SOHU.COM REPORTS SECOND QUARTER 2024 UNAUDITED FINANCIAL RESULTS
Second Quarter Highlights
- Total revenues were
US$172 million , up 13% year-over-year and 24% quarter-over-quarter. - Brand advertising revenues were US$20 million, down 17% year-over-year and up 24% quarter-over-quarter.
- Online game revenues were US$147 million, up 24% year-over-year and 25% quarter-over-quarter.
- GAAP net loss attributable to Sohu.com Limited was
US$38 million , compared with a net loss of US$21 million in the second quarter of 2023 and a net loss ofUS$25 million in the first quarter of 2024. - Non-GAAP[1] net loss attributable to Sohu.com Limited was
US$34 million , compared with a net loss of US$18 million in the second quarter of 2023 and a net loss ofUS$22 million in the first quarter of 2024.
Dr.
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[1] Non-GAAP results exclude share-based compensation expense; changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s investments; and interest expense recognized in connection with the one-time transition tax (the “Toll Charge”) imposed by the U.S. Tax Cuts and Jobs Act signed into law on |
Second Quarter Financial Results
Revenues
Total revenues were
Brand advertising revenues were
Online game revenues were
Gross Margin
Both GAAP and non-GAAP gross margin were 67%, compared with 76% in the second quarter of 2023 and 77% in the first quarter of 2024.
Both GAAP and non-GAAP gross margin for the brand advertising business were 20%, compared with 30% in the second quarter of 2023 and 1% in the first quarter of 2024.
Both GAAP and non-GAAP gross margin for online games were 76%, compared with 87% in the second quarter of 2023 and 88% in the first quarter of 2024. The decreases were mainly due to a higher percentage revenue contribution from mobile games, which require higher revenue-sharing payments.
Operating Expenses
GAAP operating expenses were US$160 million, up 16% year-over-year and 20% quarter-over-quarter. Non-GAAP operating expenses were US$161 million, up 17% year-over-year and 20% quarter-over-quarter. The increases were mainly due to an increase in Changyou’s marketing and promotional spending for its online games.
Operating Loss
GAAP operating loss was
Non-GAAP operating loss was
Income Tax Expense
GAAP income tax expense was
Net Loss
GAAP net loss attributable to Sohu.com Limited was
Non-GAAP net loss attributable to Sohu.com Limited was
Liquidity and Capital Resources
As of
Supplementary Information for Changyou Results[2]
Second Quarter 2024 Operating Results
- For PC games, total average monthly active user accounts[3] (MAU) were 2.2 million, an increase of 2% year-over-year and a decrease of 2% quarter-over-quarter. Total quarterly aggregate active paying accounts[4] (APA) were 0.9 million, a decrease of 3% year-over-year and 8% quarter-over-quarter. The quarter-over-quarter decrease in APA was mainly a result of fewer in-game promotional activities having been launched for TLBB PC during the second quarter.
- For mobile games, total average MAU were 4.9 million, an increase of 273% year-over-year and 77% quarter-over-quarter. Total quarterly APA were 1.1 million, an increase of 299% year-over-year and 240% quarter-over-quarter. The year-over-year and quarter-over-quarter increases in MAU and APA were mainly from New Westward Journey, which was launched during the second quarter.
Second Quarter 2024 Unaudited Financial Results
Total revenues were
Both GAAP and non-GAAP gross profit were
GAAP operating expenses were
Non-GAAP operating expenses were
Both GAAP and non-GAAP operating profit were
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[2] “Changyou Results” consist of the results of Changyou’s online game business and its 17173.com Website. |
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[3] Monthly active user accounts refers to the number of registered accounts that are logged in to these games at least once during the month. |
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[4] Quarterly aggregate active paying accounts refers to the number of accounts from which game points are utilized at least once during the quarter. |
Recent Development
Under the previously-announced share repurchase program of up to
Business Outlook
For the third quarter of 2024, Sohu estimates:
- Brand advertising revenues to be between
US$17 million andUS$19 million ; this implies an annual decrease of 14% to 23%, and a sequential decrease of 4% to 14%. - Online game revenues to be between US$104 million and US$114 million; this implies an annual decrease of 3% to 11%, and a sequential decrease of 22% to 29%.
- Non-GAAP net loss attributable to Sohu.com Limited to be between US$30 million and US$40 million; and GAAP net loss attributable to Sohu.com Limited to be between US$34 million and US$44 million.
For the third quarter 2024 guidance, the Company has adopted a presumed exchange rate of
This forecast reflects Sohu’s management’s current and preliminary view, which is subject to substantial uncertainty.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in
Sohu’s management believes excluding share-based compensation expense; changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s investments; and interest expense recognized in connection with the Toll Charge from its non-GAAP financial measure is useful for itself and investors. Further, the impact of share-based compensation expense; changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s investments; and interest expense recognized in connection with the Toll Charge cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts that have been the basis for information Sohu provides to analysts and investors as guidance for future operating performance. As share-based compensation expense and changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s investments do not involve subsequent cash outflow or are reflected in the cash flows at the equity transaction level, Sohu does not factor in their impact when evaluating and approving expenditures or when determining the allocation of its resources to its business segments. As a result, in general, the monthly financial results for internal reporting and any performance measures for commissions and bonuses are based on non-GAAP financial measures that exclude share-based compensation expense, changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s investments, and interest expense recognized in connection with the Toll Charge.
The non-GAAP financial measures are provided to enhance investors’ overall understanding of Sohu’s current financial performance and prospects for the future. A limitation of using non-GAAP gross profit, operating profit, net income, net income attributable to Sohu.com Limited, and diluted net income attributable to Sohu.com Limited per ADS excluding share-based compensation expense and interest expense recognized in connection with the Toll Charge is that share-based compensation expense and interest expense recognized in connection with the Toll Charge have been and can be expected to continue to be significant recurring expenses in Sohu’s business. It is also possible that changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s investments will recur in the future. In order to mitigate these limitations Sohu has provided specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables include details on the reconciliation between the GAAP financial measures that are most directly comparable to the non-GAAP financial measures that have been presented.
Notes to Financial Information
Financial information in this press release other than the information indicated as being non-GAAP is derived from Sohu’s unaudited financial statements prepared in accordance with GAAP.
Safe Harbor Statement
This announcement contains forward-looking statements. It is currently expected that the Business Outlook will not be updated until release of Sohu’s next quarterly earnings announcement; however, Sohu reserves right to update its Business Outlook at any time for any reason. Statements that are not historical facts, including statements about Sohu’s beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, instability in global financial and credit markets and its potential impact on the Chinese economy; exchange rate fluctuations, including their potential impact on the Chinese economy and on Sohu’s reported
Conference Call and Webcast
Sohu’s management team will host a conference call at
The live Webcast and archive of the conference call will be available on the Investor Relations section of Sohu’s website at https://investors.sohu.com/
About Sohu
Sohu.com Limited (NASDAQ: SOHU) was established by Dr.
Sohu provides online brand advertising services as well as multiple news, information and content services on its matrix of websites and also on its mobile platforms. Sohu’s online game business, conducted by its subsidiary Changyou, develops and operates a diverse portfolio of PC and mobile games, such as the well-known
For investor and media inquiries, please contact:
In
Ms. Huang, Pu
Sohu.com Limited
Tel: +86 (10) 6272-6645
E-mail: [email protected]
In
Christensen
Tel: +1 (480) 614-3004
E-mail: [email protected]
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SOHU.COM LIMITED |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
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Three Months Ended |
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Revenues: |
||||||
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Brand advertising |
$ |
19,853 |
$ |
16,070 |
$ |
23,883 |
|
Online games |
146,997 |
117,812 |
118,426 |
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Others |
5,483 |
5,508 |
9,781 |
|||
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Total revenues |
172,333 |
139,390 |
152,090 |
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Cost of revenues: |
||||||
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Brand advertising (includes share-based |
15,904 |
15,848 |
16,705 |
|||
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Online games (includes share-based compensation |
35,588 |
14,482 |
15,839 |
|||
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Others |
4,974 |
2,389 |
4,477 |
|||
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Total cost of revenues |
56,466 |
32,719 |
37,021 |
|||
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Gross profit |
115,867 |
106,671 |
115,069 |
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Operating expenses: |
||||||
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Product development (includes share-based |
65,209 |
66,209 |
69,492 |
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Sales and marketing (includes share-based |
83,936 |
54,806 |
57,153 |
|||
|
General and administrative (includes share-based |
11,012 |
12,534 |
11,372 |
|||
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Total operating expenses |
160,157 |
133,549 |
138,017 |
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|
Operating loss |
(44,290) |
(26,878) |
(22,948) |
|||
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Other income, net |
5,572 |
4,489 |
5,131 |
|||
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Interest income |
9,561 |
11,358 |
11,041 |
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Exchange difference |
231 |
(19) |
3,067 |
|||
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Loss before income tax expense |
(28,926) |
(11,050) |
(3,709) |
|||
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Income tax expense |
8,731 |
13,924 |
17,747 |
|||
|
Net loss |
(37,657) |
(24,974) |
(21,456) |
|||
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Less: Net loss attributable to the noncontrolling |
– |
– |
(261) |
|||
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Net loss attributable to Sohu.com Limited |
(37,657) |
(24,974) |
(21,195) |
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Basic net loss per share/ADS attributable to Sohu.com |
$ |
(1.16) |
$ |
(0.76) |
$ |
(0.62) |
|
Shares/ADSs used in computing basic net loss per |
32,492 |
33,033 |
34,091 |
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|
Diluted net loss per share/ADS attributable to |
$ |
(1.16) |
$ |
(0.76) |
$ |
(0.62) |
|
Shares/ADSs used in computing diluted net loss per |
32,492 |
33,033 |
34,091 |
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[5] Each ADS represents one ordinary share. |
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SOHU.COM LIMITED |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(UNAUDITED, IN THOUSANDS) |
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As of |
As of |
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ASSETS |
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Current assets: |
||||
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Cash and cash equivalents |
$ |
167,500 |
$ |
362,504 |
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Restricted cash |
– |
3,184 |
||
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Short-term investments |
799,105 |
597,770 |
||
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Accounts receivable, net |
75,101 |
71,618 |
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Prepaid and other current assets |
85,202 |
81,971 |
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Total current assets |
1,126,908 |
1,117,047 |
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Fixed assets, net |
261,199 |
269,058 |
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Goodwill |
47,071 |
47,163 |
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Long-term investments, net |
45,326 |
45,198 |
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Intangible assets, net |
8,484 |
2,226 |
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Long-term time deposits |
329,909 |
388,613 |
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Other assets |
12,751 |
12,793 |
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Total assets |
$ |
1,831,648 |
$ |
1,882,098 |
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LIABILITIES |
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Current liabilities: |
||||
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Accounts payable |
$ |
74,784 |
$ |
44,609 |
|
Accrued liabilities |
101,668 |
103,779 |
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Receipts in advance and deferred revenue |
47,319 |
50,829 |
||
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Accrued salary and benefits |
49,242 |
50,330 |
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Taxes payables |
10,255 |
11,363 |
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Other short-term liabilities |
78,051 |
81,482 |
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Total current liabilities |
$ |
361,319 |
$ |
342,392 |
|
Long-term other payables |
2,808 |
3,924 |
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Long-term tax liabilities |
471,676 |
474,374 |
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Other long-term liabilities |
2,461 |
2,130 |
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Total long-term liabilities |
$ |
476,945 |
$ |
480,428 |
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Total liabilities |
$ |
838,264 |
$ |
822,820 |
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SHAREHOLDERS’ EQUITY: |
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Sohu.com Limited shareholders’ equity |
993,062 |
1,058,956 |
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Noncontrolling interest |
322 |
322 |
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Total shareholders’ equity |
$ |
993,384 |
$ |
1,059,278 |
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Total liabilities and shareholders’ equity |
$ |
1,831,648 |
$ |
1,882,098 |
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SOHU.COM LIMITED |
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RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
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(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
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Three Months Ended |
Three Months Ended |
Three Months Ended |
||||||||||||||||
|
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non-GAAP |
||||||||||
|
1 |
(a) |
– |
(a) |
(21) |
(a) |
|||||||||||||
|
Brand advertising gross profit |
$ |
3,949 |
$ |
1 |
$ |
3,950 |
$ |
222 |
$ |
– |
$ |
222 |
$ |
7,178 |
$ |
(21) |
$ |
7,157 |
|
Brand advertising gross margin |
20 % |
20 % |
1 % |
1 % |
30 % |
30 % |
||||||||||||
|
– |
(a) |
– |
(a) |
18 |
(a) |
|||||||||||||
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Online games gross profit |
$ |
111,409 |
$ |
– |
$ |
111,409 |
$ |
103,330 |
$ |
– |
$ |
103,330 |
$ |
102,587 |
$ |
18 |
$ |
102,605 |
|
Online games gross margin |
76 % |
76 % |
88 % |
88 % |
87 % |
87 % |
||||||||||||
|
– |
(a) |
– |
(a) |
– |
(a) |
|||||||||||||
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Others gross profit |
$ |
509 |
$ |
– |
$ |
509 |
$ |
3,119 |
$ |
– |
$ |
3,119 |
$ |
5,304 |
$ |
– |
$ |
5,304 |
|
Others gross margin |
9 % |
9 % |
57 % |
57 % |
54 % |
54 % |
||||||||||||
|
1 |
(a) |
– |
(a) |
(3) |
(a) |
|||||||||||||
|
Gross profit |
$ |
115,867 |
$ |
1 |
$ |
115,868 |
$ |
106,671 |
$ |
– |
$ |
106,671 |
$ |
115,069 |
$ |
(3) |
$ |
115,066 |
|
Gross margin |
67 % |
67 % |
77 % |
77 % |
76 % |
76 % |
||||||||||||
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Operating expenses |
$ |
160,157 |
$ |
401 |
(a) $ |
160,558 |
$ |
133,549 |
$ |
(84) |
(a) $ |
133,465 |
$ |
138,017 |
$ |
(261) |
(a) $ |
137,756 |
|
(400) |
(a) |
84 |
(a) |
258 |
(a) |
|||||||||||||
|
Operating loss |
$ |
(44,290) |
$ |
(400) |
$ |
(44,690) |
$ |
(26,878) |
$ |
84 |
$ |
(26,794) |
$ |
(22,948) |
$ |
258 |
$ |
(22,690) |
|
Operating margin |
-26 % |
-26 % |
-19 % |
-19 % |
-15 % |
-15 % |
||||||||||||
|
Income tax expense |
$ |
8,731 |
$ |
(3,764) |
(c)$ |
4,967 |
$ |
13,924 |
$ |
(3,691) |
(c)$ |
10,233 |
$ |
17,747 |
$ |
(3,061) |
(c)$ |
14,686 |
|
(400) |
(a) |
84 |
(a) |
258 |
(a) |
|||||||||||||
|
131 |
(b) |
(398) |
(b) |
– |
||||||||||||||
|
3,764 |
(c) |
3,691 |
(c) |
3,061 |
(c) |
|||||||||||||
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Net loss before non-controlling |
$ |
(37,657) |
$ |
3,495 |
$ |
(34,162) |
$ |
(24,974) |
$ |
3,377 |
$ |
(21,597) |
$ |
(21,456) |
$ |
3,319 |
$ |
(18,137) |
|
(400) |
(a) |
84 |
(a) |
258 |
(a) |
|||||||||||||
|
131 |
(b) |
(398) |
(b) |
– |
||||||||||||||
|
3,764 |
(c) |
3,691 |
(c) |
3,061 |
(c) |
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Net loss attributable to Sohu.com |
$ |
(37,657) |
$ |
3,495 |
$ |
(34,162) |
$ |
(24,974) |
3,377 |
(21,597) |
$ |
(21,195) |
$ |
3,319 |
$ |
(17,876) |
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Diluted net loss per share/ADS |
$ |
(1.16) |
(1.05) |
$ |
(0.76) |
(0.65) |
$ |
(0.62) |
$ |
(0.52) |
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Shares/ADSs used in computing |
32,492 |
32,492 |
33,033 |
33,033 |
34,091 |
34,091 |
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Note: |
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(a) To eliminate the impact of share-based awards. |
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(b) To adjust for changes in the fair value of the Company’s investments. |
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(c) To adjust for the effect of the Toll Charge. |
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