performance ad offerings resonate greatly with customers with branding needs and position us well in the marketing competition, which not only enable us to secure our wallet share in key industries, but also tap into other industries and acquire incremental clients and budgets.

From an industry perspective, despite a softer side amid challenges from macro environment and industry policies, our traditionally strong industries such as beauty and personal care, food and beverage, 3C products and automobiles continue to deliver solid growth in the fourth quarter and the teams by our optimization and marketing strategies and service capabilities. Meanwhile, our strategic focus on sectors such as luxury and apparel also paid off contributing decent growth this quarter. We have showcased Weibo's differentiated value proposition to the market featuring the synergies between our product, user product and content operation. For instance, we leverage trending topics of Olympic Games to build hype for Antar, a domestic apparel brand and we also seamlessly incorporated luxury brand shows to our live streaming product. Such ad offerings improve our clients' ad performance leading to notably higher ad wallet share in these industries.

From ad product perspective, we focus on optimizing and innovating our ad formats to offer clients diversified product portfolio, while further strengthening the synergies between ad product and content operation. So as to empower clients accumulate social assets and better reach targeted audience on Weibo. Heading into 2022, on the monetization front, underpinned by uptake in traffic, we will step up our efforts in ad product optimization and sales execution to further enhance our monetization scale, efficiency as well as market competitiveness. First, on ad product, leveraging Weibo's differentiation and advantages will strengthen the innovation of content based ad product, launching more ad product with competitive ad such as app opening ad and hot trend products and thus driving ad demand. Additionally, we will further optimize our ad placement capabilities for our performance ad offerings, uplifting the conversion efficiency and clients ad placement experience in order to maximize monetization efficiency of Weibo's information feed.

Second, from an industry perspective, leveraging the resilience of Weibo's integrated brand plus performance ad offerings in key verticals. We are dedicated to sustaining our steady revenue growth in these industries, while extending the marketing combo of integrated brand plus performance ad with content operation to more industries and clients aiming to attract incremental clients and ad wallet, as well as reinforce Weibo's competitiveness in the ad market. For instance, we plan to further upgrade our e commerce product solution, namely Weibo Mini Shop to enable clients improve conversions through the closed loop solution on our platform. Finally, on sales execution, we have continued to optimize Weibo's sales structure and improving synergies with the operational team as that to formulate industry specific monetization strategies, which would more closely support Weibo's marketing system and improve its overall monetization efficiency. With that, let me turn the call over to Fei Cao for a financial review.

Speaker 2

Thank you, Gaofei, and hello, everyone. Welcome to Weibo's fourth quarter and the fiscal year twenty twenty one earnings conference call. As a reminder, my prepared remarks will focus on non GAAP results. All monetary amounts are in U. S.

Dollar terms and all the comparisons on a year over year basis unless otherwise noted. Weibo had another solid quarter to finish 2021 with annual revenues surpassing the $2,000,000,000 mark, up 34% for the year despite macro and industry headwinds. On top of top line momentum, we also delivered a decent operating leverage and a strong operating cash flow generating $829,200,000 in operating income and $778,900,000 in free cash flow. Starting with user metrics, in December 2021, Weibo's MEUs and average DEUs reached $573,000,000 and $249,000,000 respectively, representing a net addition of 52,000,025 users on a year over year basis. In 2021, we have achieved a solid growth of user community leveraging our strength in serving public conversation and effective channel investment.

Heading into 2022, we will focus on integrating our product roadmap to reinforce our differentiation in serving real time public conversation, while navigating through the new regulatory landscape and making Weibo the go to platform to find out and discuss what's happening. Meanwhile, we will beef up our investments in key content verticals such as sports and online gaming, positioning us well to tap into a broader user community and improve users frequency and engagement. Now let me go through our financial highlights for the fourth quarter and fiscal year twenty twenty one. Weibo's first quarter twenty twenty one net revenues was $616,300,000 an increase of 20%. Operating income was $219,800,000 representing operating margin of 36%.

Net income attributable to Weibo reached $195,500,000 representing a net margin of 32%. Diluted EPS was $0.83 compared to $0.92 in 2020. For full year 2021, total revenues reached $2,260,000,000 an increase of 34%. Operating income was 8 and $29,200,000 an increase of 43 representing operating margin of 37%. Net income attributable to Weibo reached $718,500,000 representing a net margin of 32%.

Diluted EPS was $3.08 compared to $2.38 in 2020. Let me give you more color on our fourth quarter and the full year 2021 revenue growth. Weibo's advertising and marketing revenues for the fourth quarter twenty twenty one were $515,800,000 an increase of 21%. Mobile ad revenues reached 516,100,000 representing 94% of our total ad revenues up from 91% last year. Full year 2020 advertising and the marketing revenues reached 1,980,000,000.00 an increase of 33% with mobile ad revenue contributing 93 of total ad revenue, up from 90% in 2020.

Let's start with fourth quarter performance. Weibo closed the year on a solid note, sustaining double digit growth, even though the overall advertising market was tapping off amid macro and regulatory headwinds. In terms of revenue contribution, our top three verticals were FMCG, e commerce and three c products. In terms of growth, luxury was the fastest growing vertical among major ones. This consumption sectors, consumer staples and the discretionary, demonstrated relatively resilient against a tough market environment, speaking to Weibo's unique value proposition in serving their integrated branding plus performance marketing needs during the e commerce peak season.

From ad product perspective, promoted fees continued to be the largest part followed by social display ad and search and the topic ad offerings. With tightening oversight on several ad offerings such as launch screen ad, Our team strive to serve our customers within our ecosystem and mitigate the impact by facilitating them to switch to desirable alternative, leveraging a full spectrum of social ad products they offer. Moving on to full year 2021 performance. In 2021, Weibo demonstrated a strong recovery momentum, delivering over 30% year over year growth in revenues underpinned by added demand rebound, traffic uptick and ongoing ad optimization. We are also delighted to see stronger sales execution upon the integration between our KA and SME segment, which enable them to step up fully focused on customers' industry specific needs by industry.

Our largest verticals were FMCG, e commerce and three c products. Weibo has gradually become the cornerstone of many advertisers in this consumption sectors by empowering them to leverage KOLs influence and connect with generations of users and thus fulfilling their integrated branding plus performance needs in 2021. Sectors like FMCG three c, gaming and luxury outperformed, whereas education, entertainment and real estate sectors underperformed mainly due to macro and regulatory headwinds. The ad product promoted the fees was the largest followed by social display ad and the topic and the search. Our for funnel social marketing products delivered competitive ROI and resonated greatly with brands and merchants with Weibo's differentiated ad offerings such as search and topics leading the growth.

Overall speaking, in 2021, from a demand perspective, we navigated through our traditional landscape and increased our ad worthy share from customers with resilience in the challenging environment from a supply perspective. The growth of ad revenues was primarily driven by traffic and sales through rate demonstrating higher monetization efficiency and stronger sales capability. Ad revenues from Alibaba for fourth quarter decreased 24% to $45,500,000 correlated with its conservative marketing strategies in 2021. Full year ad revenues from Alibaba decreased 8% to 139,600,000.0 broadly consistent with our expectations. The decrease is offset by inventories sold to other e commerce platforms and brand advertisers with integrated brand plus performance marketing demands.

Before turning to VAS segment, let me give some color on the trends entering 2022. Currently, we expect to see softness in the overall advertising market. In light of macro and regulatory uncertainties, we may on segment, we may on sentiment. That said, we believe the headwinds could be transient rather than structural with advertising industry rebase and the secular growth driver reassured themselves. In 2022, our team will give up execution and work relentlessly to fulfill customers' differentiated marketing needs against the tough environment in the hope of further uplifting our monetization scale and ad efficiency.

Value added service less revenues was $65,500,000 in the first quarter, an increase of 9%. The increase was primarily attributable to full quarter revenue booked from the interactive entertainment company consolidated in November 2020, while partially offset by the decrease of revenues from live streaming business. Full year 2021, VAS revenue was $276,400,000 an increase of 36% mainly resulted from incremental revenue derived from the interactive entertainment company consolidated in November 2020 and other online gaming revenues, while partially offset by the decrease of revenues from live streaming business. Turning to cost and expenses, total cost and expenses for the fourth quarter was 396,500,000.0, an increase of 28%. The increase was primarily due to higher personnel related costs, as well as step up in ad costs mainly associated with seasonal ad campaigns execution.

Full year cost and expenses totaled $1,430,000,000 compared to $1,110,000,000 for 2020. Operating income in the fourth quarter was $219,800,000 an increase of 8% representing operating margin of 36% compared to 40% last year. Operating income for full year 2021 was $829,200,000 representing operating margin of 37% compared to 34% in 2020 as we continue to balance well between investment for growth and the margin performance. Turning to income tax and the GAAP measure, income tax expense for the first quarter was $45,600,000 compared to a benefit of $25,300,000 last year. The increase of income tax expenses was primarily resulted from tax benefits booked in the first quarter of last year due to preferential tax treatment of our subsidiary as a key software enterprise, namely KIC, which left in 2021 as a super deduction true up for added to R and D expenses in the 2020.

Full year income tax expenses were $138,800,000 compared to $61,300,000 in 2020. The increase was mainly resulted from first higher profits in 2021 versus 2020. Second, tax benefits booked in the 2020 due to preferential tax treatment of our subsidiary as a case which left in 2021. And third, tax liability recognized in 2021 related to uncertain tax provisions. Net income attributable to Weibo in the first quarter was $195,500,000 compared to $212,700,000 last year.

Net margin was 32% compared to 41% of same period last year. Net income for full year 2021 was $718,500,000 representing a net margin of 32% flat versus 2020. Turning to our balance sheet and cash flow items. As of 12/31/2021, Weibo's cash, cash equivalents and short term investments totaled 3,100,000,000 compared to $3,500,000,000 as of 12/31/2020. The decrease was primarily resulted from investment activities we made and was partially offset by cash provided by operating activities and proceeds from our global offering.

In the first quarter, cash provided by operating activities was $249,700,000 Capital expenditures totaled $11,300,000 and depreciation and amortization expenses amounted to $14,800,000 on full year basis. Cash provided by operating activities was $814,000,000 Capital expenditures totaled $35,100,000 and depreciation and amortization expenses amounted to 55,000,000 We delivered approximately $778,900,000 free cash flow in 2021, an increase of 10% year over year representing our capability of delivering high profitability and generating strong operating cash flow. Lastly, on 12/08/2021, we successfully listed on the main board of Hong Kong Stock Exchange under the stock code 900898 through our global offering of 11,000,000 plus eight ordinary shares. As a newly listed company on Hong Kong Stock Exchange, we need to comply with regulations and follow the common practice adopt by public companies in the Hong Kong market. Therefore, we will no longer provide financial guidance on net revenue growth going forward.

That said, we remain committed to delivering sustainable growth of our revenue with decent profitability and free cash flow generation and driving shareholders value in the long run. With that, let me now turn the call to the operator for the Q and A session.

Speaker 0

Thank you. Our first question comes from Alicia Yip from Citigroup. Please ask your question. Thank you.

Speaker 2

So I understand company no longer provide the official guidance of the Hong Kong listing, but can management provide some colors or the directions as the latest sentiments by advertiser. If January or February that you are seeing, is it more the same as the fourth quarter? Thank you.

Speaker 3

Okay. All right. Thank you very much for your question. So first of all, have to say that in Q1 we're seeing a very good growth in terms of the advertisements placement in terms of the industries of FMCG, the three d products and automotive and luxury products as well. And also due to the external environment and also headwinds as well as the regulatory headwinds, some of the industries really experienced some kind of active growth.

For example, in Q4 of last year, we've been having a lot of regulatory activities over the live streaming e commerce. So originally they plan to place some of the advertisements during the spring festival period in Q1 of this year, but actually they stopped being doing so because of this headwinds of the regulation. So last year in Q1 actually this types of advertisement revenue accounted for about 5% of our total revenue. And also next factor vertical is about the education. So you can see that year in Q1 they had the budget for the placement of the advertisement actually this was heavily impacted.

So apart from these two verticals that are heavily impacted for the other verticals I think that we are all positively enjoying a double digit growth. And also apart from that we also had some of the little bit headwinds on the gaming industry as well as the e commerce. But still overall speaking I think the development is pretty much good.

Speaker 0

Thank you. Our next question comes from Miranda Chung from Bank of America. Please ask your question.

Speaker 4

Thank you for taking my question. Can management elaborate on the verticalization strategy for 2022? Which verticals will you focus to expand? Specifically, Weibo had gained strong traction in Olympics campaign. So what kind of strategy will company take for the sports vertical going forward this year?

And also, what kind of strategy will company take for the online game vertical? And is there any impact from the Titan online game regulation involvement? Thank you.

Speaker 3

So first of all, let me share some color in terms of the vertical of entertainment and also culture. So in this particular vertical of entertainment, it used to be a very important part for our accumulation of the traffic. But since the second half of last year, we've been seeing some kind of remodeling and also rescheduling of this entertainment industry. So this did bring an active impact to our business and performance in Q3 and Q4 in last year specifically on the traffic part. And also in 2022 of course, we've been seeing a very good transformation of this entertainment industry that was previously generated in terms of the idle based economy to pretty much the focus on the product itself and also the production of the works.

So you can see that this is the part one. But still talking about the traffic, this is still in the process of being recovered. And of course now in terms of the hot trend and also the hot search, we've been seeing that all those listed topics on the hot trend are all pretty much based on the product or based on the works. So in the second half of this year of 2022, we are going to see the traffic volume which is going to be recovered to the stage before the regulation on the entertainment industry. So second part, as you have mentioned something about the sport industry and actually for the vertical of sport, this is also very important, as important as the entertainment as one big part of the mass public consumption.

So as you can see the last year talking about the Tokyo Olympics because of very much a big focus we've been gaining a very good growth in terms of the traffic and also the number of users of using Weibo. And also for this year's Winter Olympics in Beijing, we've been seeing that in terms of traffic and also the number of users this is almost reaching the status of the Tokyo Olympics. And this is to be honest with you out of our expectation. And also in 2022 this is a big year for all the sports events. For example in the second half of the year we're going to have all Asia games and also at the end of 2022 the World Cup as well.

So that we are going to focus on the investment on the content so that we're going to gain a very good growth in terms of the traffic and also the number of users as well on this one. And also last year in the Tokyo Olympics we've been finding that some of the sponsors and also the sponsors of the athletes etcetera. We've been gaining around 40 plus more customers of placing their ads with us. So that this is another kind of a very good growth. So previously we had quite conserved or conservative expectation on the performance during the Winter Olympics period.

So we really believe that in the future in terms of the budget of those advertisers, we're going to have a big room for further improvement. So this is a very important year in terms of the sports verticals. And also third of all, in terms of the vertical of gaming. So now our focus is on the operation of the e sports tournaments. So you can see that this has been showing a very good results and performance driven in Q4 of last year during the S11 League of Legends tournament series.

And also another focus is on the investment to the esports teams. So this is going to further provide excellent content as well as the services to attract the young users. And also third thing is that this year we're going to dedicate ourselves continuously to the tournaments and esports games as well. So of course all those eSports events are pretty much based on the mature and also the existing games. So we don't think that whether or not the licenses are granted to the new games and whether or not the new games are pretty much launched in a massive way or less massive way in this year will have a big impact on the traffic volume.

But of course, it is going to a little bit impact the budget gaining abilities for us. But because the percentage of the revenue contribution from the gaming sector is actually a little bit small to our total revenue. So we've been seeing a lot big impact in Q1 of this year. But of course as long as we are going to focus on the attractions of the new users and also pay attention to the activities of the users and time spent with Weibo of those young users, we're going to have a very big room for further improvement.

Speaker 0

All right, thank you. So we have reached the end of the question and answer session. I'll turn the call back to the management team for closing remarks.

Speaker 1

Okay. Thanks, operator. This wraps up our conference call this quarter. Thank you for joining us. We'll see you next quarter.

Speaker 0

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.