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––For r

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

OR

 

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021

 

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

OR

 

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from                       to                        

Commission file number: 001-36397

WEIBO CORPORATION

(Exact name of Registrant as specified in its charter)

 

Cayman Islands

(Jurisdiction of incorporation or organization)

 

8/F, QIHAO Plaza, No. 8 Xinyuan S. Road
Chaoyang District, Beijing 100027
People’s Republic of China

(Address of principal executive offices)

 

Fei Cao, Chief Financial Officer
Phone: +86 10 5898-3095
Facsimile: +86 10 8260-8888
8/F, QIHAO Plaza, No. 8 Xinyuan S. Road, Chaoyang District
Beijing 100027, People’s Republic of China

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

American depositary shares, each representing one Class A ordinary share

WB

 

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Class A ordinary shares, par value US$0.00025 per share

9898

The Stock Exchange of Hong Kong Limited

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Not Applicable

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

(Title of Class)

As of December 31, 2021, there were 236,553,460 ordinary shares outstanding, par value US$0.00025 per share, being the sum of 140,274,502 Class A ordinary shares and 96,278,958 Class B ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

Emerging growth company 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

†     The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

International Financial Reporting Standards as issued
by the International Accounting Standards Board

Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17   Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes   No

TABLE OF CONTENTS

Part I

4

Item 1.

Identity of Directors, Senior Management and Advisers

4

Item 2.

Offer Statistics and Expected Timetable

4

Item 3.

Key Information

4

Item 4.

Information on the Company

72

Item 4A.

Unresolved Staff Comments

111

Item 5.

Operating and Financial Review and Prospects

111

Item 6.

Directors, Senior Management and Employees

128

Item 7.

Major Shareholders and Related Party Transactions

137

Item 8.

Financial Information

143

Item 9.

Offer and Listing

145

Item 10.

Additional Information

145

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

160

Item 12.

Description of Securities Other than Equity Securities

162

Part II

167

Item 13.

Defaults, Dividend Arrearages and Delinquencies

167

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

167

Item 15.

Controls and Procedures

167

Item 16A.

Audit Committee Financial Expert

168

Item 16B.

Code of Ethics

168

Item 16C.

Principal Accountant Fees and Services

168

Item 16D.

Exemptions from the Listing Standards for Audit Committees

169

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

169

Item 16F.

Change in Registrant’s Certifying Accountant

169

Item 16G.

Corporate Governance

169

Item 16H.

Mine Safety Disclosure

169

Item 16I.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

169

Part III

170

Item 17.

Financial Statements

170

Item 18.

Financial Statements

170

Item 19.

Exhibits

170

SIGNATURES

174

i

INTRODUCTION

Unless otherwise indicated and except where the context otherwise requires, all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed herein are due to rounding, and references in this annual report on Form 20-F to:

“we,” “us,” “our company,” “the Company” or “our” refers to Weibo Corporation, a Cayman Islands company, its subsidiaries, and, in the context of describing its operations and consolidated financial information, its consolidated affiliated entities in China, including, but not limited to, Beijing Weimeng Technology Co., Ltd., or Weimeng, and Beijing Weimeng Chuangke Investment Management Co., Ltd., or Weimeng Chuangke;
“Weibo” refers to our social media platform and the products and services that we provide to users, customers and platform partners through that platform;
“SINA” refers to Sina Corporation, our parent company and controlling shareholder;
“China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan;
“Class A ordinary shares” refers to Class A ordinary shares of the share capital of our Company with a par value of US$0.00025 each, conferring a holder of a Class A ordinary share one vote per share on any resolution tabled at our Company’s general meeting;
“Class B ordinary shares” refers to Class B ordinary shares of the share capital of our Company with a par value of US$0.00025 each, conferring weighted voting rights in our Company such that a holder of a Class B ordinary share is entitled to three votes per share on any resolution tabled at our Company’s general meeting;
“CSRC” refers to China Securities Regulatory Commission;
“DAUs” refers to daily active users, which are Weibo users who logged on with a unique Weibo ID and accessed Weibo through our website, mobile website, desktop or mobile applications, SMS or connections via our platform partners’ websites or applications that are integrated with Weibo, on a given day, and “average DAUs” for a month refers to the average of the DAUs for each day during the month. The numbers of our DAUs are calculated using internal company data that has not been independently verified and we treat each account as a separate user for purposes of calculating DAUs, although it is possible that certain individuals or organizations may have set up on more than one account and certain accounts are used by multiple individuals within an organization;
“feeds” include both posts and reposts;
“HK$,” “Hong Kong dollars” or “HK dollars” refers to Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong,” “HK” or “Hong Kong S.A.R.” refers to the Hong Kong Special Administrative Region of the PRC;
“Hong Kong Listing Rules” refers to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended or supplemented from time to time;
“Hong Kong Share Registrar” refers to Computershare Hong Kong Investor Services Limited;
“Hong Kong Stock Exchange” refers to The Stock Exchange of Hong Kong Limited;
“Main Board” refers to the stock market (excluding the option market) operated by the Hong Kong Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the Hong Kong Stock Exchange;

1

“MAUs” refers to monthly active users, which are Weibo users who logged on with a unique Weibo ID and accessed Weibo through our website, mobile website, desktop or mobile applications, SMS or connections via our platform partners’ websites or applications that are integrated with Weibo, during a given calendar month. The numbers of our MAUs are calculated using internal company data that has not been independently verified, and we treat each account as a separate user for purposes of calculating MAUs, although it is possible that certain individuals or organizations may have set up on more than one account and certain accounts are used by multiple individuals within an organization;
“top content creators” refers to content creators with more than 10,000 followers as of the end of a given month, or 10,000 monthly views on Weibo in a given month, excluding duplicates;
“SFO” or “Securities and Futures Ordinance” refers to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended or supplemented from time to time;
“shares” or “ordinary shares” refers to our Class A and Class B ordinary shares, par value US$0.00025 per share;
“ADSs” refers to our American depositary shares. Each ADS represents one Class A ordinary share;
“U.S. GAAP” refers to generally accepted accounting principles in the United States; and
all references to “RMB” or “renminbi” are to the legal currency of China, and all references to  “dollars,” “US$” and “U.S. dollars” are to the legal currency of the United States. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB in this annual report were made at a rate of RMB6.3726 to US$1.00, the exchange rate on December 30, 2021 as set forth in the H.10 statistical release published by the Federal Reserve Board.

2

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:

our goals and strategies;
our future business development, financial condition and results of operations;
our ability to attract and retain users and customers and generate revenue and profit from our customers;
our ability to retain key personnel and attract new talent;
competition in social media, social networking, online marketing, and other businesses in which we engage;
the outcome of ongoing or any future litigation or arbitration, including those relating to intellectual property rights;
the growth of social media, internet and mobile users and internet and mobile advertising in China;
PRC governmental policies relating to media, the internet, internet content providers and online advertising, and the implementation of a corporate structure involving VIEs in China; and
other factors described under “Item 3. Key Information—D. Risk Factors.”

You should thoroughly read this annual report and the documents that we refer to in this annual report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

3

PART I

Item 1.  Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.  Offer Statistics and Expected Timetable

Not applicable.

Item 3.  Key Information

Our Holding Company Structure and Contractual Arrangements with Our Consolidated VIEs and Their Respective Individual Shareholders

Weibo Corporation is not an operating company in China, but a Cayman Islands holding company with no equity ownership in its VIEs. We conduct our operations in China through our PRC subsidiaries and our VIEs with which we have maintained contractual arrangements and their subsidiaries in China. PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in internet and other related businesses, including the provision of internet content and online game operations. Accordingly, we operate these businesses in China through our VIEs, and rely on contractual arrangements among our PRC subsidiaries, our VIEs and their shareholders to control the business operations of our VIEs. Revenues contributed by our VIEs and their subsidiaries accounted for 83.4%, 78.1% and 80.7% of our total revenues for the years of 2019, 2020 and 2021, respectively. As used in this annual report, “we,” “us,” “our company,” “the Company” or “our” refers to Weibo Corporation, a Cayman Islands company, its subsidiaries, and, in the context of describing its operations and consolidated financial information, its consolidated affiliated entities in China, including, but not limited to, Weimeng and Weimeng Chuangke. Investors of our ADSs are not purchasing equity interest in our operating entities in China but instead are purchasing equity interest in a Cayman Islands holding company.

A series of contractual agreements, including loan agreements, share transfer agreements, loan repayment agreements, agreement on authorization to exercise shareholder’s voting power, share pledge agreements, exclusive technical services agreement, exclusive sales agency agreement, trademark license agreement, and spousal consent letters, have been entered into by and among our PRC subsidiaries, our VIEs and their respective shareholders. Terms contained in each set of contractual arrangements with our PRC subsidiaries, our VIEs and their respective shareholders are substantially similar. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with Our Consolidated VIEs and Their Respective Individual Shareholders.”

The contractual arrangements may not be as effective as direct ownership in providing us with control over our consolidated VIEs and we may incur substantial costs to enforce the terms of the arrangements. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with our VIEs and their respective shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—Shareholders of our VIEs may have potential conflicts of interest with us, which may affect the performance of the contractual arrangements with our VIEs and their respective shareholders, which may in turn materially and adversely affect our business and financial condition.”

Our corporate structure is subject to risks associated with our contractual arrangements with our VIEs. Investors may never directly hold equity interests in our VIEs. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries, our VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our VIEs and our company as a whole.

4

There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with our VIEs and their respective shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of our VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the agreements establishing the structure for operating our businesses in China do not comply with PRC regulations on foreign investment in internet and other related businesses, or if these regulations or their interpretation change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” and “—Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

We face various legal and operational risks and uncertainties associated with being based in or having our operations primarily in China and the complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, the use of our VIEs, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. We face risks associated with the lack of Public Company Accounting Oversight Board, or the PCAOB, inspection on our auditors so determined by the announcement of the PCAOB issued on December 16, 2021, which may impact our ability to conduct certain businesses, accept foreign investments, or list on United States or other foreign exchange outside of China. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of risks related to doing business in China, “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China.”

PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or be of little or no value. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our listed securities.”

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors— Risks Relating to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.”

Permissions Required from the PRC Authorities for Our Operations

We conduct our business primarily through our subsidiaries, our VIEs and their subsidiaries in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our consolidated affiliated Chinese entities have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, our subsidiaries and our VIEs in China, including, among others, the Internet Content Provision License and Online Culture Operating Permit held by Weimeng. However, given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by government authorities, we cannot assure you that we have obtained all the permits or licenses required for conducting our business in China. For example, Weimeng is not qualified to obtain the internet audio/video program transmission license under the current legal regime as it is not a wholly state-owned or state-controlled company and it was not operating prior to the issuance of the Rules for the Administration of Internet Audio and Video Program Services, commonly known as Circular 56. Weimeng plans to apply for an internet audio/video program transmission license when feasible to do so. In addition, an internet publishing permit might be necessary for our provisions of online game related services and the contents generated by our users on our platform. Weimeng has been actively communicating with the relevant regulator for the application of an internet publishing permit. Furthermore, although most of the games on our website have obtained approval from the National Press and Publication Administration, or the NPPA, certain games may not be able to obtain such approval due to the narrow interpretation of the scope of “game” adopted by NPPA in practice. We may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC licensing and regulation of internet businesses.”

5

In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and our VIEs, (i) are not required to obtain permissions from the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.

However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

Cash and Asset Flows through Our Organization

Weibo Corporation transfers cash to its wholly-owned Hong Kong subsidiaries, by making capital contributions or providing loans, and the Hong Kong subsidiaries transfer cash to the subsidiaries in China by making capital contributions or providing loans to them. Because Weibo Corporation and its subsidiaries control our VIEs through contractual arrangements, they are not able to make direct capital contribution to our VIEs and their subsidiaries. However, they may transfer cash to our VIEs by loans or by making payment to the VIEs for inter-group transactions.

Prior to December 31, 2019, Weibo Corporation, through its intermediate holding companies, provided capital contribution of US$190.0 million to its subsidiaries in China. Subsequently there was no additional capital contribution or loan investment from Weibo Corporation to its subsidiaries or VIEs in China. For the years ended December 31, 2019, 2020 and 2021, our VIEs received debt financing of US$443.7 million, US$285.9 million and US$11.4 million from WFOEs, respectively.

Our VIEs may transfer cash to the relevant WFOE by paying service fees according to the exclusive technical services agreement, exclusive sales agency agreement and trademark license agreement. For the years ended December 31, 2019, 2020 and 2021, the total amount of service fees that VIEs paid to the relevant WFOE under the exclusive technical services agreement, exclusive sales agency agreement and trademark license agreement was US$935.8million, US$812.8 million and US$719.1 million, respectively.

For the years ended December 31, 2019, 2020 and 2021, no dividends or distributions were made to Weibo Corporation by our subsidiaries. Under PRC laws and regulations, our PRC subsidiaries and VIEs are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by SAFE. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and VIEs, totaling US$394.7 million, US$451.7 million and US$480.7 million as of December 31, 2019, 2020 and 2021, respectively. Furthermore, cash transfers from our PRC subsidiaries to entities outside of China are subject to PRC government control of currency conversion. Shortages in the availability of foreign currency may temporarily delay the ability of our PRC subsidiaries and VIEs to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. For risks relating to the fund flows of our operations in China, see Item 3. Key InformationRisk FactorsRisks Relating to Doing Business in ChinaAny limitation on the ability of our PRC subsidiaries to make payments to us, or the tax implications of making payments to us, could have a material adverse effect on our ability to conduct our business or our financial condition.

In the years ended December 31, 2019, 2020 and 2021, no assets other than cash were transferred through our organization.

Weibo Corporation has not declared or paid any cash dividends, nor does it have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. See Item 8. Financial InformationA. Consolidated Statements and Other Financial InformationDividend Policy. For the Cayman Islands, PRC and U.S. federal income tax considerations applicable to an investment in our ADSs or Class A ordinary shares, see Item 10. Additional InformationE. Taxation.

6

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future:

    

Tax calculation (1)

Hypothetical pre-tax earnings(2)

 

100

%

Tax on earnings at statutory rate of 25%(3)

(25)

%

Net earnings available for distribution

 

75

%

Withholding tax at standard rate of 10%(4)

(7.5)

%

Net distribution to Parent/Shareholders

 

67.5

%

Notes:

(1)

For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China.

(2)

Under the terms of VIE agreements, our PRC subsidiaries may charge our VIEs for services provided to VIEs. These service fees shall be recognized as expenses of our VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminate in consolidation. For income tax purposes, our PRC subsidiaries and VIEs file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by our VIEs and as income by our PRC subsidiaries and are tax neutral.

(3)

Certain of our subsidiaries and VIEs qualifies for a 15% preferential income tax rate in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

(4)

The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIEs immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

The table above has been prepared under the assumption that all profits of our VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements. If, in the future, the accumulated earnings of our VIEs exceed the service fees paid to our PRC subsidiaries (or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities), our VIEs could make a non-deductible transfer to our PRC subsidiaries for the amounts of the stranded cash in our VIEs. This would result in such transfer being non-deductible expenses for our VIEs but still taxable income for the PRC subsidiaries. Such a transfer and the related tax burdens would reduce our after-tax income to approximately 50.6% of the pre-tax income. Our management believes that there is only a remote possibility that this scenario would happen.

7

Financial Information Related to the VIEs

The following tables present the condensed consolidating schedule of financial information for Weibo Corporation, its wholly owned subsidiary that is the primary beneficiary of our VIEs, namely, Weibo Technology, our other subsidiaries, our VIEs and our VIEs’ subsidiaries as of the dates presented.

Selected Condensed Consolidated Statements of Operations Data

For the Year Ended December 31, 2021

    

    

Primary

    

    

    

Weibo 

Other

Beneficiary of

VIEs and VIEs’ 

Eliminating

Consolidated 

    

Corporation

    

Subsidiaries

    

VIEs

    

Subsidiaries

    

 adjustments

    

Totals

(in US$ thousands)

Third-party revenues

 

830

232,857

202,102

1,821,294

2,257,083

Inter-company revenues(1)

1,026,210

(1,026,210)

Total costs and expenses

 

(91,572)

(109,613)

(623,559)

(1,761,137)

1,026,210

(1,559,671)

Income (loss) from subsidiaries and VIEs(2)

 

568,738

548,021

(36,406)

(1,080,353)

Income (loss) from non-operations

 

(49,677)

(79,862)

52,556

(69,711)

(146,694)

Income (loss) before income tax expenses

 

428,319

591,403

620,903

(9,554)

(1,080,353)

550,718

Less: income tax expenses

 

22,621

72,882

43,338

138,841

Net income (loss)

 

428,319

568,782

548,021

(52,892)

(1,080,353)

411,877

Less: net income (loss) attributable to non-controlling interests

 

44

(16,486)

(16,442)

Net income (loss) attributable to Weibo’s shareholders

 

428,319

568,738

548,021

(36,406)

(1,080,353)

428,319

For the Year Ended December 31, 2020

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating

Consolidated

    

Corporation

    

Subsidiaries

    

VIEs

    

Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Third-party revenues

 

314

152,188

218,349

1,319,080

1,689,931

Inter-company revenues(1)

767,707

(767,707)

Total costs and expenses

 

(68,725)

(85,271)

(496,429)

(1,300,415)

767,707

(1,183,133)

Income (loss) from subsidiaries and VIEs(2)

 

411,828

301,251

(129,126)

(583,953)

Income (loss) from non-operations

 

(30,053)

49,057

(8,600)

(141,289)

(130,885)

Income (loss) before income tax expenses

 

313,364

417,225

351,901

(122,624)

(583,953)

375,913

Less: income tax expenses

 

5,657

50,650

5,009

61,316

Net income (loss)

 

313,364

411,568

301,251

(127,633)

(583,953)

314,597

Less: net income (loss) attributable to non-controlling interests and redeemable non-controlling interests

 

(260)

1,493

1,233

Net income (loss) attributable to Weibo’s shareholders

 

313,364

411,828

301,251

(129,126)

(583,953)

313,364

8

    

For the Year Ended December 31, 2019

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating

Consolidated

    

Corporation

    

Subsidiaries

    

VIEs

    

Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Third-party revenues

 

791

56,475

236,781

1,472,867

1,766,914

Inter-company revenues(1)

834,843

(834,843)

Total costs and expenses

 

(62,905)

(55,755)

(434,045)

(1,451,468)

834,843

(1,169,330)

Income (loss) from subsidiaries and VIEs(2)

 

554,677

635,894

9,874

(1,200,445)

Income (loss) from non-operations

 

2,112

(58,407)

50,176

10,932

4,813

Income (loss) before income tax expenses

 

494,675

578,207

697,629

32,331

(1,200,445)

602,397

Less: income tax expenses

 

24,092

61,735

23,737

109,564

Net income (loss)

 

494,675

554,115

635,894

8,594

(1,200,445)

492,833

Less: net loss attributable to non-controlling interests

 

(562)

(1,280)

(1,842)

Net income (loss) attributable to Weibo’s shareholders

 

494,675

554,677

635,894

9,874

(1,200,445)

494,675

9

Selected Condensed Consolidated Balance Sheets Data

As of December 31, 2021

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating

Consolidated

    

Corporation

    

Subsidiaries

    

VIEs

    

Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Assets

Cash and cash equivalents

 

1,027,431

 

327,291

885,438

 

183,543

 

 

2,423,703

Short-term investments

500,225

100,365

110,472

711,062

Accounts receivable

 

 

68,242

4,569

 

650,278

 

 

723,089

Prepaid expenses and other current assets

 

54,980

 

137,333

97,691

 

160,722

 

 

450,726

Amount due from Group companies(3)

 

1,054,147

 

(3,145)

1,607,529

 

 

(2,658,531)

 

Amount due from SINA

 

327,178

 

3,440

127,371

 

36,211

 

 

494,200

Investment in subsidiaries and VIEs(2)

 

3,106,184

 

3,063,879

(90,419)

 

 

(6,079,644)

 

Property and equipment, net

 

 

517

66,067

 

1,812

 

 

68,396

Operating lease assets

 

 

1,586

30,884

 

28,049

 

 

60,519

Intangible assets, net

 

 

 

166,930

 

 

166,930

Goodwill

 

 

 

130,405

 

 

130,405

Long-term investments

 

 

698,909

68,820

 

439,922

 

 

1,207,651

Other non-current assets

 

1,000

 

15,584

714,249

 

352,008

 

 

1,082,841

Total assets

 

6,071,145

 

4,414,001

3,512,199

 

2,260,352

 

(8,738,175)

 

7,519,522

Account payable

 

 

7,068

61,077

 

129,498

 

 

197,643

Accrued and other liabilities

 

41,935

 

57,992

240,240

 

480,866

 

 

821,033

Income tax payable

 

 

19,958

82,907

 

41,882

 

 

144,747

Deferred revenues

433

2,240

31,115

57,348

91,136

Amount due to Group companies(3)

 

 

1,196,289

 

1,462,242

 

(2,658,531)

 

Operating lease liability

 

 

1,503

30,436

 

28,022

 

 

59,961

Convertible debt

 

896,541

 

 

 

 

896,541

Unsecured senior notes

 

1,538,415

 

 

 

 

1,538,415

Defer tax liability

 

 

24,721

2,545

 

39,637

 

 

66,903

Other non-current liabilities

 

 

1

 

15,122

 

 

15,123

Total liabilities

 

2,477,324

 

1,309,772

448,320

 

2,254,617

 

(2,658,531)

 

3,831,502

Redeemable non-controlling interests

 

 

 

66,622

 

 

66,622

Total shareholders’ equity(2)

 

3,593,821

 

3,104,229

3,063,879

 

(60,887)

 

(6,079,644)

 

3,621,398

Total liabilities, redeemable non-controlling interests and shareholders’ equity

 

6,071,145

 

4,414,001

3,512,199

 

2,260,352

 

(8,738,175)

 

7,519,522

10

As of December 31, 2020

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating 

Consolidated 

    

 Corporation

    

Subsidiaries

    

VIEs

    

 Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Cash, cash equivalents

 

282,448

 

212,513

1,045,880

 

274,003

 

 

1,814,844

Short-term investments

1,510,841

171,207

1,682,048

Accounts receivable

 

 

60,420

568

 

431,022

 

 

492,010

Prepaid expenses and other current assets

 

41,261

 

32,435

167,408

 

55,653

 

 

296,757

Amount due from Group companies(3)

 

732,216

 

(3,060)

1,081,354

 

 

(1,810,510)

 

Amount due from SINA

 

212,604

 

(30,177)

335,331

 

31,142

 

 

548,900

Investment in subsidiaries and VIEs(2)

 

2,467,097

 

2,422,616

(33,343)

 

 

(4,856,370)

 

Property and equipment, net

 

 

876

59,064

 

692

 

 

60,632

Operating lease assets

 

 

1,978

3,415

 

1,783

 

 

7,176

Intangible assets, net

 

 

 

146,976

 

 

146,976

Goodwill

 

 

 

61,712

 

 

61,712

Long-term investments

 

 

678,544

106,177

 

394,745

 

 

1,179,466

Other non-current assets

 

1,000

 

15,032

12,949

 

15,615

 

 

44,596

Total assets

 

5,247,467

 

3,391,177

2,778,803

 

1,584,550

 

(6,666,880)

 

6,335,117

Account payable

 

 

7,296

58,877

 

83,336

 

 

149,509

Accrued and other liabilities

 

6,145

 

44,660

164,396

 

341,552

 

 

556,753

Income tax payable

 

 

3,582

72,845

 

26,417

 

 

102,844

Deferred revenues

 

386

 

2,052

55,400

 

85,846

 

 

143,684

Amount due to Group companies(3)

 

 

842,372

 

968,138

 

(1,810,510)

 

Operating lease liability

 

 

2,193

3,188

 

1,704

 

 

7,085

Convertible debt

 

892,399

 

 

 

 

892,399

Unsecured senior notes

 

1,536,112

 

 

 

 

1,536,112

Defer tax liability

 

 

24,400

1,481

 

32,418

 

 

58,299

Other non-current liabilities

 

 

 

2,102

 

 

2,102

Total liabilities

 

2,435,042

 

926,555

356,187

 

1,541,513

 

(1,810,510)

 

3,448,787

Redeemable non-controlling interests

 

 

 

57,714

 

 

57,714

Total shareholders’ equity(2)

 

2,812,425

 

2,464,622

2,422,616

 

(14,677)

 

(4,856,370)

 

2,828,616

Total liabilities, redeemable non-controlling interests and shareholders’ equity

 

5,247,467

 

3,391,177

2,778,803

 

1,584,550

 

(6,666,880)

 

6,335,117

Selected Condensed Consolidated Cash Flows Data

    For the Year Ended December 31, 2021

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating 

Consolidated 

    

 Corporation

    

Subsidiaries

    

VIEs

    

 Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Net cash provided by (used in) operating activities(4)

 

(29,381)

26,029

335,831

481,541

814,020

Loans to Group companies

 

(287,285)

(11,396)

298,681

Other investing activities

 

872,207

(227,893)

(484,877)

(583,397)

(423,960)

Net cash provided by (used in) investing activities

 

584,922

(227,893)

(496,273)

(583,397)

298,681

(423,960)

Borrowings under loan from Group companies

 

287,285

11,396

(298,681)

Other financing activities

 

189,442

189,442

Net cash provided by (used in) financing activities

 

189,442

287,285

11,396

(298,681)

189,442

11

    

    For the Year Ended December 31, 2020

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating 

Consolidated 

    

 Corporation

    

Subsidiaries

    

VIEs

    

 Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Net cash provided by (used in) operating activities(4)

(32,179)

66,316

550,247

157,262

 

741,646

Capital contribution to Group companies

(2,864)

 

2,864

Loans to Group companies

(144,289)

(285,853)

 

430,142

Other investing activities

(770,406)

(152,591)

(18,360)

(272,958)

 

(1,214,315)

Net cash provided by (used in) investing activities

(914,695)

(155,455)

(304,213)

(272,958)

 

433,006

(1,214,315)

Capital contribution from Group companies

2,864

 

(2,864)

Borrowings under loan from Group companies

144,289

285,853

 

(430,142)

Other financing activities

740,446

1,517

 

741,963

Net cash provided by (used in) financing activities

740,446

144,289

290,234

 

(433,006)

741,963

For the Year Ended December 31, 2019

    

    

Primary

    

    

    

Weibo

Other

Beneficiary of

VIEs and VIEs’

Eliminating

Consolidated

    

Corporation

    

Subsidiaries

    

VIEs

    

Subsidiaries

    

adjustments

    

Totals

(in US$ thousands)

Net cash provided by (used in) operating activities(4)

 

(32,371)

86,558

678,453

(100,987)

631,653

Loans to Group companies

 

(177,850)

(443,682)

621,532

Other investing activities

 

(376,566)

(245,611)

(298,777)

(280,404)

(1,201,358)

Net cash provided by (used in) investing activities

 

(554,416)

(245,611)

(742,459)

(280,404)

621,532

(1,201,358)

Borrowings under loan from Group companies

 

177,850

443,682

(621,532)

Other financing activities

 

793,599

(1,730)

791,869

Net cash provided by (used in) financing activities

 

793,599

177,850

441,952

(621,532)

791,869

(1)It represents the elimination of the intercompany service charge at the consolidation level.
(2)It represents the elimination of the investment among Weibo Corporation, other subsidiaries, primary beneficiary of VIEs, and VIEs and VIEs’ subsidiaries.
(3)It represents the elimination of intercompany balances among Weibo Corporation, other subsidiaries, primary beneficiary of VIEs, and VIEs and VIEs’ subsidiaries.
(4)For the years ended December 31, 2019, 2020 and 2021, cash paid by the VIEs to Weibo Technology for technical service fees were US$935.8 million, US$812.8 million and US$719.1 million, respectively.

A.[Reserved]

B.Capitalization and Indebtedness

Not applicable.

C.Reasons for the Offer and Use of Proceeds

Not applicable.

12

D.Risk Factors

Summary of Risk Factors

An investment in our ADSs or Class A ordinary shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully in Item 3. Key Information—D. Risk Factors.

Risks Relating to Our Business

If we fail to grow our active user base, or if user engagement on our platform declines, our business, financial condition and operating results may be materially and adversely affected.
If our users and platform partners do not continue to contribute content or their contributions are not valuable to other users, we may experience a decline in user traffic and user engagement.
We rely on our partnership program with channel partners, which mainly include application pre-install partners, programmatic buying partners and application marketplaces, to drive traffic to our platform, and if our partnership program becomes less effective or if the smartphone market and shipment in China slow down compared to the prior years, traffic to our platform could decline and our business and operating results could be adversely affected.
If we are unable to compete effectively for user traffic or user engagement, our business and operating results may be materially and adversely affected.
We may not be able to maintain or grow our revenues or our business.
We generate a substantial majority of our revenues from online advertising and marketing services. If we fail to generate sustainable revenue and profit through our advertising and marketing services, our result of operations could be materially and adversely affected.

Risks Relating to Our Corporate Structure

We are a Cayman Islands holding company with no equity ownership in our VIEs. We conduct our operations in China through our PRC subsidiaries and our VIEs with which we have maintained contractual arrangements and their subsidiaries in China. Investors thus are not purchasing the right to convert shares into direct equity interest in our operating entities in China but instead are purchasing the right to convert shares into equity interest in a Cayman Islands holding company. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries, our VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our VIEs and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Risk Factors—Risks Relating to Our Corporate Structure.”

Risks Relating to Doing Business in China

The PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline. For more details, see “Risk Factors—Risks Relating to Doing Business in China—The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs and Class A ordinary shares.”
Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs and Class A ordinary shares. For more details, see “Risk Factors—Risks Relating to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.”

13

Regulation and censorship of information disseminated over the internet in China may adversely affect our business and subject us to liability for information displayed on Weibo, or Yizhibo.
Our ADSs may be delisted and our ADSs and shares prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act, or the HFCAA, if the PCAOB is unable to inspect or fully investigate auditors located in China. On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. Under the current law, delisting and prohibition from over-the-counter trading in the U.S. could take place in 2024. If this happens there is no certainty that we will be able to list our ADS or shares on a non-U.S. exchange or that a market for our shares will develop outside of the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

Risks Relating to Our ADRs and Class A Ordinary Shares

The trading prices for our listed securities have been and are likely to continue be, volatile, regardless of our operating performance, which could result in substantial losses to our investors.
We adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange.
Substantial future sales or perceived potential sales of our Class A ordinary shares, ADSs, or other equity or equity-linked securities in the public market could cause the price of our Class A ordinary shares and/or ADSs to decline.

Risks Relating to Our Business

If we fail to grow our active user base, or if user engagement on our platform declines, our business, financial condition and operating results may be materially and adversely affected.

The growth of our active user base and the level of user engagement are critical to our business. We had 573 million MAUs and 249 million average DAUs in December 2021. Our business has been and will continue to be significantly affected by our success in growing and retaining massive active users and increasing their overall level of engagement on our platform, including their engagement with promoted feeds, other advertising and marketing products and value-added services on our platform. We anticipate that our user growth rate will slow over time as the size of our user base increases and as we achieve higher market penetration in China’s internet population. To the extent our user growth rate slows or the number of our users declines, our success will become increasingly dependent on our ability to retain existing users and enhance user activities and stickiness on the platform. If people do not perceive content and other products and services on our platform to be interesting and useful, we may not be able to retain and attract users or increase their engagement. A number of user-oriented websites and mobile applications that achieved early popularity have since seen their user bases or levels of engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our active user base or engagement level. A number of factors could potentially negatively affect user growth and engagement, including if:

we are unable to retain existing users and attract new users to our platform, or achieve greater penetration into lower tier cities in China;
there is a decrease in the perceived quality or reliability of the content generated by our users;
a large number of influencers, such as celebrities, key opinion leaders, or KOLs and other public figures, and platform partners, such as media outlets and organizations with media rights, switch to alternative platforms or use other products and services more frequently;

14

we are unable to manage and prioritize information to ensure users are presented with content that is appropriate, interesting, useful and relevant;
we fail to introduce new and improved products or services or we introduce new or improved products or services that are not well received by users;
technical or other problems prevent us from delivering our products or services in a rapid and reliable manner or otherwise adversely affect the user experience;
users believe that their experience is diminished as a result of the decisions we make with respect to the frequency, relevance, prominence, format and quality of the advertisements displayed on our platform;
we are unable to combat spam or other hostile or inappropriate usage on our platform;
there are user concerns related to privacy and communication, safety, security or other factors;
we fail to provide adequate customer service to our users;
users engage with other platforms or activities instead of ours;
there are adverse changes in our products or services that are mandated by, or that we elect to make to address, legislation, regulations or government policies; or
we fail to maintain our brand image or our reputation is damaged.

We have undertaken various initiatives to stimulate the growth of our users and user engagement. For instance, in addition to the microblogging service with which Weibo originally started, we have added functionalities such as trends, topics, search, short videos, live streaming and interest-based information feeds over the years, which we believe have helped broaden our appeal and generate more user traffic and engagement. However, there can be no assurance that these and other strategies will continue to be effective. If we are unable to increase our user base and user engagement, our platform could be less attractive to potential new and existing users and customers, which would have a material and adverse impact on our business, financial condition and operating results.

If our users and platform partners do not continue to contribute content or their contributions are not valuable to other users, we may experience a decline in user traffic and user engagement.

Our success depends on our ability to provide users with interesting and useful content, which in turn depends on the content contributed by our users and platform partners. We believe that one of our competitive advantages is the quality, quantity and open nature of the content on Weibo, and that access to rich content is one of the main reasons users visit Weibo. We seek to foster a broader and more engaged user community, and we encourage influencers, such as celebrities, KOLs and other public figures, and platform partners, such as multi-channel networks, (the “MCNs”), media outlets and organizations with media rights, to use our platform to express their views and share interesting, and high quality content.

Among all our users, influencers have been contributing increasingly interesting and attractive contents on our platform. We provide these content creators with the opportunity to monetize their social assets on Weibo through advertising, e-commerce, paid-subscription, tipping and other means. If content creators do not see significant value from their social marketing activities on Weibo and find monetization on Weibo inadequate, we may have to subsidize them through direct content cost payout, which may have an adverse and material impact on our business and operating results. Alternatively, content creators may choose to switch to other platforms and contribute less or no content to Weibo, which may cause our user base and user engagement to decline and our customers view our products and services less attractive for advertising and marketing purposes and consequently reduce their advertising spending on our platform.

If users and platform partners do not continue to contribute content to Weibo due to policy changes, their use of alternative communication channels or any other reasons, and we are unable to provide users with interesting, useful and timely content, our user base and user engagement may decline. If we experience a decline in the number of users or the level of user engagement, customers may not view our products and services as attractive for their advertising and marketing expenditures and may reduce their spending with us, which would materially harm our business and operating results.

15

We rely on our partnership program with channel partners, which mainly include application pre-install partners, programmatic buying partners and application marketplaces, to drive traffic to our platform, and if our partnership program becomes less effective or if the smartphone market and shipment in China slow down compared to the prior years, traffic to our platform could decline and our business and operating results could be adversely affected.

We work with application (app) pre-install partners, such as key domestic handset manufacturers for user acquisition and activation. Due to intense competition in the marketplace, app pre-install partners may raise prices to a point where it becomes cost prohibitive for us to rely on them for Weibo user activation, or they may decide to discontinue their services to us altogether. The partnership also highly depends on the total amount of handset shipment and sales of our partners, which may fluctuate or slow down compared with prior years. The growth of Weibo’s user base is impacted by the growth of new users from Weibo app, and pre-installation of Weibo app on new smartphones is an important source of new Weibo users. A continuing slowdown of new smartphone shipment in China may adversely impact the growth rate of our new users. If this trend continues, our business and operating results may be materially and adversely affected.

We also work with programmatic buying partners, such as top applications for traffic direction and user activation. Due to the real time bidding nature of programmatic buying, the prices for inventories on top applications may fluctuate or surge to a point where it becomes less cost effective for us to invest in the channel. In addition, inaccurate user targeting and the possible high churn rate observed during the traffic direction step may also limit the overall effectiveness of the partnership.

In addition, we work with application marketplaces, including app stores of key domestic handset manufacturers as well as other major application marketplaces, to drive downloads of our mobile applications. In the future, Google (Android), Apple or other operators of application marketplaces may make changes to their marketplaces and make access to our products and services more difficult.

If we are unable to compete effectively for user traffic or user engagement, our business and operating results may be materially and adversely affected.

Competition for user traffic and user engagement is intense and we face strong competition in our business. Major Chinese internet companies, such as Tencent and Bytedance, compete directly with us for user traffic and user engagement, content, talent and marketing resources. As a social media featuring social networking services and messenger features, we are subject to intense competition from providers of similar services as well as potentially new types of online services. These services include (i) messengers and other social apps and sites, such as Weixin/WeChat, QQ Mobile, Qzone Mobile and Momo; (ii) news apps and sites, such as those operated by other major internet companies, including Tencent, Bytedance, Baidu, NetEase, Sohu and Phoenix News Media; (iii) multimedia apps (photo, video and live streaming, etc.), such as Douyin/TikTok, Kuaishou, Bilibili, iQiyi, Tencent Video, Youku, Xigua Video, Red (Xiaohongshu), Momo and JOYY. In addition, as a media platform in nature, we also compete with traditional media companies for audiences and content.

We also compete with both offline and online games for the time and money of game players. We offer social commerce solutions to our customers that enable them to conduct e-commerce on our platform. Consequently, our offerings compete with e-commerce companies and online verticals that enable merchants to conduct e-commerce, including location-based services and online-to-offline services. In addition to direct competition, we face indirect competition from companies that sponsor or maintain high traffic volume websites or provide an initial point of entry for internet users, including but not limited to providers of search services, web browser and navigation pages. We may also face competition from global social media, social networking services and messengers, such as Facebook, Instagram, Twitter, Youtube, TikTok, WhatsApp, Facebook Messenger, Snapchat, Pinterest, Line and Kakao Talk. Some of our competitors may have substantially more cash, traffic, technical and other resources than we do. We may be unable to compete successfully against these competitors or new market entrants, which may adversely affect our business and financial performance.

We believe that our ability to compete effectively for user traffic and user engagement depends upon many factors both within and beyond our control, including:

the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors;
the amount, quality and timeliness of content aggregated on our platform;

16

our ability to enable celebrities, KOLs, media outlets and other content creators to quickly and efficiently build a fan base and monetize from their social assets;
our ability, and the ability of our competitors, to develop new products and services and enhancements to existing products and services to keep up with user preferences and demands;
the frequency, relevance and relative prominence of the advertisements displayed by us or our competitors;
our ability to establish and maintain relationships with platform partners;
our ability to provide effective customer service and support;
changes mandated by, or that we elect to make to address, legislation, regulations or government policies, some of which may have a disproportionate effect on us;
acquisitions or consolidation within our industry, which may result in more formidable competitors; and
our reputation and brand strength relative to our competitors.

We may not be able to maintain or grow our revenues or our business.

We have experienced significant growth in revenues and in our business in recent years. Our ability to continue to grow our revenues depends on a number of factors. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results — Factors Affecting Our Results of Operations” for a detailed discussion.

Our revenue growth also depends on our ability to continue to grow our core businesses, newly-developed businesses, as well as businesses we have acquired or which we consolidated. We are exploring and will continue to explore in the future new business initiatives, including in industries and markets in which we have limited or no experience, as well as new business models, that may be untested. Developing new businesses, initiatives and models requires significant investments of time and resources, and may present new and difficult technological, operational and compliance challenges. Many of these challenges may be specific to business areas with which we do not have sufficient experience. We may encounter difficulties or setbacks in the execution of various growth strategies and these growth strategies may not generate the returns we expect within the timeframe we anticipate, or at all.

In addition, our overall or segment revenue growth may slow or our revenues may decline for other reasons, including increasing competition and slowing growth of China’s smartphone market, disruptions to China’s economy or the global economy from pandemics, natural disasters or other events, as well as changes in the geopolitical landscape, government policies or general economic conditions. As our revenue grows to a higher base level, our revenue growth rate may slow in the future. Furthermore, due to the size and scale we have achieved, our user base may decrease, not continue to grow as quickly or at all.

We generate a substantial majority of our revenues from online advertising and marketing services. If we fail to generate sustainable revenue and profit through our advertising and marketing services, our result of operations could be materially and adversely affected.

We started to generate revenues in 2012 through advertising and marketing services, and to a less extent also through value-added services. Ever since then, advertising and marketing services have been contributing a substantial majority of our total revenues, accounting for 88% of our revenues in both 2020 and 2021. Therefore, any failure to continue generating sustainable revenue and profit through our advertising and marketing services could materially harm our business.

Compared with traditional advertising and marketing solutions, online advertising and marketing services are evolving rapidly and sometimes considered experimental. In addition, we, as well as the whole industry, are endeavoring to develop novel forms of advertising and marketing services. As a result, we cannot guarantee that the advertising and marketing strategies we have adopted can generate sustainable revenues and profit. Particularly, as is common in the industry, our advertising and marketing customers do not have long-term commitments with us. In addition, some potential new customers may view our advertising and marketing services as unproven, and we may need to devote additional time and resources to convince them. Customers will not continue to do business with us or may only be willing to advertise with us at reduced prices if we do not deliver advertising and marketing services in an effective

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manner, or if they do not believe that their investment in advertising and marketing with us will generate a competitive return relative to alternative advertising platforms.

Our ability to add new customers and increase spending of existing customers can be particularly affected by our ability to provide timely and reliable measurement analysis of customers’ advertising campaigns on Weibo, as some customers rely on advertisement measurement to evaluate advertising effectiveness. We are working with third-party measurement firms to provide these data services to our customers but the online advertisement measurement market in China is nascent. We cannot assure you that our measurement partners will be able to provide measurement to the satisfaction of our customers. If our customers are unable to obtain measurement results on their marketing campaigns on Weibo to their satisfaction, our customers may be less willing to maintain or expand their advertising spending on our platform, and our financial conditions, results of operations and prospects may be materially and adversely affected.

We also need to adapt our advertising and marketing service offerings to the way users consume contents on our platforms. We introduced mobile-adapted promoted marketing solutions, such as promoted feeds, to our advertisers as our mobile products gain more user traffic. Users’ preferences on content format are also evolving. Online content in video format has become increasingly prevalent in recent years. If we are unable to adapt our products and services fo