WEIBO Q2 FY26 earnings call WB

Weibo shifted its user acquisition strategy to focus on conversion rates and optimizing the homepage information feed. While core users show increased time spent on Weibo and interactivity, low-frequency users are taking time to adapt to changes, leading to a slight year-over-year DAU decline. The company is balancing recommendation efficiency with user habits to strengthen engagement and aims for better achievements in the second half of the year regarding low-frequency user retention. Lower shipments of handsets with pre-installed apps also impacted new user attraction by around 10%.

Video consumption saw double-digit growth in total time spent year-over-year and even more meaningful growth in average time spent per user, driven by enhanced recommendation algorithms and increased supply of high-quality video content. The supply of high-quality video content grew double-digit quarter-over-quarter. Weibo is actively expanding its video content creator base, attracting creators from other platforms, and has established a framework for onboarding, production, and retention, with approximately 10,000 creators and a 70% retention rate. The ROI for content creator incentives is between 70% and 100%.

AI is being extensively applied across the advertising process, from creative generation to ad placement and quality management. AI-generated video creatives for e-commerce advertisers improved coverage and usability, and AI-optimized materials reduced negative feedback rates by over 30% in the e-commerce sector, enhancing user experience and campaign efficiency. The consumption share of AI-generated ad creatives in promoted feed ads and real-time bidding systems reached 50% in June, contributing to eCPM improvement.

Weibo is strengthening its core areas of trending topics, social network, and search. Super Topics, as interest-based communities, saw double-digit year-over-year growth in daily active users and discussion participants, driven by enhanced features and event-based initiatives like the World Cup. Intelligent Search is evolving towards multi-turn conversations and deeper AI integration, though it experienced a negative trend quarter-over-quarter despite a year-over-year increase. AI facilitation has helped Super Topics activity reach historical highs.

The advertising business faced headwinds from a subdued domestic consumption market and cautious advertiser budgets, resulting in a 1% YoY decline in ad revenue (6% on a constant currency basis). While automobile, Internet services, and food & beverage sectors showed growth, handset and cosmetics sectors experienced declines. Weibo is focusing on content marketing, celebrity/KOL-based marketing, and AI integration to capture ad budgets more effectively, particularly for advertisers with budgets between $5 million and $20 million.

The company maintains discipline in capital allocation with measured capital spending. Cash, cash equivalents, and short-term investments increased to USD 2.64 billion as of June 30, 2026, from USD 2.41 billion at December 31, 2025. Operating cash flow for the quarter was USD 15.5 million, impacted by corporate income tax settlements, receivables collection schedules, and annual rebate payments. Capital expenditures totaled USD 3.1 million, and depreciation and amortization expenses amounted to USD 15.7 million. The focus remains on balancing profitability, financial flexibility, and long-term development.