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SOHU.COM REPORTS FIRST QUARTER 2024 UNAUDITED FINANCIAL RESULTS
First Quarter Highlights
- Total revenues were
US$139 million , down 14% year-over-year and 1% quarter-over-quarter. - Brand advertising revenues were US$16 million, down 29% year-over-year and 20% quarter-over-quarter.
- Online game revenues were US$118 million, down 9% year-over-year and up 3% quarter-over-quarter.
- GAAP net loss attributable to
Sohu.com Limited wasUS$25 million , compared with a net loss ofUS$18 million in the first quarter of 2023 and a net loss ofUS$13 million in the fourth quarter of 2023. - Non-GAAP[1] net loss attributable to
Sohu.com Limited wasUS$22 million , compared with a net loss of US$13 million in the first quarter of 2023 and a net loss ofUS$11 million in the fourth quarter of 2023.
Dr.
[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; the impact of income tax related to changes in the fair value of the Company's investments; and interest expense recognized in connection with the one-time transition tax (the "Toll Charge") imposed by the |
First Quarter Financial Results
Revenues
Total revenues were
Brand advertising revenues were US$16 million, down 29% year-over-year and 20% quarter-over-quarter.
Online game revenues were US$118 million, down 9% year-over-year and up 3% quarter-over-quarter.
Gross Margin
Both GAAP and non-GAAP gross margin were 77%, compared with 75% in the first quarter of 2023 and 76% in the fourth quarter of 2023.
Both GAAP and non-GAAP gross margin for the brand advertising business were 1%, compared with 17% in the first quarter of 2023 and 16% in the fourth quarter of 2023.
Both GAAP and non-GAAP gross margin for online games were 88%, compared with 85% in the first quarter of 2023 and 87% in the fourth quarter of 2023.
Operating Expenses
GAAP operating expenses were US$134 million, down 4% year-over-year and up 1% quarter-over-quarter. Non-GAAP operating expenses were US$133 million, down 4% year-over-year and flat quarter-over-quarter.
Operating Loss
GAAP operating loss was
Non-GAAP operating loss was US$27 million, compared with an operating loss of
Income Tax Expense
GAAP income tax expense was US$14 million, compared with income tax expense of
Net Loss
GAAP net loss attributable to
Non-GAAP net loss attributable to
Liquidity and Capital Resources
As of
Supplementary Information for Changyou Results[2]
First Quarter 2024 Operating Results
- For PC games, total average monthly active user accounts[3] (MAU) were 2.3 million, an increase of 5% year-over-year and a decrease of 1% quarter-over-quarter. Total quarterly aggregate active paying accounts[4] (APA) were 0.9 million, an increase of 1% year-over-year and 3% quarter-over-quarter.
- For mobile games, total average MAU were 2.8 million, an increase of 71% year-over-year and 63% quarter-over-quarter. The year-over-year and quarter-over-quarter increases in MAU were mainly from Haikyu!!FLY HIGH that we launched in
Japan andSouth Korea during the quarter. Total quarterly APA were 0.3 million, flat year-over-year and a decrease of 2% quarter-over-quarter.
First Quarter 2024 Unaudited Financial Results
Total revenues were
GAAP and non-GAAP gross profit were both
GAAP operating expenses were
Non-GAAP operating expenses were
GAAP operating profit was
Non-GAAP operating profit was
[2] "Changyou Results" consist of the results of Changyou's online game business and its 17173.com Website. [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. [4] Quarterly aggregate active paying accounts refers to the number of accounts from which game points are utilized at least once during the quarter. |
Under the previously-announced share repurchase program of up to
Business Outlook
For the second quarter of 2024, Sohu estimates:
- Brand advertising revenues to be between
US$18 million andUS$20 million ; this implies an annual decrease of 16% to 25%, and a sequential increase of 12% to 24%. - Online game revenues to be between US$133 million and US$143 million; this implies an annual increase of 12% to 21%, and a sequential increase of 13% to 21%.
- Non-GAAP net loss attributable to
Sohu.com Limited to be between US$27 million and US$37 million; and GAAP net loss attributable toSohu.com Limited to be between US$30 million and US$40 million.
For the second 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; the impact of income tax related to changes in the fair value of 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; the impact of income tax related to changes in the fair value of 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, and the impact of income tax related to changes in the fair value of 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, the impact of income tax related to changes in the fair value of the Company's investments, and also excluded the 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
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 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
Tel: +86 (10) 6272-6645
E-mail: ir@contact.sohu.com
In
Christensen
Tel: +1 (480) 614-3004
E-mail: linda.bergkamp@christensencomms.com
|
||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
||||||
Three Months Ended |
||||||
|
|
|
||||
Revenues: |
||||||
Brand advertising |
$ |
16,070 |
$ |
20,195 |
$ |
22,524 |
Online games |
117,812 |
114,759 |
129,463 |
|||
Others |
5,508 |
6,405 |
9,806 |
|||
Total revenues |
139,390 |
141,359 |
161,793 |
|||
Cost of revenues: |
||||||
Brand advertising (includes share-based compensation expense of respectively) |
15,848 |
16,966 |
18,687 |
|||
Online games (includes share-based compensation expense of |
14,482 |
15,123 |
19,028 |
|||
Others |
2,389 |
1,733 |
2,728 |
|||
Total cost of revenues |
32,719 |
33,822 |
40,443 |
|||
Gross profit |
106,671 |
107,537 |
121,350 |
|||
Operating expenses: |
||||||
Product development (includes share-based compensation expense of respectively) |
66,209 |
69,553 |
73,048 |
|||
Sales and marketing (includes share-based compensation expense of respectively) |
54,806 |
50,813 |
52,443 |
|||
General and administrative (includes share-based compensation expense of respectively) |
12,534 |
12,450 |
14,311 |
|||
Total operating expenses |
133,549 |
132,816 |
139,802 |
|||
Operating loss |
(26,878) |
(25,279) |
(18,452) |
|||
Other income, net |
4,489 |
15,949 |
3,797 |
|||
Interest income |
11,358 |
11,578 |
11,084 |
|||
Exchange difference |
(19) |
(823) |
(1,074) |
|||
Income/(loss) before income tax expense |
(11,050) |
1,425 |
(4,645) |
|||
Income tax expense |
13,924 |
14,044 |
13,289 |
|||
Net loss |
(24,974) |
(12,619) |
(17,934) |
|||
Less: Net loss attributable to the noncontrolling interest shareholders |
- |
(1) |
(1) |
|||
Net loss attributable to |
(24,974) |
(12,618) |
(17,933) |
|||
Basic net loss per share/ADS attributable to Limited [5] |
$ |
(0.76) |
$ |
(0.37) |
$ |
(0.53) |
Shares/ADSs used in computing basic net loss per share/ADS attributable to Sohu.com Limited |
33,033 |
34,061 |
34,091 |
|||
Diluted net loss per share/ADS attributable to |
$ |
(0.76) |
$ |
(0.37) |
$ |
(0.53) |
Shares/ADSs used in computing diluted net loss per share/ADS attributable to Sohu.com Limited |
33,033 |
34,061 |
34,091 |
|||
[5] Each ADS represents one ordinary share. |
|
||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
(UNAUDITED, IN THOUSANDS) |
||||
As of |
As of |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ |
318,716 |
$ |
362,504 |
Restricted cash |
1,769 |
3,184 |
||
Short-term investments |
624,456 |
597,770 |
||
Accounts receivable, net |
55,398 |
71,618 |
||
Prepaid and other current assets |
86,754 |
81,971 |
||
Total current assets |
1,087,093 |
1,117,047 |
||
Fixed assets, net |
265,508 |
269,058 |
||
Goodwill |
47,137 |
47,163 |
||
Long-term investments, net |
45,527 |
45,198 |
||
Intangible assets, net |
1,314 |
2,226 |
||
Long-term time deposits |
390,496 |
388,613 |
||
Other assets |
14,552 |
12,793 |
||
Total assets |
$ |
1,851,627 |
$ |
1,882,098 |
LIABILITIES |
||||
Current liabilities: |
||||
Accounts payable |
$ |
46,264 |
$ |
44,609 |
Accrued liabilities |
106,052 |
103,779 |
||
Receipts in advance and deferred revenue |
48,114 |
50,829 |
||
Accrued salary and benefits |
44,574 |
50,330 |
||
Taxes payables |
10,600 |
11,363 |
||
Other short-term liabilities |
82,139 |
81,482 |
||
Total current liabilities |
$ |
337,743 |
$ |
342,392 |
Long-term other payables |
3,493 |
3,924 |
||
Long-term tax liabilities |
481,620 |
474,374 |
||
Other long-term liabilities |
2,936 |
2,130 |
||
Total long-term liabilities |
$ |
488,049 |
$ |
480,428 |
Total liabilities |
$ |
825,792 |
$ |
822,820 |
SHAREHOLDERS' EQUITY: |
||||
|
1,025,513 |
1,058,956 |
||
Noncontrolling interest |
322 |
322 |
||
Total shareholders' equity |
$ |
1,025,835 |
$ |
1,059,278 |
Total liabilities and shareholders' equity |
$ |
1,851,627 |
$ |
1,882,098 |
|
||||||||||||||||||
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||||||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
||||||||||||||||||
Three Months Ended |
Three Months Ended |
Three Months Ended |
||||||||||||||||
GAAP |
Non-GAAP Adjustment |
Non- GAAP |
GAAP |
Non-GAAP Adjustment |
Non- GAAP |
GAAP |
Non-GAAP Adjustment |
Non- GAAP |
||||||||||
- |
(a) |
- |
(a) |
13 |
(a) |
|||||||||||||
Brand advertising gross profit |
$ |
222 |
$ |
- |
$ |
222 |
$ |
3,229 |
$ |
- |
$ |
3,229 |
$ |
3,837 |
$ |
13 |
$ |
3,850 |
Brand advertising gross margin |
1 % |
1 % |
16 % |
16 % |
17 % |
17 % |
||||||||||||
- |
(a) |
(44) |
(a) |
18 |
(a) |
|||||||||||||
Online games gross profit |
$ |
103,330 |
$ |
- |
$ |
103,330 |
$ |
99,636 |
$ |
(44) |
$ |
99,592 |
$ |
110,435 |
$ |
18 |
$ |
110,453 |
Online games gross margin |
88 % |
88 % |
87 % |
87 % |
85 % |
85 % |
||||||||||||
- |
(a) |
- |
(a) |
- |
(a) |
|||||||||||||
Others gross profit |
$ |
3,119 |
$ |
- |
$ |
3,119 |
$ |
4,672 |
$ |
- |
$ |
4,672 |
$ |
7,078 |
$ |
- |
$ |
7,078 |
Others gross margin |
57 % |
57 % |
73 % |
73 % |
72 % |
72 % |
||||||||||||
- |
(a) |
(44) |
(a) |
31 |
(a) |
|||||||||||||
Gross profit |
$ |
106,671 |
$ |
- |
$ |
106,671 |
$ |
107,537 |
$ |
(44) |
$ |
107,493 |
$ |
121,350 |
$ |
31 |
$ |
121,381 |
Gross margin |
77 % |
77 % |
76 % |
76 % |
75 % |
75 % |
||||||||||||
Operating expenses |
$ |
133,549 |
$ |
(84) |
(a) $ |
133,465 |
$ |
132,816 |
$ |
961 |
(a) $ |
133,777 |
$ |
139,802 |
$ |
(714) |
(a) $ |
139,088 |
84 |
(a) |
(1,005) |
(a) |
745 |
(a) |
|||||||||||||
Operating loss |
$ |
(26,878) |
$ |
84 |
$ |
(26,794) |
$ |
(25,279) |
$ |
(1,005) |
$ |
(26,284) |
$ |
(18,452) |
$ |
745 |
$ |
(17,707) |
Operating margin |
-19 % |
-19 % |
-18 % |
-19 % |
-11 % |
-11 % |
||||||||||||
Income tax expense |
$ |
13,924 |
$ |
(3,691) |
(d)$ |
10,233 |
$ |
14,044 |
$ |
(3,667) |
(d)$ |
10,377 |
$ |
13,289 |
$ |
(2,420) |
(c,d)$ |
10,869 |
84 |
(a) |
(1,005) |
(a) |
745 |
(a) |
|||||||||||||
(398) |
(b) |
(827) |
(b) |
2,218 |
(b) |
|||||||||||||
- |
- |
(555) |
(c) |
|||||||||||||||
3,691 |
(d) |
3,667 |
(d) |
2,975 |
(d) |
|||||||||||||
Net loss before non-controlling interest |
$ |
(24,974) |
$ |
3,377 |
$ |
(21,597) |
$ |
(12,619) |
$ |
1,835 |
$ |
(10,784) |
$ |
(17,934) |
$ |
5,383 |
$ |
(12,551) |
84 |
(a) |
(1,005) |
(a) |
745 |
(a) |
|||||||||||||
(398) |
(b) |
(827) |
(b) |
2,218 |
(b) |
|||||||||||||
- |
- |
(555) |
(c) |
|||||||||||||||
3,691 |
(d) |
3,667 |
(d) |
2,975 |
(d) |
|||||||||||||
Net loss attributable to Limited for diluted net loss per share/ADS |
$ |
(24,974) |
3,377 |
(21,597) |
$ |
(12,618) |
1,835 |
(10,783) |
$ |
(17,933) |
$ |
5,383 |
$ |
(12,550) |
||||
Diluted net loss per share/ADS attributable to Sohu.com Limited |
$ |
(0.76) |
(0.65) |
$ |
(0.37) |
(0.32) |
$ |
(0.53) |
$ |
(0.37) |
||||||||
Shares/ADSs used in computing diluted net loss per share/ADS attributable to Sohu.com Limited |
33,033 |
33,033 |
34,061 |
34,061 |
34,091 |
34,091 |
||||||||||||
Note: |
||||||||||||||||||
(a) To eliminate the impact of share-based awards. |
||||||||||||||||||
(b) To adjust for changes in the fair value of the Company's investments. |
||||||||||||||||||
(c) To adjust for the impact of income tax related to changes in the fair value of the Company's investments. |
||||||||||||||||||
(d) To adjust for the effect of the Toll Charge. |
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