Weibo Corporation (WB) Q4 2017 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. And welcome to the Weibo Reports Fourth Quarter and Fiscal Year 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Ms. Vanessa Chen. Over to you ma'am.

Thank you, Operator. Welcome to Weibo's 2017 fourth Quarter Earnings Conference Call. Joining me today are our Chairman of the Board, Charles Chao; our Chief Executive Officer, Gaofei Wang; and our VP, Finance, Fei Cao. The conference call is also being broadcasted on the Internet and is also available through Weibo's IR website. Before the management presentation, I'd like to read you the safe harbor statement in connection with today's conference call. During the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements about 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 statement. Weibo assumes 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 SEC, all information provided in this press release is occurring as of the for the date and 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 future prospects. Our non-GAAP financial excludes certain expenses, gains or losses and other items that are not expected to result in future cash payments or that are non-recurring in nature or will be 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 the lines for a brief Q&A session. With this, I would like to turn the call over to our Chief Executive Officer, Gaofei Wang.

[Foreign Language] Thank you. Hello, everyone, and welcome to Weibo's fourth quarter and full year 2017 earnings call. [Foreign Language] On today's call, I will share a few key assays in Weibo's user growth, product development and monetization, review the progress that we made in 2017 and share with you our strategic plan for 2018. [Foreign Language] Let me first discuss fourth quarter financial results. We continue to see strong revenue in the user growth in the fourth quarter of 2017. Our total revenue reached 377.4 million, up 77% year-over-year. Advertising and marketing reached 332.3 million, up 77% year-over-year versus 79% of net revenue coming from mobile. Non-GAAP net income was 146 million, up 90% year-over-year. [Foreign Language] Weibo's total revenue for fiscal year 2017 was 1.15 billion, up 75.5 year-over-year, which is our fastest 2016 IPO. Advertising and marketing revenue reached 996.7 million, up 75% year-over-year. Non-GAAP net income reached 405.7 million, up 121% year-over-year. [Foreign Language] Weibo's robust revenue growth and operating efficiency in 2017 are in following three areas. First, continues user growth and diversifying social product features have made Weibo the primary channel for advertisers to execute our social marketing campaign. Second, as a result of efforts to further improve user engagements, in our content distribution system, we offer a full factor of advertising and marketing product and solution to our different customer segments from individuals to SMEs to key accounts. This increase is customer's recognition towards Weibo's social marketing ability and overall value proposition. Lastly, Weibo's social network efforts have been further optimized in 2017, effectively enhancing our operational efficiency and monetization. [Foreign Language] On the user front, Weibo's smartly active users reached 392 million in December, up 25% year-over-year. Average daily active users in December reached to 172 million, up 24% year-over-year. In December, 93% of Weibo's MAU were mobile. In 2017, our remote MAUs increased nearly 79 million and DAUs increased 33 million, representing larger user based increased line in 2016. [Foreign Language] Throughout 2017, Weibo's position as a leading social media platform in China has been further solidified and the competitiveness of Weibo's ecosystem continues to improve. Even under the increasingly competitive China's mobile internet market, Weibo provides a platform for millions of users use their proper information share and express their views as in dating conversation of interest. At the same time, Weibo present a medium for larger number of users to use talents to the road and utilize the platform to monetize the concept been created and ultimately capitalize their personal value that effectively has accumulated. [Foreign Language] In regarding our operational update for the fourth quarter, I will cover Weibo's progress in the following areas. [Foreign Language] As a reminder, the ecosystem of Weibo's platform has developed around three core components; users, users, content and customers. Our rapidly growing user based enabled content creators to continuously be a social asset and leverage our continuously improving product to pursue the monetization aspirations. This is from also creational of higher quality content that has been shared and distributed on the Weibo. Attracting more users, sparkling conversation under distribution are thereby increasing our user base and user engagement. This social and interest network owned by the users then add as a distribution channel with is still our services and product to help us establish more effective connection between our users and customers increasing Weibo's marketing effectiveness. As these three components come into play, we will continuously increase the inside and value. This strengthen our competitive position in the social media industry. My operational assay will elaborate in these three arrears. [Foreign Language] On the user growth front, we see that the growth of mobile internet user have become to slowdown in 2017 as we are facing increasingly competitive landscape. However, as our network effects further expand and the social platform feature continuous to strengthen, we were able to leverage and strengthen Weibo's competitive advantage in user acquisition to support future user growth. On the channel investments, our strategic cooperation with the smartphone manufacturers and top ads continue to depend benefiting for our growing marketing and a product integration as well as resource exchanges. As a result, we have maintained relatively lower user acquisition cost of our peers even under the current competitive market condition. [Foreign Language] Yeah 2017, we increased our strategic efforts and investments in user product developments to improve user engagement. As we got more data from user interest and the social behaviors, our strategy to invest in machine learning have been well and we continue to see the benefits from this investment. In December 2017, Weibo's MAUs the number of recall users increased over 50% year-over-year. [Foreign Language] On the product level, the competitive landscape towards interest based information fees and the UTC for video have increased in mobile internet industry in 2017. Both have been the key drivers for user growth and also be our main focus around product development in 2018. We completed structural change on Weibo's core information feed's product in 2017 to include both social relationship based information feeds and interest-based information feeds on the whole timeline of Weibo's act. Relationship based information feeds now prioritized content based on the social interactions and the timeliness of content distribution. We are at interest-based information feeds of generative user interest on the content consumption. This change is important to us and has further enhanced Weibo's unique competitive advantages in social media industry. [Foreign Language] In 2017, we saw Weibo's interest based information feeds became popularity among users to consumer content. In December, the number of users who refreshed interest based information feeds and the interest based information feeds refresh nearly doubled from last year. This had helped us rapidly enter the news media market and we have the notice of right in the retention and engagement of users who used to be less active. Moreover, increase the exploder of content on news media and the top content creators in interest based information feeds enable more exploder of UGC in relationship based information feeds. This will promote more UGC on Weibo contract more user social relations and strengthen our social attribute. [Foreign Language] Moreover, we have increased our investment in UGC short video product in 2017. The scale of UGC short video have increased new products such as Weibo Stories. In December, the number of users how post at Weibo's increased sequentially by more than 50% and the Weibo Story and the use have maintained rapid growth. In 2018, we will increase our investment in UGC short video product besides optimizing Weibo Story content creation experience. We will focus on enhancing the user consumption experience of UGC short video basing our information feeds, allowing Weibo to be more competitive in the market and the better promoting user growth in large areas. [Foreign Language] In 2018, we plan to increase our investments through the following strategy. First, while keeping our partnership with the smartphone manufacturers, T.V. program and top ads. In addition to installing the Weibo app the on our smartphone, we're plan to expand the collaboration in contents to increase the efficiency of user acquisition. Second, we will increase our investment in machine learning to improve the precision imagine user interest to recommended account and the content and optimize content consumption experience for users with varying level of engagement, so after further increase user engagement. Third, we'll continue to increase our investments in products to strengthen our social attribute. That said, we will further enhance the social content production and the mentally user social relation as our top priority for content distribution to amplify the social features of the platform and to differentiate ourselves from the market. In 2018, given the current competitive landscape, we believe the investment will expand the scale of our platform enhances our social network impact and the balance there that we're able to grow over the long term. [Foreign Language] Turning to content. Short video remains as the top priority for us this year. We foresee video to become the primary media format for our users to report, share and communicate with one another. In 2017, short videos continued to grow rapidly richer more users never before. The number of a video share and the video feeds also grew. In December short video post and short video of views doubled from last year. [Foreign Language] One of our key focus in 2017 was promoting the growth of the short video to strengthen our partnership with a popped up media account and a major media IP content organizations, working cohesively to improve Weibo's short video content ecosystem. In addition to encouraging top media count to produce more video content, we are supporting them to better traffic distribution and accumulating social assets. In December, the short video post from self-media account grew by more than 50% year-over-year. [Foreign Language] Second, Weibo's partnership with the multiple large media and IP content organization have generated impressive results. For example, Weibo have become the mid on our platform for traditional media in China to distribute their content partnering with a media such as the CCTV and people's daily to promote 19th the CPC National Congress. During the 19th, the CPC National Congress short videos posted by media was 335% of the total content process and relating short video was around 3 billion views. In terms of payment vertical, in 2017 we're partnered with Talent Top T.V. Channels, three online video website based on IP content of T.V. series and the variety show. So it's actually promoting various T.V serials and the variety shows including the Weibo of China and drama series such as the Day & Night. In December, short videos related to T.V. serial and the variety show grew by more than 2 fold allowing Weibo T.V. channels and online video websites to effectively partner and the collaboratively deliver content further reinforcing Weibo's leadership in the entertainment vertical. [Foreign Language] As we noted in last year, one of our focuses have been further virtualized content building stronger engagement through our average level. By December, we have partnered with more of less 1300 MCNs growing by nearly 300 MCNs from last quarter. In December, the number of top content creators daily posted by top content creators and mostly view our rapid growth from last year. Moreover, the monetization of self-media continue to threat on Weibo's platforms in 2017. Advertising social comments and pace of subscriptions are three main ways for top content creators to monetize our Weibo. In 2017, the monetization skill met nearly double year-over-year. Supporting self-media accounts to accumulate social assets allow them to monetize but more importantly add us incentive to continuously produce higher quality content to generate stronger engagement with us. This even encourage visit user engagement of Weibo. [Foreign Language] For example, e-commerce vertical have developed due three years of operation and the key MV generated from Weibo for fiscal year 2017 grew by over 70% year-over-year. While the fans and the fans engagement also grew accordingly. The improvement of our monetization ecosystem not only increases the engagement of pop content creators but also increased the fan base engagement. When the model is replicated in other vertical on Weibo both the users scale and the user engagement in this verticals will further increase enhancing Weibo's competitiveness at the social media platform and monetization potential. Moving forward, Weibo's drive enable more self-media accounts to monetize, so thereby reinforcing Weibo's ecosystems. [Foreign Language] In 2018, we've planned to optimize our content ecosystems due to following strategies. First, we will continue to beaten our partnership with content channels such as variety shows, T.V. news media and competitive vertical. In securing top IP and the copywriter content, we enhance Weibo's competitiveness in premium content consumption. Second, we'll continue to operate the verticals to expand the scale of top-up content creators and in engagement to subscribe Weibo's core competitiveness in content ecosystem. Third, we'll continue to increase the user base and improve the user experience of our content product matrix so enable users to efficiently extract and experience themselves. U.S. in contents, will not have only help us view the stronger content ecosystem and the strength on Weibo's competitive edge at the social media platform, it will also help us expand the horizon of the content consumption market and to broaden our product offering. [Foreign Language] Lastly, turning to monetization, we achieve a strong ad revenue growth in the fourth quarter. In the fourth quarter, key accounts ad revenue at a number of customers have continued to grow rapidly. Key accounts customers grew by 34% year-over-year, while key accounts revenue grew 106% year-over-year. This year, the scale of key account customers and ARPU has posted grown meaningfully. Driven by the Weibo's effect and the strong influence of hot news on KOL, as a result, we have now become the primary channel for yield advertisers to tack the social marketing campaigns while for incurring customers, we will become the long term marketing partners to further explode the corporation in social marketing. For example, Samsung initiated a campaign targeting young Chinese users to market alert in the fourth quarter. According to it by elaboration three young celebrities combined with the Weibo's influence and the very nature of the short video, Samsung's brand satisfaction rose by 100%, purchase rose by 138% and recommendation intend rose by 117%. Our brand advertiser have also become more diverse. In addition to more SMCG growth, we saw noticeable growth in mobile any advertising segment further showing the key accounts revenue. [Foreign Language] Turing to SMEs. In the fourth quarter, SME revenue increased to 64% from prior year, where our customers grew 31% year-over-year. The growth was mainly driven by the continuous enhancements we have made in our advertising platform. For example, we implemented feed by strategy proving users with comment on advertisement. Ultimately leading advertisers to improve their ad quality. Moreover when implementing our dynamic outlook strategy to optimize the user consumption experience. Based on the specific users' engagement level and the specific ad interest, we have specific app exploder to the user. By applying the new strategy, we saw an active experience of double digit decrease. And moving forward, we will implement this strategy to cover our core feed. Our goal is to better manage our ad products to improve our efficiency in the fourth quarter. ECPM engagement rates have continue to raise from the last quarter. [Foreign Language] As I have mentioned before, self-media grew rapidly in 2017 and we will continue to support this growth in 2018. As advertising has become an important part of social marketing, we'll embrace more in self-medias in our monetization ecosystem focused on innovative ad product on the content end of video we distribute. We believe the major beneficial relationship between self-media advertising and our existing advertising, both help advertisers to reach more of the right users enable to coverage of marketing of wider background and support Weibo's monetization ecosystem. [Foreign Language] In 2018, we plan to increase the competitiveness of Weibo's app product through the following strategies. First, we'll increase our investments in user product to grab more user engagement on Weibo and enhance our social network effect. Second, we will further increase our customer base to educating them about successful case of studies of Weibo social marketing. And at the same time, we will continue to innovate and optimize our social marketing products focusing of rising royalty and accumulation and app conversion both will help to raise Weibo's value and competitiveness on the further scaling customer growth. Third, we will continue to enhance our apps after Super FenSiTong was released. We have noticed there is still lot of data to mind and the machine learning improvement we can make through enhanced advertising efficiency. At the same time, we will step up our cost ratio the third parties to continue to improve social interest of our users and optimize our app measurement system, further increasing advertisers to recognition to value of Weibo's social marketing. Fourth, we will further combine high quality content creators such as content producing organizations, self-media and the media like to long term well-established monetization ecosystem that delivers better content to drive innovative new advertising format and rise monetization value of the content and expand Weibo's quality app inventory. [Foreign Language] Overall, heading into 2018, we expect increasing competitive landscape in the mobile internet industry. More notably, certain competitors therefore will significantly increase our investment into market channels, content ecosystem improvement and expanding our product offerings. Although this may come as a short-term impact towards our margin expansion, however we are certain that the investment we commit will be critical for expanding Weibo's platform and the market share. At the same time, this will help us more effectively compete in short video market, enhance our network impact and ensure Weibo's competitive edge to grow in the long-term.

With that, let me turn the call over to Cao Fei for a financial update.

Thank you, Gaofei. Let me go through our financial highlights. For fourth quarter of 2107, Weibo's total revenue reached $377.4 million, up 77% year-over-year, exceeding the previous guidance. Non-GAAP net income attributable to Weibo was $146 million, up 90% year-over-year. Non-GAAP diluted EPS was $0.64 compared to $0.34 a year ago. With revenue peaking in our high season in Q4, we delivered adjusted EBITDA of $161.9 million, up 107% year-over-year, and adjusted EBITDA margin was 43% compared to 37% last year. We're also pleased to announce that we have achieved an important milestone as our total revenue for full year 2017 surpassed the $1 billion to $1.15 billion, up 75% compared to 2016. Our pay and SME businesses, which together represented 92% of Weibo's advertising revenue, each grew robustly in 2017 at 85% and 73% year-over-year respectively. Non-GAAP net income attributable to Weibo was $405.7 million for 2017, up 121% compared to 2016. Non-GAAP diluted EPS was $1.80 compared to $0.82 in 2016. Adjusted EBITDA was $471.3 million, up 143% year-over-year, and adjusted EBITDA margin was 41% compared to 30% in 2016. As a result of our continued efforts to address revenue growth and operating efficiency, we continued to expand our margins throughout 2017. We delivered a non-GAAP net margin of 35% for the year compared to 28% in 2016. Factoring a high income tax rate we had to bear in 2017, the 7 percentage point increase in net margin once again demonstrates the strong operating leverage of Weibo as a unique and a substantial social media platform. In 2018, we will continue to drive operational and financial improvements across our business and we are confident that we are positioned for long-term growth as our users, content creators and customers continue to scale up. Now, let me give you more color on fourth quarter revenues. Advertising and marketing revenue for the first quarter grew to $332.3 million, up 77% year-over-year. Mobile ad revenue in Q4 was $262.9 million, up 105% year-over-year, representing 79% of our total ad revenue. We will continue to capitalize on rapid growth of mobile advertising market in China with 93% of mobile MAUs. We are leveraging our robust ecosystem of users, content providers and advertisers to deliver a strong value proposition to each participant. This overall network effect combined with continued growth of Weibo's user base and user engagements has solidified Weibo as an essential element of mobile marketing in China and further strengthens Weibo's leading position in the social media industry at large. Total advertisers in Q4 remained stable compared to Q3 and up 31% year-over-year. It is worth noting as Q4 is peak season for major e-commerce sales in China, our SME advertisers have remained relatively stable and continued to effectively compete for inventory with e-commerce big brand advertisers. Moving on to SMEs. In Q4, Weibo's SME ad business delivered a value of $156.6 million, up 64% year-over-year, continuing the strong momentum throughout 2017. Revenues from both self-service had strong growth year-over-year. Key industry sectors contributing to strong revenue growth, including ad download, e-commerce and O2O. Weibo has delivered to attract more long-term SME customers to our platforms. As Gaofei mentioned, since release of [indiscernible] in late August in 2017, we have further optimized the advertising system to include an active feedback strategy and a dynamic algo. How can we make our ads more relevant and effective? The optimization also helps encourage SMEs to increase the quality of their ads and help advertisers show their ads to people who are likely to spend more with them. This is an important improvement to us. We want to make sure that every dollar from our advertisers' budget is well spent. Moving on to keys. Our key account business made up of mostly large brand advertisers is another pillar of Weibo's growth engine. In Q4, our key ad revenue reached $127.4 million, up 106% year-over-year. The number of key customers reached another historical high, growing 34% year-over-year this quarter. Social ads are continuing to grow and have become a must have too many of our advertisers. As more key customers see the impressive results from their Weibo's social magazine campaigns, more brands advertisers have recognized the increasing magazine value gained through Weibo's unique content, innovative social nature and the ability to attract strong user engagement. This year, we have made continues efforts in diversifying our ad offerings and in promoting celebrities and the influencer, whose present on Weibo have also amplified the impact of social ads. Weibo has also become a top promotion channel for Double 11 and 12, helping to increase brand affection and a porter for promoting the products. Revenue attributable to Alibaba was $38.4 million, up 55% year-over-year. As pointed out on our third quarter conference call, we are a key platform for Alibaba in the field of e-commerce, marketing, data accumulation and transactions. Alibaba continues to be a key strategic partner given its ad spending as well as the revenue derived from other areas of Alibaba's business, including social e-commerce, O2O, payment solutions, entertainment and videos. This continues to be a strong partnership and we are confident in its continued success in driving value for both Weibo and Alibaba. Value-added service, VAS revenues was $45.1 million in Q4, up 81% year-over-year. Membership fees, which include individual membership and enterprise account verification, was up 117% year-over-year, and data licensing was up 37% year-over-year. The two together make up more than 15% of Weibo's VAS revenues. Turning to cost and expenses, total non-GAAP costs and expenses were $220 million, up 58% year-over-year, primarily due to increased marketing and divestment spend as well as higher turnover tax, which is in line with our rapid revenue growth. In Q4, we continued to focus our ad work to drive user acquisitions and retention. As such, sales and marketing expenses grew at a faster rate compared to Q4 2018, specifically attributable to increase in the total marketing spending and brand promotion of Weibo Stories. Moving forward, as we think about user acquisitions and the retentions over the longer term and the competitive landscape, we plan to be more aggressive on user acquisitions and the retentions in the multiple channels in 2018. We believe this strategic reinvestment will enable us to solidify our market leadership as the top social media platform in China. This quarter, we also stepped up our spending on R&D in machine learning and user video experience optimization. As a technology driven company, Weibo will continue to focus on developing innovative user and [indiscernible] as well as facilitating a better user experience. Non-GAAP operating income was $157.5 million in Q4, up 114% year-over-year. Non-GAAP operating margin in Q4 was 42% compared to 35% last year. Our non-GAAP operating margin for full year of 2017 was 40% compared to 27% last year. As Gaofei mentioned, our current relatively high profit margins provide Weibo ample flexibility to further invest in user scale and build higher verticals for content ecosystems. We expect our non-GAAP operating margin for the full year of 2018 to maintain similar levels or to be slightly better compared to 2017. Income tax expense was $70 million compared to $55,000 last year, primarily due to tax exemptions expiring in 2017. Non-GAAP net income attributable to Weibo in Q4 was $146 million, up 90% year-over-year. Turning to our balance sheet and cash flow items. As of December 31, 2017, Weibo's cash, cash equivalents and short-term investments totaled $1.79 million compared to $396 million as of December 31, 2016. Aside from earnings, the increase in cash, cash equivalents and the short-term investments was also attributed to the net proceeds received from issuance of $900 million convertible senior notes. For the fourth quarter, cash provided by operating activities were $198.3 million, capital expenditures totaled $9 million and the depreciation and amortization expenses amounted to $4.5 million. We delivered free cash flow of $189.3 million for the quarter, representing 149% growth year-over-year, surpassing the growth rate in net income. This quarter demonstrates a strong operation leverage and a unique platform business feature Weibo has enjoyed. According to our ADR depositary firm, as of December 31, 2017, approximately 28% of Weibo's shares outstanding were represented by American depository shares, 85% of which was considered floating shares. Turning to Weibo's first quarter 2018 guidance. We have adopted a new revenue standard, ASC 606, revenue from contracts with customers, which took effect on January 1, 2018. By applying the modified retrospective method and the new accounting standard, we are very proud to report our revenue net of value-added tax and to recognize value generated through advertising and better transactions. First, our preliminary assessment of the new accounting standard. The aggregate impact from the accounting changes will not be material to our financial statements as a whole. By applying the new accounting standard, we estimate our first quarter revenue to be between $335 million and $345 million, which assumes a foreign exchange rate of RMB 6.50 to $1. With that, let me now turn the call over to the operator to begin the Q&A portion.

[Operator Instructions]. The first question comes from the line of Juan Lin from 86Research.

I have two questions. The first one is on our user matrixes. I noticed that in 2017 we added 33 million DAU and 75 million MAU. I am wondering if - whether the net growth of user number in 2018 and going forward will be stabilizing at the current level. This is the first question. And the second question is on our user feed monetization. Now, that [indiscernible] has already been available for both pay and SME advertisers, I am wondering what is the current ECPM of new feed versus last quarter and the Q4 2016 and what is the outlook for ECPM for 2018.

I think, as everybody knows, the competitive landscape in China mobile, Internet industry has significantly changed in the last year and the rising cost for user acquisitions through the handset manufacturers has been well noticed in the marketplace. However, because Weibo had a long-term relationship with the handset manufacturers, top APPs and the TV station and the other long form video companies, we have a very unique position in the marketplace to negotiate right cost to work with - in the user acquisition front.

You look at the base number of our users - we understand it's getting harder from a percentage point of view to grow the new users, and this is also thus reflected on both the fresh new users and the recall new users. However, our monetization capability has been rising in the last couple of years as well, so we are confident that the monetization we can get from each user can well cover the costs we incurred in the new user acquisitions.

As I indicated in my prepared remarks, we already made a really good progress in the recalled customer in 2017. So heading into 2018, this is one of the area we will continue to focus our efforts. I think on one side because we are a social media platform, we are served by a natural advantage in terms of connecting and recalling customer back, and on the other side, our capability in machine learning enhancement as well as our expansion in the video experience also helps us to attract our user back to our platform. Yes, I think there is two sets of ECPM worth noting. One is related to those we call a pure media property, for example, the launch page ECPM. The other sets are the news feed, the feed ECPM. You look at the pure media ECPM, compared to other competitors in the marketplace, we still have - we have certain price advantage over that. With the growing base of our users, we intend to increase our ECPM on that front in 2018. On the feed ECPM, as we introduced the Super Fans Top in the marketplace in late third quarter last year, we have better a matching with our inventory and our customer demand. And we anticipate the ECPM for the feed in 2018 will continue to rise in the foreseeable future.

The next question comes from the line of Alicia Yap.

I have a question related to the 1Q guidance. So can you explain a little bit more about the new accounting standard. Your 1Q guidance actually implies currently about 68% to 73% year-over-year growth. What would be the like-to-like growth rate if we were using the previous comps, like the standard? And then related to the 1Q, can you also give us some colors of the ultimate growth drivers? Will that mainly driven by the increased ad budget from the existing customer or you actually expect growing more SME customer base or is it more driven by technology improvement that allow the customer to actually be a bit more efficiently and also - leading to the higher ECPM? And then any benefit you expect to get from the Chinese New Year gala, the Winter Olympics?

This is Vani. On your first question, I think in Gaofei's prepared remarks we made it very clear that the aggregated impact from the accounting changes on revenue line is not material taking the financial statement as a whole. If I want to expand this a little bit, there's two parts of the new accounting standard that will have impact on Weibo moving into 2018. One is the value-added tax. Historically, we are recording - we are using growth method, recording where - whereby our revenue included the value-added tax. With the new accounting standard, now we are required to report revenue only through a net form. That means that part of the value-added tax will be taken directly out of the revenue. So that's the one-fold. The second part is the accounting for the advertising barter transactions. Prior accounting required no - barter transactions can be recognized if a fair value cannot be determined in the marketplace. However, the latest new accounting standard has updated that with a transaction sort of a model, where a company is required to recognize a barter transaction based on transaction sort of arrangements. With that, we anticipate that we have to report that barter in 2018. But the net-net of these two components, they are offsetting each other, because one is to reduce your revenue, the other is increasing your revenue. That's why we said that the aggregated impact from such changes will not be material. So if you're using the old method and the new method, you are coming to a very similar result for two sets of accounting standards. Hopefully, that answers your first question. The second is on the driver part. I think the - you already mentioned a number of those drivers as you asked the question. I don't think one that a single set of driver will be predominant compared to the others. So it's a mix issue. On the key account side, we're probably talking more on the budget shifting, while on the SME customer side, we're talking about more customer - a larger customer base. We're talking about higher bidding activities on the platform. So that we're anticipating the rising of the ECPM as more bidding available to us. So I don't think we're singling out a particular component that would be the only set to drive the revenue growth. We're talking about multiple elements. Your third question is on the Chinese New Year Gala and the Winter Olympic. You want to go ahead?

If you look back at the past three years our Q1 performance, you might be noticing that Q1 is representing a very important quarter for us to acquire new users. This is a quarter we generally work with CCTV-1 for the Chinese New Year Gala, and through the red envelope and the participation in the Chinese New Year Gala, we expect to attract a significant portion of our new user during the year. As you may know, Weibo was the only social media partner to the CCTV-1 for the last couple of years. And even the Gala - the Gala is going to happen in three days. Even prior to the - there's a lot of pre-event that's going on right now and we already see pretty good pick-up in the new users. We are hoping this year it's another - will be another good quarter for us to attract and to retain our users, and the Chinese New Year Gala, the collaboration between Weibo and CCTV hopefully will become another successful event for both parties.

Now, I would like to hand the conference back to the speakers. Please go ahead, ma'am.

That concludes today's conference call. Thank you for joining us, everyone. Thank you.