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Weibo Corporation
3/3/2022
Good day and thank you for standing by. Welcome to Wakewood Corporation's fourth quarter and fiscal year 2021 earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To answer questions during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. And now, I'd like to hand the call over to the management team of Weibo Corporation. Thank you. Please go ahead.
Thank you, Operator, and welcome to Weibo's fourth quarter and fiscal year 2021 earnings conference call. Joining me today are our Chief Executive Officer, Gaofei Wang, and our Chief Financial Officer, Fei Cao. The conference call is also being broadcast on the Internet and is available through Weibo's IR website. Before the management remarks, I would like to read you the Safe Harbor Statement in connection with today's conference call. During today's conference call, we may make forward-looking statements, statements that are not historical facts, including statements of our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Weibo assumes no obligation to update the forward-looking statement in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's annual report on Form 20F and other filings with the SEC. All the information provided in this press release is occurring as of the date hereof. Weibo assumes no obligation to update such information except as required under applicable law. Additionally, I'd like to remind you that our discussion today includes certain non-GAAP measures, which includes stock-based compensation and certain other expenses. We used non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and future prospects. Our non-GAAP financials exclude certain expenses, gains and losses, and other items that are not expected to result in future cash payment or are non-recurring in nature, or are not indicative of our core operating result and outlook. Please refer to our press release for more information about our non-GAAP measures. Following management remarks, we will open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gao Fei Wang.
Thank you. Hello, everyone. Welcome to the Weibo press conference.
Thank you. Hello, everyone, and welcome to Weibo's fourth quarter 2021 earnings conference call.
On today's call, I'll share with you highlights in Weibo's user product monetization, review the progress made in 2021, and elaborate on our strategies for 2022. First, let's talk about the financial performance of Weibo in the fourth quarter. In the fourth quarter of 2021, although the macroeconomic environment and industry policy will have a certain negative impact on the advertising market, but as we strengthen the marketing ability in the heavy industry, the efficiency of traffic has been improved, and Weibo's revenue has remained the same as before, and the file growth is complete. In the fourth quarter, Weibo's total revenue reached $6.16 billion, and it rose by 20% year-on-year. The total advertising revenue reached $5.5 billion, and it rose by 21% year-on-year. Let me start with our fourth quarter financial results.
In the first quarter, we achieved solid revenue growth on both annual and quarterly basis, mainly attributable to our enhanced sales capability on key advertising industries, as well as our efforts to further improve our monetization efficiency. despite macro and industry headwinds on the advertising business. Our total revenue reached $616.3 million in the first quarter, an increase of 20% year over year. Advertising and marketing revenues reached $550.8 million, an increase of 21% year over year, with 94% of our ad revenue coming from mobile. In the first quarter, non-GAAP operating income reached $219.8 million, representing a non-GAAP operating margin of 36%. For full year 2021, Weibo's total revenues reached $2.26 billion, an increase of 34% year-over-year. Advertising and marketing revenues were $1.98 million, an increase of 33% year-over-year. Non-GAAP operating income reached $829.9 million, an increase of 43% year-over-year, representing a non-GAAP operating margin of 37%.
On user front, Weibo's MAU reached 573 million and average day use reached 249 million in December 2021, an increase of 10% and 11% year-over-year respectively.
Ninety-five percent of Weibo's MAUs came from mobile.
In 2021, even though the environment of the Internet industry has changed significantly, Weibo has always been around the core positioning of social media in the market and differentiated business advantages, growth in user size, and improved commercial performance. In terms of users, products, and commercialization, we have achieved good results. In terms of product operation, we are working hard to strengthen Weibo's competitiveness in hot spots, social media, and other core functions, and combine effective channel strategy. The number of users exceeded the peak during the outbreak of the epidemic in 2020. The number of users achieved a double growth in the same way. In terms of commercialization, our revenue reached 22.6 billion dollars, which increased by 34% year-on-year, which led to a strong recovery in 2020, and further improved Weibo's advertising market budget. This is mainly due to the improvement of Weibo traffic and efficiency, as well as the enhancement of the competitive ability of the main industry marketing and advertising products.
As we review 2021, we will navigate through industry changes and deliver solid results on user growth, product and monetization, leveraging our core positioning as a social media platform and differentiating market competitiveness. On product front, we sharpen our edge in core functions like hot trends and social attributes. Coupled with effective channel investment, we achieve double-digit percentage growth of our user base year-over-year. exceeding the peak level we achieved during COVID-19 outbreak in 2020. On monetization, our revenues reached $2.26 billion, up 34% year-over-year, representing a strong rebound from 2020. We further increased Weibo's share of wallet in the advertising market this year, made it attributable to traffic growth, ad-efficient improvement, stronger sales capability in P-vertical, as well as more competitive ad product metrics.
Next, let me share with you our progress made in product and monetization in the fourth quarter and lay out our key initiatives for 2022.
In the first quarter of 2021, on product operation, we focus on improving Weibo's monetization efficiency by strengthening our competitiveness in core features such as hot trend and social attributes. Coupled with effective channel investment, we deliver solid user growth and deep user engagement, which in turn improves monetization efficiency.
In terms of channels, we keep Weibo's advantage in terms of customer acquisition. We continue to focus on improving the frequency of active users. On the basis of stabilizing the size of users, the channel strategy will be able to drive users to improve the channels and clean up the users. In the channels of manufacturers and operators, users' scale continues to be improved. At the same time, we further improve the product efficiency. By optimizing the content quality and distribution recommended by the video, we can improve users' content consumption experience and improve users' content consumption frequency. On the other hand, On channel investment, in the first quarter, we continued to leverage Weibo's advantage in user acquisition cost and kept focusing on improving user frequency. While maintaining the number of users acquired,
Our channel strategy has tilt toward channels that could effectively drive user frequency and the scale of targeted users. Consequently, the number of users acquired from channel collaboration with multiple manufacturers and operators continue to grow. And meanwhile, we further improve our product offerings to better serve users acquired through channel. On the one hand, we optimized our content quality and distribution capability of interest-based video feed to improve users' experience and frequency to consume content. On the other hand, we enhanced our capability to accurately identify channel users' interest and characteristics and tailor product strategy to gradually lead users to shift toward community-based products such as Super Topic, while enhancing users' content consumption aiming to cultivate their mindset of using Weibo and thus improve their willingness to proactively visit us and increase onboard frequency.
In terms of social activity, we continue to strengthen the social nature of the product, keeping the size and activity of users and the user community as the focus. In terms of the traffic flow, we have further excavated and distributed high-quality social content, as well as strengthened the product strategy of hand-brushed social content exposure, effectively promoting users' consumption and interaction in the traffic flow. At the same time, By optimizing the distribution model of the traffic flow, we further strengthen the weight of the video number of Youzi and the content of the project. At the same time, we have improved the sociality of the traffic flow and increased the number of double digits in December last year. In terms of community media, under the current overall external environment, community business is becoming more and more important in Weibo's ecosystem. On the basis of the return of entertainment business last year, we have greatly enriched the community product category, and the community has been invested in strengthening the community operation in the field of games, sports, and campus. to upgrade and adjust the underlaying structure to accommodate more categories and encourage more users to participate in the content consumption of Weibo. Currently, the number of Weibo daily users has reached nearly 20% of the entire platform. In December, the scale of community users in sports, games, and schools has significantly improved. This has provided us with stronger development directions and confidence in the future. Our investment in the community will promote users' connection with Weibo
Turning to social attributes, in Q4, we continue to enhance social functions of our products, aiming to sustain the skill and engagement of our core users. On relationship-based feed, we further enhanced capability of discovering and distributing high-quality social content and effectively promoted user consumption and interaction in the relationship-based feed by product tactics, such as emphasizing exposure of social posts with high engagement in the top spot of the relationship-based feed, especially among users with low and medium user frequency. And meanwhile, we continue to optimize content structure of relationship-based feed and enhance social attributes through increasing content exposure from high-quality video accounts and super topics by optimizing the distribution mechanism in the relationship-based feed. As a result, the number of engagement per 1,000 impressions delivered grew double-digit percentage compared with that of December 2020. On community-based product, it has become an increasingly vital part within Weibo's ecosystem. Upon ensuring compliance of entertainment business operations, we have largely enriched the content verticals of Super Topics with emphasis on gaming, sports, and campus verticals and upgrading product framework leading to the consumption of community-based content by a broader user group and enrichment of more verticals. At this stage, the posts generated from Super Topics have reached nearly 20% of our total posts on a daily basis. In December 2021, we saw the number of users who consume community-based content in sports, gaming, and campus articles achieve notable growth year-over-year. This achievement gives us confidence that our investment in these products will further enhance users' social stiffness and engagement on Weibo and create growth opportunities for us in the new area.
In terms of video, we have continued to increase the size and contractuality of video calls and promote the production and consumption of video content as the focus. As of December, the opening scale of video calls exceeded 25 million, and the video call size of videos was also increased twice in January. In terms of business expansion and contractuality, Our focus is on the original video editor that can drive users to be active. The increase in the size of the video is constantly optimizing the quality of the content recommended by the video and the accuracy of the video. The efficiency of video recommendation continues to improve, improving our user activity and video broadcast storage. On video front, we continue to focus on expanding the scale of video accounts and improving their engagement, as well as facilitating video content creation and consumption.
so as to deepen user engagement. As of December 2021, there were over 25 million video accounts, and the number of video accounts uploading videos on a monthly basis increased multiple times on an annual basis. On operation and user engagement, we focus on original video content creators who can better drive user engagement and interaction, and incentivize them to generate content through traffic and operational resources support. especially for those in the key content verticals. On product side, we continue to enhance video production functions and motivated top KOLs to create content through providing them with more interactive features. Meanwhile, as the number of video accounts increases, we continue to improve content quality and distribution accuracy of the recommended video feed, further improving recommendation efficiency user engagement, and video ad inventories. On live streaming, we kept improving product features and user experience of joint mic live streaming in multiple scenarios, and further integrated joint mic live streaming with key IPs and events in core verticals, such as entertainment, sports, and gaming, in order to further cultivate users' consumption behavior. In December 2021, the DAUs of Weibo's live streaming more than doubled year-over-year.
In 2022, we will improve users' size and activity in the following three aspects. First, considering the size and market pattern of Weibo's overall usage, we will pay more attention to the balance between the cost of users and the change of users. The focus is to improve the ROI of the users in the channels and maintain the reasonable period of the cost of users in the second year.
Let me briefly lay out our strategy for 2022 on the product and operational front. We will strive to further grow Weibo's user base and engagement from the following three aspects. First, on channel investment. In view of Weibo's current user skill and competitive landscape, we will put more emphasis on keeping the balance between user acquisition costs and monetization per user and improving ROI of users acquired through channels. and thus to keep the total user acquisition cost within a reasonable range in 2022. 其次,从平台核心竞争力的维度, 我们将继续加强热点和社交的产品运营投入, 深化与媒体、文娱、游戏、体育合作方的战略合作, 推动媒体及IP方在话题议题的组织投入, 以及在社交资产的建设, 保障微博基于热点和IP的讨论供给, 保证微博在用户核心功能使用的竞争力,
At the same time, we will upgrade our products for the super-wide community, and significantly increase the type of coverage and user participation of Weibo's sexual community, which is also our key work in 2022. We expect Weibo's social media and community interaction functions to help Weibo get more young users to participate and help us gain more market share. Here, I would like to share some of Weibo's performance during the Beijing Winter Olympics. During the opening of the Winter Olympics, it attracted a lot of attention and participation from the people. Weibo has achieved strategic cooperation with Dongyun Center, All Chinese national teams participated in the competition, including Weibo, and launched 176 sportsman plans. Weibo actively shared sports impressions and activities with users, making Weibo the first platform for Chinese sportsman social interaction. During the Winter Olympics, over 2,500 sportsmen posted more than 2,500 posts on Weibo, with nearly 4,500,000 followers. At the same time, Weibo strengthened the Olympic hot spot cooperation with partners such as Yangshi, Migu, and Yangmei. The overall flow of Beijing Winter Olympics exceeded that of the Tokyo Olympic Games, Weibo's core competitiveness, we will continue to beef up our operational efforts around hot trends and social attributes, aiming to further solidify Weibo's competitive mode in our core features. To elaborate, for one thing,
we'll strengthen our strategic cooperation with partners in the media, entertainment, gaming, and sports sectors, advocating media and IP holders to lead topic discussion and facilitate the build-out of social assets so as to enrich the supply of discussion materials around trending topics and IPs on our platform. For another, as another key initiative in 2022, we will upgrade product functionality for super topics through expanding content verticals for interest-based communities, aiming to attract broader user base, especially younger generations, to consume content and engage to community products and capturing incremental market share from users' timestamps. For instance, let me share some achievements we've made during the 2018-2022 Winter Olympic Games that Jeff concluded. attracted great attention and engagement from the general public. Leveraging strategic cooperation with the Women's Sports Administrative Center, we invited all Chinese national teams and athletes to join Weibo and share moments and interact with Weibo users, making Weibo a social platform for social interactions among Chinese athletes. During the games, They are 176 athletes related to the topics being initiated, and over 2,500 posts generated from athletes worldwide, and nearly 45 million new followers accumulated for these athletes. And meanwhile, they also strengthen cooperation with partners, such as State Media and Me Too, on Olympics-related training topics. As a result, We are pleased to see the overall traffic of participating Winter Authentic Games on the global platform, the TAP, Tokyo Authentic Games, with the total number of public views and discussions around Winter Authentic Games reached over 450 billion and nearly 300 million times respectively, giving us the confidence that WIPO's unique value proposition has enabled us Before that, we can put our competitive notes on the product front. On company ecosystem, in 2021, we elevated the monetization capabilities for top content creators with emphasis on end monetization and e-commerce model, leading to nearly 50% growth in the number of top content creators who monetize within Weibo's ecosystem. Looking forward to 2022, we'll further optimize the monetization model and enhance monetization efficiency for top content creators to drive higher earnings for them, which would entice more quality content generation and drive user engagement in return.
At the end, in terms of video, we will continue to improve the video number system, improve the experience and motivation of new content creators, and accelerate the progress of community video. At the same time, we will focus on improving
Finally, on the video front, we will continue to leverage our video account program to improve the video production experience and enthusiasm for Weibo's core content creators, and thus accelerating the visualization trend among content creators. Meanwhile, we will focus on operation and content generation of key protocols, such as TV series and variety shows, gaming, and sports, in the hope of cultivating users' mindsets for choosing Weibo for differentiated video consumption experience so as to deepen user engagement.
In terms of commercialization, in the fourth quarter, ad revenue increased by 21%. Despite the impact of the external factors of promotion and the industry, Weibo's ad revenue still maintained an objective increase, which was first of all due to Weibo's customer industry results being more balanced. Our monetization front
Our air revenues continue to build solid growth in Q4, up 21% year-over-year, despite external factors such as macro environment and industry policies. The relative resilience in our advertising business was mainly attributable to two things. First, we benefited from a relatively balanced industry mix, with limited risk exposure to those sectors hit hard amid regulatory crackdown last year, such as education and online finance. Secondly, our integrated brand plus performance at offerings resonate greatly with customers, with branding needs, and position as well in the marketing competition, which not only enable us to secure our wallet share in key industries, but also tap into other industries and acquire incremental clients and budgets.
In terms of industry management, our advantageous industry, such as each and every customer, 10B2, 3C digital, car, Although the macroeconomic environment and industry policy have caused a certain impact on customers' demand for marketing, we have maintained an objective income growth in the fourth quarter by actively adjusting the marketing strategy, investing resources, and enhancing customer service capabilities. At the same time, we have focused on opening up the industry this year, including luxury goods, shoes, and so on. In the fourth quarter, we have still contributed to a higher income growth. For example, we have combined the shoes brand ANTA with the Olympic hot spot event. The combination of social media and live streaming allows more customers to gradually get to know Weibo's advertising products and user products. The combination of content operation and operation has formed a special marketing model, which has improved the advertising effect of customers and also led to a clear improvement in the advertising revenue and customer style of Weibo in this industry. In terms of advertising products, we focus on optimizing and innovating the form of advertising products, providing customers with more diverse product choices, and at the same time further strengthening the link between advertising products and content, helping customers build social assets,
From an industry perspective, despite a softer demand side amid challenges from macro-environment and industry policies, our traditionally strong industries, such as beauty and personal care, food and beverage, 3C products, and automobiles, continue to deliver solid growth in the fourth quarter, and are pinned by our optimization in marketing strategies and service capabilities. Meanwhile, our strategic focus on sectors such as luxury and apparel also paid off, contributing decent growth this quarter. We have showcased Weibo's differentiated value proposition to the market, featuring the synergies between our user product and content operation. For instance, we leveraged trending topics of Olympic Games to build hype for ANTA, a domestic apparel brand, and we also seamlessly incorporated luxury brand shows to our live streaming product. Such ad offerings improve our clients' ad performance, leading to notably higher ad wallet share in these industries. From ad product perspective, we focus on optimizing and innovating our ad formats to offer clients a diversified product portfolio while further strengthening the synergies between ad product and content operation. so as to empower clients to accumulate social assets and better reach targeted audience on Weibo.
In 2022, in terms of commercialization, we will continue to improve the commercialization scale of Weibo based on advertising products, sales and business operations, and market competitiveness. First, in terms of advertising products, we want to combine the characteristics and advantages of Weibo to strengthen the innovation of commercial products based on content, and promote more advertising products with competitive market power. For example, we will further optimize the ability of commercial advertising to improve the transfer efficiency and customer ad experience of advertising, and maximize the transformation efficiency of Weibo's new line. Second, based on the model of Weibo's commercial advertising in the core industry's risk-resistant ability, we will strive to maintain a steady growth in the key industry, and we will further promote the commercial advertising combination marketing method to more industries and customers. Heading into 2022,
On the monetization front, end-to-end bioptic in traffic will step up our efforts in ad product optimization and sales execution to further enhance our monetization skill, efficiency, as well as market competitiveness. First, on ad product, leveraging Weibo's differentiation and advantages will strengthen the innovation of content-based ad product, launching more ad product with competitive edge, such as app opening ad and hot trend products. and thus driving ad demand. Additionally, we will further optimize our ad placement capabilities for our performance ad offerings, uplifting the conversion efficiency and clients' ad placement experience in order to maximize the monetization efficiency of Weibo's information feed. Second, from an industry perspective, leveraging the resilience of Weibo's integrated brand-class performance ad offerings in key verticals. We are dedicated to sustaining steady revenue growth in these industries while extending the marketing combo of integrated brand-class performance ad with content operation to more industries and clients, aiming to attract incremental clients and ad wallet, as well as reinforce Weibo's competitiveness in the ad market. For instance, we plan to further upgrade our e-commerce product solution, namely Weibo Mini Shop, to enable clients to improve conversions through the closed-loop solution on our platform. Finally, on sales execution, we will continue to optimize Weibo's sales structure and improving synergies with the operational team as steps to formulate industry-specific monetization strategies, which would more closely support Weibo's marketing system. and improve its overall monetization efficiency. With that, let me turn the call over to Fei Cao for financial review.
Thank you, Gao Fei, and hello, everyone. Welcome to Weibo's fourth quarter and fiscal year 2021 earnings conference call. As a reminder, my prepared remarks will focus on non-GAAP results. All monetary amounts are in US dollar terms, and all the comparisons on a year-to-year basis, unless otherwise noted. Weibo had another solid quarter to finish 2021, with annual revenues surpassing the $2 billion mark, up 34% for the year, despite macro and industry headings. On top of top-line momentum, we also delivered a decent operating leverage and a strong operating cash flow. generating $829.2 million in operating income and $778.9 million in free cash flow. Starting with user metrics, in December 2021, we put MEUs and average DEUs, reaching $573 million and $249 million respectively, representing a net addition of $52 million and 25 million users on a year-over-year basis. In 2021, we have achieved a solid growth of user community, leveraging our strengths in serving public conversation and effective channel investment. Heading into 2022, we will focus on integrating our product roadmap to reinforce our differentiation in serving real-time public conversation while navigating through the new regulatory landscape. and making Weibo the go-to platform to find out and discuss what's happening. Meanwhile, we will beef up our investments in key content verticals such as sports and online gaming, positioning as well to tap into a broader user community and improve users' frequency and engagement. Now, let me walk you through our financial highlights for the first quarter and fiscal year 2021. Weibo's first quarter 2021 net revenues was $616.3 million, an increase of 20%. Operating income was $219.8 million, representing an operating margin of 36%. Net income attributable to Weibo reached $195.5 million, representing a net margin of 32%. Diluted EPS was $0.83, compared to $0.92 in 2020. Before year 2021, total revenues reached $2.26 billion, an increase of 34%. Operating income was $829.2 million, an increase of 43%, representing an operating margin of 37%. Net income attributable to Weibo reached $718.5 million, representing a net margin of 32%. Diluted EPS was 3.08 compared to 2.38 in 2020. Let me give you more color on our fourth quarter and the full year 2021 revenue growth. Weibo's advertising and marketing revenues for the fourth quarter 2021 was $515.8 million, an increase of 21%. Mobile ads revenues reached $516.1 million, representing 94% of our total ad revenues, up from 91% last year. Full year 2021 advertising and marketing revenues reached $1.98 billion, an increase of 33%, with mobile ad revenues contributing 93% of total ad revenues, up from 90% in 2020. Let's start with first quarter performance. We will close the year on a solid note, sustaining double-digit growth, even though the overall advertising market was tapping off amid macro and regulatory headwinds. In terms of revenue contribution, our top three verticals were FMCG, e-commerce, and 3C products. In terms of growth, luxury was the fastest growing vertical among major ones. Least consumption sectors including consumer staples and discretionary, demonstrated relative resilience against a tough market environment, speaking to Weibo's unique value proposition in serving their integrated branding plus performance marketing needs during the e-commerce peak phases. From an ad product perspective, promoted fees continued to be the largest part, followed by social display ads, and search and topic ad offerings. With tightening oversight on several ad offerings, such as launch screen ads, our team strives to serve our customers within our ecosystem and mitigate the impact by facilitating them to switch to desirable alternatives, leveraging a full spectrum of social ad products they offer. Moving on to full-year 2021 performance. In 2021, Weibo demonstrated strong recovery momentum, delivering over 30% year-over-year growth in revenues, underpinned the ad demand rebound, traffic uptick, and ongoing ad optimization. We are also delighted to see stronger sales execution upon the integration between our KA and SME segment, which enable them to steadfastly focus on customers' industry-specific needs by industry. Our largest three verticals were FMCG, e-commerce, and 3C products. Weibo has gradually become the cornerstone of many advertisers in these consumption sectors by empowering them to leverage KOL's influence and connect with Generation Z users, and thus fulfilling their integrated branding plus performance needs in 2021. Sectors like FMCG3C, gaming, and luxury outperformed, whereas education, entertainment, and real estate sectors underperformed, mainly due to macro and regulatory headwinds. The ad product. Promoted Fees was the largest, followed by Social Display Ads and Topic and Search. Our portfolio of social marketing products delivered competitive ROI and resonated greatly with brands and merchants, which we both depreciated at offerings, such as search and topics, leading the growth. Overall speaking, in 2021, from a demand perspective, we navigated through our traditional landscape and increased our AdWords share from customers with resilience in the challenging environment from a supply perspective. The growth of ad revenues was primarily driven by traffic and sell-through rate, demonstrating higher monetization efficiency and stronger sales capability. Ad revenues from Alibaba for fourth quarter decreased 24% to $45.5 million, correlating with its conservative marketing strategies in 2021. Full-year ad revenues from Alibaba decreased 8%, to 139.6 million, broadly consistent with our expectations. The decrease is offset by inventories sold to other e-commerce platforms and brand advertisers with integrated brands plus performance marketing demands. Before turning to that segment, let me give some color on the trends entering 2022. Currently, we expect to see softness in the overall advertising market in light of macro and regulatory uncertainties waiting on sentiment. That said, we believe the heavens could be transient rather than structural with advertising industry rebates and the secular growth driver reassert themselves. In 2022, our team will beef up execution and work relentlessly to fulfill customers' differentiated marketing needs against a tough environment in the hope of further uplifting our monetization scale and ad efficiency. Value-added service vast revenues were $65.5 million in the first quarter, an increase of 9%. The increase was primarily attributable to full-quarter revenue booked from the interactive entertainment company consolidated in November 2020. while partially offset by the decrease of revenues from live streaming business. For year 2021, less revenue was $276.3 million, an increase of 36%. Many resulted from incremental revenues derived from the interactive entertainment company consolidated in November 2020 and other online gaming revenues. while partially offset by the decrease of revenues from live streaming business. Turning to cost and expenses, total cost and expenses for the first quarter was $396.5 million, an increase of 28%. The increase was primarily due to higher personnel-related costs, as well as step-ups in ad costs mainly associated with seasonal ad campaigns' executions. Full-year costs and expenses totaled $1.43 billion compared to $1.11 billion for 2020. Operating income in the first quarter was $219.8 million, an increase of 8%, representing operating margin of 36% compared to 40% last year. Operating income for full-year 2021 was $829.2 million, representing an operating margin of 37% compared to 34% in 2020, as they continued to balance well between investment for growth and the margin performance. Turning to income tax and the gap measure, income tax expense for the first quarter was $45.6 million compared to a benefit of $25.3 million last year. The increase of income tax expenses was primarily resulted from tax benefits in the fourth quarter of last year due to preferential tax treatment of our subsidiary as a key software enterprise, namely KSE, which lapsed in 2021, and the super deduction true-up for eligible R&D expenses in the fourth quarter of 2020. Four-year income tax expenses were $138.8 million compared to $61.3 million in 2020. The increase was mainly resulted from first, higher profits in 2021 versus 2020. Second, tax benefits booked in the 2020 due to preferential tax treatment of our subsidiary as a KSE, which left in 2021. And third, tax liability recognized in 2021 related to uncertain tax positions. Net income attributable to Weibo in the first quarter was 195.5 million. compared to 212.7 million last year. Net margin was 32% compared to 41% same period last year. Net income for full year 2021 was 718.5 million, representing a net margin of 32%, flat versus 2020. Turning to our balance sheet and the cash flow items, as of December 31st, 2021, Weibo's cash equivalent and short-term investments totaled $3.1 billion, compared to $3.5 billion as of December 31, 2020. The decrease was primarily resulted from investment activities we made and was partially offset by cash provided by operating activities and proceeds from our global offering. In the first quarter, cash provided by operating activities was $249.7 million, Capital expenditures totaled $11.3 million and the depreciation and amortization expenses amounted to $14.8 million on a four-year basis. Tax provided by operating activities was $814 million. Capital expenditures totaled $35.1 million and the depreciation and amortization expenses amounted to $55 million. We delivered approximately $778.9 million free cash flow in 2021. an increase of 10% year-over-year, representing our capability of delivering high profitability and generating strong operating cash flow. Lastly, on December 8, 2021, we successfully listed on the main board of Hong Kong Stock Exchange under the stock code 9898 through our global offering of 11 million Class A ordinary shares. As a newly listed company on Hong Kong Stock Exchange, we need to comply with regulations and follow the common practice adopted by public companies in the Hong Kong market. Therefore, we will no longer provide financial guidance on net revenue growth going forward. That said, we remain committed to delivering sustainable growth of our revenue with decent profitability and free cash flow generation. and driving shareholders' value in the long run. With that, let me now turn the call to the operator for the Q&A session.
Thank you. As a reminder, if you wish to ask a question, please press star 1 on your telephone and light for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. Please stand by while we compile the question and answer roster. Once again, there's still one for questions. Our first question comes from Alicia Yeo from CT Group. Please ask your question.
Hi, thank you. So I understand the company no longer provides the official guidance after the Hong Kong listing. but can management provide some colors or the directions as the latest sentiments by the advertiser? If January or February that you are seeing, is it more the same as the fourth quarter? Thank you.
首先从QE的情况来看的话, 我们的核心的广告行业, 比如说像快招,数码,汽车,包括奢侈品这些行业, 目前, Overall, the growth is relatively good. On the other hand, I think due to the external factors that influence the balance and the management of the industry, we expect that some industries may have some negative impacts on the growth of our first quarter. One is that we will see the live e-commerce of the fourth quarter last year. Because of some government supervision and their own problems, many of their original plans were suspended during the Spring Festival of the first quarter. In fact, this part of the income was about 5% of last year's income in our first quarter. In addition, you also know that in the training industry, last year was mainly the first quarter of the first half of the year, and it was still maintained as a normal investment. In addition to these two key industries, the industry that is more affected by it, Okay. All right, thanks.
Thank you very much for your question. So first of all, I have to say that in Q1, we're seeing a very good growth in terms of the advertisements placement in terms of the industries of FMCG, the 3D products, and alternatives and luxury products as well. And also due to the external environment and also headwinds as well as the regulatory headwinds, some of the industries really experienced some kind of negative growth. For example, in Q4 of last year, we've been having a lot of regulatory activities over the live streaming e-commerce. So, you know, originally they planned to place some of the advertisements during the spring festival period in Q1 of this year, but actually they stopped doing so because of the headwinds of the regulation. So last year in Q1, actually these types of advertisement revenue accounted for about 5% of our total revenue. And also next sector vertical is about the education. So you can see that, you know, last year in Q1, they had the budget for the placement of the advertisement. Actually, this was heavily impacted. So apart from these two verticals that are heavily impacted, for the other verticals, I think that we are positively, you know, enjoying a double-digit growth. And also, apart from that, we also had some of the, you know, a little bit headwinds on the gaming industry as well as the e-commerce industry. But still, overall speaking, I think the development is pretty much good.
Thank you. Okay. All right.
Thank you. Our next question comes from Miranda Chung from Bank of America. Please ask your question.
Thank you for accepting my question. Good evening. Congratulations on your performance. Then my question is, I would like to ask if you can share a strategy for sport sports this year, and what are some of the areas that the company is planning to focus on? And then one of them is that the company also mentioned that it has just received a lot of discussion from users in the Olympic Games and these interactions with sports athletes. Then I would like to ask what kind of plans there will be in sports sports. And then the other one is that there are sports sports. Thank you for taking my question. Can management elaborate on the verticalization strategy for 2022? Which verticals will you focus to expand? Specifically, will Bullhead gain strong traction in the Olympics campaign? So what kind of strategy will the company take for the sports vertical going forward this year? And also, what kind of strategy will the company take for the online game vertical? And is there any impact from the Titan online game regulation environment? Thank you.
This has had a negative impact on our entertainment content. This negative impact mainly occurred in the third and fourth seasons of last year. After 2022, as the entire literature industry gradually adjusted from the selection show and idol economy mode to this core environment of works, we will see that the entire volume of literature is also gradually recovering. From what we are currently watching, First of all, let me share some color in terms of the vertical of entertainment and also culture.
So in this particular vertical of entertainment, it used to be a very important part for our accumulation of the traffic. But since the second half of last year, we've been seeing some kind of a remodeling and also rescheduling of this entertainment industry. So this did bring an active impact to our business and performance in Q3 and Q4 last year, specifically on the traffic part. And also in 2022, of course, we've been seeing a very good transformation of this entertainment industry that was previously generated in terms of the idol-based economy to pretty much to focus on the product itself and also the production of the works. So you can see that this is the part one. But still, you know, talking about the traffic, this is still in the process of being recovered. And, of course, now in terms of the hot trend and also the hot search, we've been seeing that all those listed topics on the hot trend are all pretty much based on the product or based on the works. So in the second half of this year, of 2022, we are going to see the traffic volume, which is going to be recovered to the stage before the regulation on the entertainment industry.
In terms of sports, we think sports is similar to entertainment. It is also a new wave of traditional mass consumption. During the Tokyo Olympics last year, we saw that after increasing our investment in the sports field, the size of the traffic and the number of users was also very obvious. In the Winter Olympics, the traffic and discussion volume of the party reached and approached the Tokyo Olympics last year, which exceeded our expectations. The year 2022 is the year of the sports competition, which includes the Asian Games and the World Cup at the end of this year. Therefore, we believe that the increase in the cost of sports this year will bring a better return on the flow and transformation of this year. During this year's Tokyo Olympics, I saw that the sponsors of the Olympics, including many sports players, about 40 customers posted on Weibo. The growth in the size of the customer is still very obvious, but because of this, before we were relatively conservative about the flow of the winter Olympics. So in terms of customer budget, we will see that there is still a very large room for improvement. So this part of the war, we will see that we will do our main investment this year.
So, second part, as you have mentioned, something about the sport industry. And actually, for the vertical of sport, this is also very important, as important as the entertainment, as one big part of the mass public consumption. So, as you can see, last year, talking about the Tokyo Olympics, because of very much a big focus, we've been gaining a very good growth in terms of the traffic and also the number of users of using Weibo. And also for this year's Winter Olympics in Beijing, we've been seeing that in terms of traffic and also the number of, this is almost reaching the stages of the Tokyo Olympics. And this is, to be honest with you, out of our expectation. And also in 2022, this is a big year for all the sports events. For example, in the second half of the year, we're going to have all Asia Games. And also at the end of 2022, the World Cup as well. So that we are going to focus on the investment on the content. so that we're going to gain a very good growth in terms of the traffic and also the number of users as well on this one. And also, last year in the Tokyo Olympics, we've been finding that some of the sponsors and also the sponsors of the athletes, etc., we've been gaining around 40-plus more customers of placing their ads with us, so that this is another kind of a very good growth. So previously, we had quite conservative expectation on the performance during the Winter Olympics period. So we really believe that in the future, in terms of the budget of those advertisers, we're going to have a big room for further improvement. So this is a very important year in terms of the sports verticals.
In terms of gaming, our focus this year is still on gaming and some e-sports games. We have seen some good results in the last year's 4G S11. At the same time, we have also made some investments in gaming teams this year. More of this is to encourage us to provide more content and services to our young users. The focus of our operation this year is on the gaming market, and these markets are based on very mature games in the market. So whether the game is released or not, the new release may not have much impact on our traffic. More importantly, this year's games will affect our ability to obtain in terms of game budget. But at least from the current 1st quarter, And also, third of all, in terms of the vertical of gaming, so now our focus is on the operation of the eSports tournament.
So you can see that this has been showing very good results and performance driven in the Q4 of last year during the S11 League of Legends tournament series. And also another focus is on the investment to the esports teams. So this is going to further provide excellent content as well as the services to attract the young users. And also, third thing is that, you know, this year, we're going to dedicate ourselves continuously to the tournaments and the esports games as well. So, of course, all those esports events are pretty much based on the mature and also the existing games. So we don't think that whether or not the licenses are granted to the new games and, you know, whether or not the new games are pretty much launched in a massive way or less massive way in this year will have a big impact on the traffic volume. But of course, it is going to a little bit impact the budget gaining abilities for us. But because the percentage of the revenue contribution from the gaming sector is actually a little bit small to our total revenue. So we've been seeing a lot big impact in Q1 of this year. But of course, as long as we are going to focus on the attractions of the new users and also pay attention to the activities of the users and time span with way more of those young users, we're going to have a very big room for further improvement.
All right. Thank you. So we have reached the end of the question and answer session. I'll turn the call back to the management team for closing remarks.
Okay, thanks, operator. This wraps up our conference call this quarter. Thank you for joining us. We'll see you next quarter.
Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.