Weibo (WB) Q3 2025: AI-Driven Feed Lifts Engagement, E-Commerce Ad Revenue Jumps 50%
Weibo’s Q3 2025 marked a pivotal shift as its algorithmic feed overhaul and AI-powered ad tools drove deeper engagement and a standout 50% surge in e-commerce ad revenue, offsetting headwinds from Olympic comps and sector drag. The company’s strategic pivot toward video and interest-based content is reshaping user behavior and ad monetization, while AI integration is accelerating both content discovery and advertising efficiency. As management eyes 2026, macro softness and changing subsidy policies pose risks, but platform upgrades and sector partnerships signal a recalibrated growth path.
Summary
- AI and Product Revamp Unlock Engagement: Recommendation feed overhaul and intelligent search drove double-digit user interaction gains.
- E-Commerce and Auto Ads Outperform: E-commerce ad revenue surged over 50% while auto remained resilient amid sectoral softness.
- Macro and Policy Risks Loom: Weakness in consumer goods and changing subsidies temper ad recovery outlook into 2026.
Performance Analysis
Weibo delivered Q3 revenue of $442.3 million, down 5% year-over-year, driven by a 6% decline in advertising revenue due to a high Olympic base and sector-specific pressure in consumer goods, games, and smartphones. Notably, e-commerce advertising surged over 50% and auto ad revenues remained solid, reflecting targeted sector strength and effective partnerships. Value-added services (VAS), including membership and game-related revenue, grew 2%, providing a modest counterbalance to ad softness.
Operating income reached $132 million with a 30% margin, narrowing from 35% last year as revenue contraction and increased costs weighed on profitability. Net margin also compressed to 25%. AI-powered ad products and real-time bidding contributed double-digit growth in conversion-driven ad formats, especially for app downloads and lead generation, but these gains were not enough to offset declines in traditional brand advertising from key verticals.
- Feed and Search Innovation: MAUs reached 578 million and DAUs 257 million, with intelligent search DAUs and queries up over 50% quarter-on-quarter.
- Advertising Mix Shifts: E-commerce and auto sectors drove growth, while FMCG, games, and smartphones lagged due to budget contraction and tough comps.
- AI Creative Penetration: Nearly 30% of video ad consumption now uses AI-generated creatives, materially improving efficiency and user experience.
The combination of a structurally improved content feed and AI-led ad product upgrades is driving a more resilient, diversified revenue base, though legacy headwinds and cost inflation remain near-term drags.
Executive Commentary
"The restructuring of the information feed holds strategic significance for Weibo, which is comparable to our transition from the chronological to algorithm-based sorting several years ago... the increased weight of recommendation content and video content will strengthen Weibo's core competitiveness as a social media platform while laying a solid foundation for the sustainable and healthy development of our content ecosystem."
Gaofei Wang, Chief Executive Officer
"Notably, our real-time bidding feed products sustained double-digit growth driven by AI-powered ad tech upgrades that enhance the conversions and ROI for advertisers, particularly for app download and lead generation campaigns."
Fei Cao, Chief Financial Officer
Strategic Positioning
1. Algorithmic Feed and Video-First Content
Weibo’s shift from relationship-based to recommendation-driven feeds, with a focus on video and interest-based content, is fundamentally changing user engagement and time spent on platform. This mirrors a broader industry pivot and is designed to lower onboarding friction for new users and boost content creator exposure, especially for video bloggers previously hampered by legacy feed dynamics.
2. AI-Enabled Monetization Across the Stack
AI is now embedded across Weibo’s ad lifecycle, from creative generation to performance optimization. The Lingchuan platform enables scalable, personalized ad production, and AI-generated video ad creatives now drive nearly 30% of video ad consumption. These tools have improved conversion efficiency for key campaign types and are being extended to live-stream commerce, unlocking new monetization formats for brands and KOLs (Key Opinion Leaders).
3. Sector Partnerships and Revenue Diversification
Deepening partnerships with e-commerce and auto platforms have become critical revenue drivers, as evidenced by over 50% e-commerce ad growth and stable auto ad spend. Meanwhile, new collaborations within e-commerce conglomerates are laying groundwork for a more balanced, less cyclical ad revenue mix.
4. Intelligent Search as a Growth Lever
Weibo’s intelligent search product surpassed 70 million MAUs, with DAUs and queries up over 50% quarter-on-quarter, reflecting strong user adoption. While direct monetization is nascent, management sees growing demand for ad placements and branded content discovery, foreshadowing a future revenue stream as search becomes more integrated into the platform’s content ecosystem.
5. Brand Advertising and Regulatory Dynamics
Recent tax policy changes capping feed ad deductibility are prompting advertisers to rebalance toward brand and celebrity endorsement campaigns, where Weibo’s entertainment and KOL resources are a unique asset. However, sector-specific regulatory changes and the post-Olympic ad cycle continue to create volatility in traditional brand spend.
Key Considerations
This quarter reflects Weibo’s accelerated transition from legacy social feed dynamics to an AI-powered, video-centric, and sector-partnered platform, with both opportunities and risks for long-term growth and monetization.
Key Considerations:
- Algorithmic Feed Adoption: User engagement metrics improved, but full monetization impact will depend on sustained adoption and content creator buy-in.
- AI Monetization Ramp: AI-powered ad tools are driving efficiency and conversion, but broad-based revenue lift requires further scaling and client education.
- Sector Concentration Risk: Outsized dependence on e-commerce and auto ad growth could expose Weibo to sector cyclicality if consumer or policy headwinds intensify.
- Regulatory and Policy Fluidity: Tax changes and subsidy withdrawals are reshaping ad budgets, requiring ongoing agility in product and client strategy.
- Content Ecosystem Evolution: Success of video and interest-based content hinges on creator incentives and platform differentiation in a highly competitive digital media landscape.
Risks
Weibo faces material risks from macroeconomic softness, policy-driven ad budget shifts, and sector-specific volatility, particularly in consumer goods, games, and smartphones. The withdrawal of national subsidies, especially in auto and handset sectors, could dampen ad recovery, while user adoption of new feed paradigms may lag, impacting both growth and monetization. Regulatory uncertainty around ad formats and tax deductibility remains a persistent headwind.
Forward Outlook
For Q4, Weibo management guided to:
- Continued e-commerce and auto ad momentum, with ongoing weakness in consumer goods and gaming verticals.
- Further integration of AI into ad products and content recommendation, aiming for higher ad ROI and user engagement.
For full-year 2025, management did not provide specific quantitative guidance but flagged:
- Olympic and World Cup cycles in 2026 as potential catalysts for ad demand recovery in consumer goods.
Management highlighted several factors that will shape results:
- Sectoral ad budget reallocation in response to policy and macro trends.
- Adoption and monetization of new AI-powered search and feed products.
Takeaways
Weibo’s Q3 signals a business in transition, leveraging AI and feed innovation to offset cyclical and structural ad market headwinds.
- AI and Video-Driven Engagement: Recommendation feed overhaul and AI-powered ad tools are driving double-digit gains in user interaction and ad conversion, but require further scaling to fully offset legacy declines.
- Sector Partnerships Mitigate Cyclicality: E-commerce and auto ad growth provide near-term resilience, but sector concentration and policy changes remain key variables for future quarters.
- 2026 Event Cycle as Next Inflection: Major global events in 2026 could reaccelerate brand ad budgets, but platform differentiation and user adoption of new content formats will determine Weibo’s long-term trajectory.
Conclusion
Weibo’s Q3 2025 results underscore the platform’s evolution toward an AI-driven, video-first, and sector-partnered model. While macro and regulatory headwinds persist, the company’s strategic execution on product, partnership, and AI integration is laying groundwork for future growth and monetization diversification.
Industry Read-Through
Weibo’s experience highlights a broader industry pivot toward algorithmic, video-centric feeds and deep AI integration across both content and advertising. Platforms reliant on legacy social or display ad formats face similar pressure to innovate or risk revenue stagnation, especially as macro and regulatory headwinds force advertisers to rebalance budgets. The rapid adoption of AI-powered creative and performance tools is becoming table stakes for digital media and advertising platforms. Sector partnerships and diversified revenue streams are emerging as key defenses against cyclical ad volatility, with e-commerce, auto, and live-stream commerce as leading verticals. Other platforms should closely monitor user adoption of feed changes and the evolving interplay between content creators, advertisers, and AI-driven discovery.