Weibo Corp

NASDAQ:WB

Earnings Call Transcript 2021-Q3

[Operator]

Good day and thank you for standing by. Welcome to Weibo's Third Quarter 2021 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] And now I'd like to turn the conference over to the management team of Weibo. Thank you. Please go ahead.

[Unknown Executive]

Thank you, operator. Welcome to Weibo's third quarter 2021 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 management remarks, I would like 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 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 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. Weibo assumes no obligation to update such information, except as required under applicable law. Additionally, I would 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 future prospects. Our non-GAAP financials exclude certain expenses, gains or losses, and other items that are not expected to result in future cash payments or are nonrecurring 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's prepared remarks, we will open up the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.

[Gaofei Wang, executive]

[Interpreted] Thank you. Hello, everyone, and welcome to Weibo's third quarter 2021 earnings conference call. On today's call, I will share with you highlights in Weibo's user, products, and monetization in the third quarter of 2021. On the user front, Weibo's MAUs reached 573 million and average DAUs reached 248 million in September 2021, adding approximately 62 and 23 million users year-over-year, respectively, which represented the highest net addition number among the recent 6 quarters. In September, 94% of Weibo's MAUs came from mobile. On the monetization front, leveraging further optimization in our competitive strategies and ad product offerings for key industries, our total revenues reached $607.4 million in third quarter, an increase of 30% year-over-year. Advertising and marketing revenues reached $537.6 million and increased 29% year-over-year. 93% of our ad revenues came from mobile. Our non-GAAP operating income in the third quarter reached $248.7 million. Now let me elaborate on our progress made in the areas of product and monetization in Q3. In the third quarter, driven by seasonality such as summer break and Olympics, Weibo's user scale and traffic both reached record high in July and August, post the spike seen during the pandemic outbreak in March last year. As for September, we will typically see a fallback in traffic naturally due to the back-to-school seasonality. While for this September, in light of rectifications on the entertainment sector, we have also stepped up our compliance efforts and revamped relevant product offerings accordingly. As a result, we saw a pullback in traffic from the July and August level as well as slowdown of user growth on a sequential basis. In the meantime, we also revisited our product and operations to further conform to regulatory requirements. To elaborate, we cooperated closely with our partners in the entertainment industry to highlight celebrities' work such as TV series and variety shows as opposed to celebrities themselves in the hope of fostering a healthier entertainment ecosystem. We also refined our health trends mechanism so as to build out a more constructive ecosystem. We also refined our hot trends mechanism so as to build out a more constructive ecosystem around hot events in the long run. On the channel brands, with headwinds in certain verticals, such as the crackdown on education, the overall user acquisition price has been on descending trend due to less market competition. Coupled with Weibo's competitive edge in channels, our channel cost per user has further decreased. Meanwhile, we are also pleased with better retention rate of user acquired through channels, leveraging improved synergy between channel investment and subsequent product usage. To elaborate, we made progress in optimizing our targeting mechanism and thus acquired an incremental number of high-quality users. In meantime, we continuously improved subsequent content consumption experience and optimized user recall strategy, driving organic content consumption from China users. In the third quarter, we stepped up cooperation with major channel partners such as handset manufacturers and operators in the areas of social features and hot trends. In September, the number of users acquired from channel investments increased substantially compared with June. We are well positioned to further enhance our competitive edge on user acquisition, leveraging gradual normalization of competition on the channel front as well as steady improvements in engagement trend of users acquired through channels. On the product front, I would like to share with you our key initiatives on Weibo's information feeds and videos. On information feeds, our primary strategy in 2021 is to solidify the competitive edge of Weibo's key social features and core functionalities and thus drive users' stickiness and interactions among Weibo's core user groups. In the third quarter, we further strengthened the data mining and distribution of quality social content and hot trends, as well as step up traffic support to quality accounts. On product features, we focus on amplifying content distribution to fans and facilitating social relations build out among users so as to improve content consumption experience and social attributes. Taking Tokyo Olympic Games as an example, Weibo demonstrated its strong platform positioning in a combination of hot trends and social features, underpinned by our advantage in real-time Olympic updates, public discussion and viral distribution, as well as strong engagement from athletes. Olympic Games-related topics generated over 400 million views and 170 million discussions on our platform, a phenomenal performance among domestic platforms. As a result, both our user and traffic reached a record high in July and August. Looking ahead, we will further reinforce our hot trends plus social interactions playbook, which features a systematic operation approach that integrates media reports, celebrity and KOL discussion and distribution, as well as social interaction among users. We will also beef up our product features and feed distribution and thereby further up policing Weibo's competitive edge. Moving on to videos. In 2021, we focused on accelerating content visualization for Weibo's content creators through our video accounts program and thus increased video content generation and consumption. Meanwhile, we emphasized 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 generators. As of September, the number of registered video accounts surpassed 20 million mark. This quarter, we focused on several key verticals, such as fashion and beauty, gaming and sports to cultivate users' mindset towards video consumption. We also enticed video content generator in these key verticals through our incentive program, while optimizing the recommendation model under key scenarios to enable video content creators with right community vibe to reach users more efficiently. Thanks to improving video ecosystem and Olympic effect, the quarterly average video views and time spend in Q3 continued to grow from Q2. On live streaming, we leveraged our [ joint mic ] live streaming product to attract users with our real-time Olympic updates and build a highly-engaged community vibe. During the Olympic season, we were delighted to see over 50 athletes, hundreds of KOLs, and multiple top media outlets participate in our [ joint mic live ] generating lots of hot topics or viral distribution and discussion. From the product perspective, we kept optimizing user experience and enhancing the social and consumption features of our live streaming products laying solid foundation for the upcoming IP-based [ joint mic live streaming ]. Next, let me give you an update on the content verticals. In third quarter, we witnessed a tightening regulatory environment for the overall entertainment sector. Notably, government authorities issued a serious rectification measures on film, TV series, and variety shows, as well as fan culture. In the short run, we would expect certain impact on traffic from the entertainment and news information verticals. That said, leveraging our continuous investment to enrich content verticals, we could mitigate such impact by fulfilling users' diversified consumption need on other content verticals. A good example would be the gaming and eSports vertical. Since last year, Weibo has beefed up its investments in various areas in the sector and strengthened partnership with game developers, eSports tournaments, gaming KOLs and hosts, as well as started our own eSports team. The game vertical has now become one of the top content verticals besides news, information, and entertainment, benefiting from strong social distribution and large engaged Gen Z user groups. For instance, during the recent League of Legends Season 11, relevant topics generated over 100 million views and 60 million discussions in total. As a result, our traffic also reached its peak since Tokyo Olympic Games on the final day of the Season 11 tournament. Additionally, Weibo has also proactively enriched our offerings around the eSports sector, including investing and starting several eSports team, organizing a series of eSports tournaments of popular games in the market. With investments in the upstream and downstream around gaming and eSports sector, Weibo is well positioned to better reach young users and improve their engagement, which would boost the monetization for gaming sector in the long run. Now let me share some color on our monetization strategies and the progress made this quarter. In 2021, we have further strengthened the competitive edge of our social app products, solidified our industry-specific marketing capabilities, and enhanced 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 29% year-over-year in the third quarter despite the deceleration or even cutback of ad spend from certain industries that are facing macro or regulatory headwinds. We are delighted to see resilient growth in key verticals, such as cosmetics and personal care, food and beverage, and 3C products, et cetera, benefiting from improvements in our service capabilities. Meanwhile, our strategic focus on sectors such as gaming and apparel also paid off, testified by decent growth seen in these sectors as we strengthened the synergy between our user and ad products to further enhance the monetization efficiency of our organic traffic and ad performance. On flipside, a few sectors posted a notable decline due to regulatory headwinds, such as education and entertainment. Ad budget decline from the entertainment industry could be temporary due to the cutback on the demand side amidst tightening policies in the sector, which should gradually come back following the normalization and gradual release of blockbuster shows. However, it will be a different story with the education sector as the crackdown on the industry's ad demand seems irreversible currently. In light of recent policies and the industry trends, we have proactively adapt our go-to-market strategies and adjust our sales structure. Looking ahead, we will beef up our efforts to reach and serve customers in those promising sectors, such as the new consumption economy so as to fulfill their specific marketing needs in the longer term. On the ad product front, we focused on mainly 2 things in the third quarter. First, we continued to reinforce Weibo's competitive edge in branding plus performance ad offerings, leveraging the compound effect of our hot trends, celebrity KOL, and treasure box ad offerings. We showcased strong ad performance to our customers during major events and their prime campaign windows. For instance, during the Tokyo Olympic Games, automobile company, GAC, leveraged athletes [indiscernible] influence to build hype and relevant topics went viral on our platform reaching nearly 200 million views and generated over 12x traffic value compared with the traditional commercial placements. Second, we'll continue to optimize our feed ad offerings, notably on the full funnel conversion model from front to back end. Specifically, for the gaming sector, we further reinforced the synergy between our ad offerings and content vertical operations, leading to heated discussion on newly-launched games and build-out of social assets. We have successfully extended these industry-specific ad offerings to more gaming clients, which resonated greatly in the market. Taking the blockbuster IP game Harry Potter as an example, we leveraged its strong IP feature and created a series of trendy topics. These topics generated more than 6 million views and 5 million discussions in total, enabling us to capture higher ad budget from the clients. Going forward, building upon the success story with gaming industry, we will further explore and extend the model to the e commerce sector, while beefing up our investment in ad technologies around such ad products with focus on the new consumption sector. In the second half of 2021, government authorities beefed up the overall regulatory efforts on Internet platforms and issued a couple of new policies, including rectifications of fan culture and celebrity ranking charts, Cybersecurity Law, and Personal Information Protection Laws, just to name a few. The new set of regulatory framework imposes higher compliance requirements across the industry in terms of products, operation, and monetization. As such, Weibo also devoted significant R&D resource to the compliance front. Furthermore, we're in regular communication with relevant government departments to better understand their policies and implementation guidelines so as to adjust our products and our operations in a prompt way. For instance, talking about the recent fan culture rectification, Weibo has taken preemptive measures and issued guidelines to celebrity agencies and fan groups actually half year before issuance of such policy. Upon implementation for a period of time, we have already seen fan interaction head towards a healthier path, allowing us to buffer and minimize the impact from the recent rectification. Similarly on the hot trends product, since the end of last year, we have proactively taken steps to lower the percentage of entertainment-related trends, which has come down and stabilized at around 25% of total trends. With diversified hot trends, our hot trends product is well positioned to reach a wider user demographics. Lastly, let me reiterate on our positioning. Despite certain uncertainties and headwinds, we deliver solid progress and results in the areas of user, traffic, product as well as monetization in the third quarter. That said, we are indeed facing a year of change where we have to navigate through many external evolvements. However, what doesn't change is our core positioning as China's leading social media platform. We have always been steadfast in our mission to empower users to be heard publicly and connect with each other, as well as our commitment to a better society. We have demonstrated our indispensable value proposition in critical events such as the recent flood in Zhengzhou city and also during the evolving COVID-19 pandemic situation. We are proud to serve our users and society in recording and discovering what's happening in the world for the past 12 years. With further optimization in our user experience and core features, Weibo will continue to be the go-to platform for users to connect with each other, discover hot trends, and for customers to market effectively. With that, let me turn the call over to Fei Cao for a financial review.

[Cao Fei, executive]

Thank you, Gaofei, and hello everyone. Welcome to Weibo third quarter 2021 earnings conference call. Let's start with user metrics. In September 2021, Weibo's MAUs and average DAUs reached 573 and 248 million, respectively, continuing to grow from prior quarters, despite the back-to-school seasonality and the regulation headwinds. On annual basis, we added approximately 62 million MAUs and 23 million DAUs, a solid net addition number, primarily driven by strong execution on channel and video front. Looking ahead, we remain focused on executing against our user and product strategies, while navigating through changes in the regulatory landscape, leveraging 12 years of experience as a social media platform as well as our indispensable role in serving public conversations. Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results and all the comparisons are on a year-over-year basis, unless otherwise noted. Now let me walk you through our financial highlights for third quarter of 2021. Weibo's third quarter 2021 net revenues was $607.4 million, a increase of 30%. Operating income was $248.7 million, a increase of 39%, representing operating margin of 41%. Net income attributable to Weibo was $209.6 million, a increase of 37%, representing a net margin of 34%. Diluted EPS was $0.90 compared to $0.66 in the third quarter 2020. Now let me give you more color on revenues. Weibo's advertising and marketing revenues for third quarter 2021 increased 29% to $537.6 million. Mobile ad revenue was $500.4 million contributing approximately 93% of total ad revenues, up from 90% last year. Weibo delivered a solid ad revenue growth, underpinned by robust engagement trends during Olympics, strong sales execution, and ongoing ad optimization. We are delighted to see advertisers recognize Weibo as the go-to platform to build hype with our industry-specific ad playbook during major events. In terms of revenue contribution, our top 3 verticals were FMCG, 3C products, and e-commerce. Weibo has gradually become the cornerstone of many advertisers in these consumption sectors by enabling them to connect with Generation Z users and fulfilling their integrated branding, class, performance, needs. In terms of growth, FMCG and 3C products continue to outperform, whereas entertainment and education verticals underperformed, mainly due to the regulatory headwinds. From the ad product perspective, revenue contribution by product category remains fairly stable with promoting fees being the largest part, followed by social display ad, and other ad offerings, such as promoted trends and topics amidst industry-wide rectifications on large screen ads and the celebrity charts. Our teams strived to mitigate such impact by reversing ad offerings as well improving monetization efficiency, which resulted in different growth for each of the broad product category. Also we continued to see good traction with video ad and ample room to further drive its penetration, positioning as well for a long runway of growth. As we're headed into Q4, we are committed to leveraging our unique value proposition in the market and strong execution track record over the years to capture a commercial rate share of wallet, even though the fact that the overall advertising market could be challenging in many ways. Despite short-term macro and regulatory headwinds facing the whole advertising industry, we are committed to driving value for our customers in the long run by leveraging Weibo's full spectrum of social advertising products. Ad revenues from Alibaba for third quarter decreased 29% to $20.8 million, mainly due to Alibaba's own conservative marketing strategies this quarter as well as our progressive open up of ad inventories to other e-commerce platforms. That said, our cooperation with Alibaba positions us well to capitalize on the ongoing digitalization trend and get value for brands and the merchants on both platforms. Value-added service, VAS, revenues was $69.8 million in the third quarter, an increase of 42%, primarily attributable to the revenue derived from the interactive entertainment company acquired in November 2020, while partially offset by decrease of revenue from live streaming business. Turning to cost and expenses. Total cost and expenses for third quarter was $358.7 million, a increase of 25%. The increase was primarily due to step-up in marketing spend and higher personnel-related cost. Operating income in the third quarter increased 39% to $248.7 million. Operating margin was 41%, up from 39% last year, exceeding our expectations. We are pleased with further operating leverage achieved this quarter as we continue to balance well between investment for growth and margin performance. Turning to income tax under GAAP measure. Income tax expense for the third quarter was $31.4 million compared to $30 million last year. Net income attribute to Weibo in the third quarter was $209.6 million, representing a net margin of 34% compared to 33% last year. Turning to our balance sheet and the cash flow items. As of September 13, 2021, Weibo's cash, cash equivalent, and short-term investments totaled $2.7 billion compared to $3.5 billion as of December 31, 2020. The decrease was primarily resulted from investment activities we made and was partially offset by cash provided by operating activities. In the third quarter of 2021, cash provided by operating activities was $226 million. Capital expenditures totaled $8.3 million. And depreciation and amortization expenses amounted to $14.1 million. Lastly, let's talk about our financial outlook. We anticipate our first quarter of 2021 revenue to increase by 15% to 20% 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&A session.

[Operator]

[Operator Instructions] Our first question comes from the line of Alicia Yap from Citigroup.

[Alicis a Yap, analyst]

[Interpreted] First question is, curious if management can share if there's any change of the Weibo behavior ever since the effectiveness of the Personal Information Protection Law starting in November 1. Second question is overall advertising industry actually is facing macro and also regulatory challenges, and yet Weibo has been able to maintain double-digit growth in the online ad revenue. So can management share with us the performance and growth rate for different industry vertical and how big is the macro impact and how big is the regulatory impact on each industry vertical?

[Gaofei Wang, executive]

[Interpreted] First of all, let me address the question related to the implementation of the Personal Information Protection Law. So overall speaking, this is actually a mega trend, not only happening and impacting China but also the rest of the world as well, because after the implementation of the Personal Information Protection Law, we've been also having challenges in terms of our algorithms and also the fair competition as well as the performances of our CSR as well and also do the other companies. So that is to say that we need to emphasize more on the operation as well as the compliance as well. And also in terms of Weibo, I'd like to give you 2 points. The first one is that Weibo has always been a public social media platform. So actually, during the past, if any user has any questions or any suggestions, they were really feeling free to actually provide the feedback to us and, of course, we were always been very much refrained from making public the personal privacies and also the other information with a very good protection. So that because of this impact, we are going to postpone or not thinking about going online for the features of the function of feedback and also the other relevant functions. And also second point is that Weibo has been operational in China for 12 years already, and during the past decades, we've been keeping a very close communication and collaboration with the government as well in terms of all kinds of different details. So as you all know that in this particular industry, Weibo is really a kind of a more compliant company versus the other peers as well, and also this is a normal business operational environment for us to be really regulated pretty much. And also we emphasize a lot on the self-discipline in terms of the data collected and also the other businesses operated. And also before the implementation of this Personal Information Protection Law, we received already the guidance and also the trainings from the government direction had the optimization, overall algorithm, and also the personal information protection, as well as the data securities as well. So we already had a very good communication with the government even before the implementation of this law. And also of course, after going live of this Personal Information Protection Law, of course, that we are going to face a further optimization and adjustment as well. However, I believe that such a tight and stringent regulation sustainably is going to benefit not only Weibo but also the whole industry. And also in terms of your second question, it is indeed correctly mentioned by you during the question that the whole industry and also not only Weibo but also the externalists were facing a lot of challenges since the second half of this year. But of course, having said that, Weibo was still had a double-digit growth in the ad industry. And, of course, that was pretty much due to 2 reasons. The first one is a very optimized ad sector and vertical structure, as well as a very good and diversified coverage. And second was because of the nature of Weibo's ads, which was social media oriented. And also I would like to actually talk about the 3 major industries that have been regulated pretty seriously during the past. So they're education and insurance as well as the entertainment industry, if you like. So first of all, talking about the education. So education vertical action accounted for very minor proportion of our total revenue which was lower than 2%. But of course, if you're talking about K-12 relevant education, this was even lower. And, of course, second of all, talking about the finance, especially insurance industry. So we had a pilot run of this particular collaboration with the insurance industry for the ad placement in April in Q2, actually. However, because of the poor user experience and also the other reasons we gave up on this particular industry. And third of all, talking about the entertainment industry, so this is, of course, a very a big contributor to our total revenue. However, in the past we were pretty much having a collaborative model based on the content instead of regarding those entertainment customers as our customers. So that is to say that even if we had a stringent regulation on the entertainment industry, this hardly impacted our revenue and also this particular challenge wasn't as big as the other peers as well. And also second of all, talking about those verticals that have been badly and also worsely and impacted by this particular type regulation, so they were automotive industry as well as gaming. So first of all, talking about the automotive and, of course, we all know that the whole industry of automotive was declining naturally by itself. However, talking about the ad types that we provided to those customers in the automotive industry this was a pretty much on the brand-plus performance oriented. So of course, we are still maintaining a very good positioning in the budget pool of our customers in this industry. And also as I have already stated in the opening remark that Weibo has grasped but the opportunity very well and precisely, especially the trend that more and more ICE vehicles are turning to the electric vehicles and penetration of EV is becoming higher, so that we got a lot of the budget of the new EV launch for our customers. So we kept a flat performance in Q3 in this area. However, in the future while the chip shortage issue has been resolved, we're going to see a very good recovery of our leading position in this industry vertical. And, of course, lastly are now talking about the gaming, of course, we had the regulation over non-adults in this area. However, as I have stated, we successfully got the trend of the popular eSport games and also catch a lot of opportunities for the launch of many new popular games. So we really gain a highly recognition from the gaming industry in terms of our ability of doing business with them. And also you can see that the percentage of this particular part of the new business has been increasing over time. So all in all -- and also lastly I would like to comment on the other verticals that were not impacted by this regulatory and also the macro headwinds, especially FMCG and also the consumer electronics, et cetera. They were keeping a very good growth. So of course, that Weibo always emphasize on the strategy of having brand plus the performance ad as well as providing a differentiated strength by leveraging a lot on the KOLs and also celebrities as well. So you can see that these kind of FMCG and consumer electronics industries were not impacted at all and also maintained a very robust growth. So overall speaking, because of this optimized overall structure of our customers and verticals and also part of the industries have been impacted by the macro environment and also the regulatory environment. However, still we had a very positive trend in Q3 and also quite optimistic about continuing this trend to Q4. Okay.

[Operator]

Next question comes from Ashley Xu from Credit Suisse.

[Ashley Xu, analyst]

[Interpreted] My question is related to the regulation in the entertainment sector, especially about the rectification about fan culture. Could management share more color about the impact on our user engagement and monetization? At the same time, you mentioned that we are investing in the eSports and gaming-related content. Could management share more color on our progress and future plans?

[Gaofei Wang, executive]

[Interpreted] So first of all, talking about the fan culture. So as I have stated in the previous answer, so we had a very good communication and also the relationship with the government even before the implementation of any regulation. So actually before the implementation of the policy, we are going to have a better understanding of the details of implementation as well as the enforcement of these certain regulations and also accordingly adjust our behavior and also performance and also operation. Okay. And also second of all, 1 or 2 years ago, actually, we already witnessed a negative impact of this fan culture to the whole ecosystem of Weibo and also the whole industry. So we have adjusted quite actively the announcement of the community in the first half. If you've noticed that in the adjusted announcement -- community announcement we already said that we have forbidden all kinds of the release of the third-party information and also the relevant [indiscernible] supportive messages sent by the fans as well. And also these kind of measures that we proactively take or took had a very good buffering effect on this time's regulatory change, so that we have been reducing the impact to our traffic to the minimum level because of this preparation. And also in Q3, we really see the real implementation of the detailed rules and, of course, for example, we have been changing actively the kind of management of the celebrity agencies as well as the fan groups and also try to manage more tightly in terms of those contents of television and movies, et cetera. And also we had a very good adjustment over the super topic and also the ranking of celebrities, et cetera. And also I would like to say that in recent years, we've been seeing the development of the entertainment industry more towards the top-notch phenomenon, which was pretty much the focus on those top celebrities and also the top shows and also the programs. However, Weibo still, by its nature, is a social media instead of a pure media. So if we follow this particular trend, this is going to be detrimental to our diversification of our content and also going to harm the environment of the interaction between the fans as well as the celebrities and also between the movie lovers and also the programs as well. So that is to say that in recent years we can see that it is already very obvious trend that the entertainment-related topics are just trying to rely on a very limited number of variety shows and also a few celebrities on the top ranking. So in the past several years, we've been already noticing that and also tried to diversify the contents related to all kinds of different programs and variety shows and also creating a very diversified and rich discussion and also the interaction as well. So as I have already said, of course, the whole industry is taking measure, for example, by collaborating with the video content platform as well as the TVs and radio stations. In the next several years or next year, we're going to try to launch more content related to all kinds of different movie and also the other programs and variety shows as well and also the TV station is going to do that as well. So we are going to emphasize on the collaborations with those entities more and also try to build a very good and healthy environment for the interactions. And also lastly, talking about the eSport. So as we have already said during the opening remark that we had a huge investment into the gaming industry and, of course, they're making this gaming vertical one of the biggest verticals in Q3 against the others, for example, entertainment and also the traditionally strong vertical in Weibo. So of course, you already see a very beautiful figure on the number of reach on the topic of League of Legends Season 11s final and also, of course, that we are heavily investing into building teams and also organizing the tournaments of the eSport or popular games. So you've been seeing very good data and also figure in terms of the development because of the investment that we have conducted. But of course, like the entertainment, gaming industry is a very complicated and also very a big industry, big take. So actually, we are still in the infant phase of it and still continuing our investment. So of course, like the other industries, of course, our strategy for the gaming industry is to collaborate with the famous IPs and also collaborate with the famous tournament and also eSports event, and also try to cooperate with those celebrity team members and also those famous teams as well. So I really believe that we're going to have a much better operational model and operational efficiency compared with our peers. So at the end of the day, we're going to try to diversify the content that Weibo really provide to attract more high-value users. All right.

[Operator]

Our next question comes from Alex Ko from Morgan Stanley.

[Alex Ko, analyst]

[Interpreted] Congrats on the solid results. So we mentioned regulations on advertising industry last quarter, including the large-screen ads, IDFA policy implementation. So can management share the latest observation in third quarter and fourth quarter, help us quantify the impact on Weibo ads and the measures we have taken to navigate the impact?

[Gaofei Wang, executive]

[Interpreted] Also first of all, definitely speaking, I think that in Q3 and also Q4, we had a very good momentum for this ad -- particular business, not only because of our very optimized structure of our customers but also because a very good portfolio of our product as well as the nature of Weibo as a social ad platform. So first of all, of course, talking about the open screen ad or the splash ad, actually, in the first half, definitely speaking, we had a more stringent regulation over the apps of launching the splash ads. And that did impact the whole industry. But of course, as seen from the data and also statistics, you can see that in Q3, this particular revenue actually slowed down its growth rate, and the month-to-month growth rate was only single digital which was a lower than the industry the whole kind of ad revenue growth. And, of course, that was majorly due to the lowered down the click rate on this big splash ad, and also that did impact part of our performance-oriented kind of ad customers. But of course, having said that, still because of the very good ability of Weibo in terms of our customer and brand access, those budgets from those impacted customers never leave Weibo, meaning that we successfully transfer their budget from the splash ad to other areas like utilizing the feed -- information feeds and also the hot trend search and also the other relevant products as well. And also especially during the Double 11 festival, we've launched several new products and also tried to increase the click rate by several folds, and that really increased the demand from our customers. And also second of all, related to IDFA, of course, that since the launch of iOS 15 in Q3, IDFA-related details have all been implemented and also landed. Of course, that did impact a lot of the peers in this advertisement industry. However, in talking about Weibo, we did not have that large impact in Q3. That was because I'm talking about our customers, the reason for them to collaborate with us on their ad placement was not only because of a higher precision but of course, more focusing on the marketing effectiveness as well as the information dissemination. So for example, for many kind of gamer developers, they tried to collaborate with Weibo while they launched the new games and not only because of a higher and better precision but of course, tried to disseminate the particular information of the new game as far as possible. So that is to say, of course, in Q2, we already started to support to the Apple official SKAdNetwork attrition strategy. So that was a very good effectiveness that improved the final result of this particular business and also tried very well to enlarge our market share at the end. So lastly, in conclusion, of course, that we did see and witness such a bad impact on the whole advertisement industry because of this regulation over the IDFA as well as the open-up screen related ads. But of course, these kind of 2 regulations really had a serious impact on those apps that depended a lot on the splash ad or dependent a lot on the precision marketing strategy. But of course, Weibo is a social media platform that emphasized a lot on the social nature of advertisement placement. So of course, that we really cover the whole chain from the exposure in the first time all the way to the final conversion and transfer of the customers. And also really, we emphasized a lot on the brand plus performance strategy. So such kind of a single directional crash on certain type of a product will never impact very heavily on our overall business and also thus, as a result, make some of the customers leaving our company or stop the collaboration or giving the budget to us, no. And also yesterday, as the interim result -- I mean the Q3 result announcement made by Tencent also talk a lot about this particular point, which is a social ad platform. So of course, that we do provide all kinds of other products to our customers and also help them to really boost the consumer assets because of the other innovative products. Of course, having said that, still we need to invest a lot into a more product R&D fashion and also cost of goods sold as well. So of course, in conclusion, definitely speaking, we are going to further leverage our advantage as a social media platform to really enhance more the collaborations with our customers.

[Operator]

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

[Unknown Executive]

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

[Operator]

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]