Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 25, 2016

 

 

SOHU.COM INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   0-30961   98-0204667

(State or other jurisdiction

Of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

Level 18, SOHU.com Media Plaza

Block 3, No. 2 Kexueyuan South Road, Haidian District

Beijing 100190

People’s Republic of China

(011) 8610-6272-6666

(Address, including zip code, of registrant’s principal executive offices

and registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On April 25, 2016, the registrant announced its unaudited financial results for the first quarter ended March 31, 2016. A copy of the press release issued by the registrant regarding the foregoing is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1    Press Release dated April 25, 2016

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

DATED: April 26, 2016   SOHU.COM INC.
  By:   

/s/ Carol Yu

    Carol Yu
    President and Chief Financial Officer

 

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EX-99.1

Exhibit 99.1

SOHU.COM REPORTS FIRST QUARTER 2016 UNAUDITED FINANCIAL RESULTS

BEIJING, CHINA, April 25, 2016 – Sohu.com Inc. (NASDAQ: SOHU), China’s leading online media, search, gaming, community and mobile service group, today reported unaudited financial results for the first quarter ended March 31, 2016.

First Quarter Highlights

 

    Total revenues were US$408 million1, down 10% year-over-year and 12% quarter-over-quarter.

 

    Brand advertising revenues were US$126 million, down 6% year-over-year and 11% quarter-over-quarter. Of this, revenues of Sohu Media Portal, or Sohu.com excluding Sohu Video, were US$45 million, flat year-over-year and down 8% quarter-over-quarter. Revenues of Sohu Video were US$41 million, down 16% year-over-year and 19% quarter-over-quarter.

 

    Sogou2 revenues were US$147 million, up 27% year-over-year and down 11% quarter-over-quarter.

 

    Online game revenues were US$103 million, down 45% year-over-year and 19% quarter-over-quarter.

 

    GAAP net loss attributable to Sohu.com Inc. was US$21 million, or US$0.53 loss per fully-diluted share.

Non-GAAP3 net loss attributable to Sohu.com Inc. was US$22 million, or US$0.56 loss per fully-diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc., commented, “We got off to a good start this year as we met expectations for both top and bottom line results in the first quarter. For Sohu Media Portal, we worked hard to strengthen our value to users and advertisers, constantly refining our mobile products and advertising system. For Sohu Video, we are prepared to meaningfully step up our investments in content to enhance our competitiveness and stay in the race as a first tier player. Sogou achieved solid traction as its mobile search traffic continued to outgrow the industry. Changyou delivered in-line financial results, while it strives to recreate the superior PC game experience on smartphone, in particular leveraging the vast user base of its most popular PC game TLBB.”

Mr. Xiaochuan Wang, CEO of Sogou, commented, “For the first quarter, Sogou’s financial performance exceeded our previous expectations. In RMB terms, total revenues and non-GAAP net income increased 35% and 42%, respectively. Mobile search traffic more than doubled from a year ago, accounting for nearly two thirds of aggregate traffic. Looking into 2016 and beyond, we plan to step up research in cutting-edge technologies, in particular, artificial intelligence. Under the leadership of Charles, Sogou proudly joined forces with Tsinghua University, in setting up a joint research institute focusing on artificial intelligence and aim to build Sogou into a leading innovative player in this arena in China.”

First Quarter Financial Results

Revenues

Total revenues for the first quarter of 2016 were US$408 million, down 10% year-over-year and 12% quarter-over-quarter.

Total online advertising revenues, which include revenues from the brand advertising and search and search-related businesses, for the first quarter of 2016 were US$259 million, up 9% year-over-year and down 11% quarter-over-quarter.

Brand advertising revenues for the first quarter of 2016 totaled US$126 million, down 6% year-over-year and 11% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases were mainly due to decreases in revenues from the online video and 17173 advertising businesses. Revenues of Sohu Media Portal, or Sohu.com excluding Sohu Video, were US$45 million, flat year-over-year and down 8% quarter-over-quarter. Revenues of Sohu Video were US$41 million, down 16% year-over-year and 19% quarter-over-quarter.

 

1  For the first quarter of 2016, on yearly basis, the depreciation of RMB against the U.S. dollar impacted our reported financial results. On a constant currency basis, total revenues in the first quarter of 2016 would have been US$24 million higher, or down 5% year-over-year.
2  Sogou operates the search and search-related business and offers Internet value-added services (“IVAS”) with respect to Web games developed by third-party developers. In the statements of operations, revenues from search and search-related services are recorded as “Search and search-related” revenue, and revenues from IVAS are recorded as “Others” revenue.
3  Non-GAAP results exclude share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions and dividend and deemed dividend to non-controlling preferred shareholders of Sogou. Explanation of the Company’s non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying “Non-GAAP Disclosure” and “Reconciliations of Non-GAAP Results of Operation Measures to the Nearest Comparable GAAP Measures.”

 

1


Search and search-related revenues for the first quarter of 2016 were US$134 million, up 27% year-over-year and down 12% quarter-over-quarter. The year-over-year increase was mainly driven by robust growth of mobile traffic. The quarter-over-quarter decrease was mainly due to seasonal factors.

Online game revenues for the first quarter of 2016 were US$103 million, down 45% year-over-year and 19% quarter-over-quarter. The year-over-year decrease was mainly due to the natural decline in revenues of older games, such as TLBB 3D and TLBB, and a decrease in Web game revenue upon the completion of the sale of the 7Road business during the third quarter of 2015. The quarter-over-quarter decrease was mainly due to the natural decline in revenues of TLBB, which is an older game.

Gross Margin

Both GAAP and non-GAAP gross margin was 53% for the first quarter of 2016, compared with 51% in the first quarter of 2015 and 57% in the fourth quarter of 2015.

Both GAAP and non-GAAP gross margin for the online advertising business for the first quarter of 2016 was 43%, compared with 35% in the first quarter of 2015 and 47% in the fourth quarter of 2015.

Both GAAP and non-GAAP gross margin for the brand advertising business in the first quarter of 2016 was 32%, compared with 22% in the first quarter of 2015 and 38% in the fourth quarter of 2015. The year-over-year increase was primarily due to a decrease in video content costs. The quarter-over-quarter decrease was mainly due to decreases in revenues from the online video and 17173 advertising businesses.

Both GAAP and non-GAAP gross margin for the search and search-related business in the first quarter of 2016 was 54%, compared with 53% in the first quarter of 2015 and 55% in the fourth quarter of 2015.

Both GAAP and non-GAAP gross margin for online games in the first quarter of 2016 was 75%, compared with 73% in the first quarter of 2015 and 78% in the fourth quarter of 2015. The changes in gross margins were mainly a result of a change in the revenue contribution from mobile games compared with PC games, as mobile games typically require larger revenue-sharing payments to others, which drives down gross margin. The year-over-year increase in gross margin was primarily due to a smaller percentage revenue contribution from mobile games. The quarter-over-quarter decrease in gross margin was primarily due to a larger percentage revenue contribution from mobile games.

Operating Expenses

For the first quarter of 2016, GAAP operating expenses totaled US$200 million, down 13% year-over-year and 18% quarter-over-quarter. Non-GAAP operating expenses were US$200 million, down 8% year-over-year and 10% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases were mainly due to decreased compensation expenses.

Operating Profit

GAAP operating profit for the first quarter of 2016 was US$15 million, compared with an operating profit of US$3 million in the first quarter of 2015 and an operating profit of US$19 million in the fourth quarter of 2015.

Non-GAAP operating profit for the first quarter of 2016 was US$15 million, compared with an operating profit of US$15 million in the first quarter of 2015 and an operating profit of US$44 million in the fourth quarter of 2015.

Income Tax Expense

Both GAAP and non-GAAP income tax expense was US$12 million for the first quarter of 2016, compared with income tax expense of US$16 million in the first quarter of 2015 and income tax expense of US$20 million in the fourth quarter of 2015.

 

2


Net Income

Before deducting the share of net income pertaining to non-controlling interest, GAAP net income for the first quarter of 2016 was US$11 million, compared with a net loss of US$5 million in the first quarter of 2015 and net income of US$9 million in the fourth quarter of 2015. Before deducting the share of net income pertaining to non-controlling interest, non-GAAP net income for the first quarter of 2016 was US$11 million, compared with a net income of US$8 million in the first quarter of 2015 and net income of US$34 million in the fourth quarter of 2015.

GAAP net loss attributable to Sohu.com Inc. for the first quarter of 2016 was US$21 million, or US$0.53 loss per fully-diluted share, compared with a net loss of US$31 million in the first quarter of 2015 and net loss of US$31 million in the fourth quarter of 2015. Non-GAAP net loss attributable to Sohu.com Inc. for the first quarter of 2016 was US$22 million, or US$0.56 loss per fully-diluted share, compared with a net loss of US$25 million in the first quarter of 2015 and net loss of US$13 million in the fourth quarter of 2015.

Liquidity

As of March 31, 2016, the Sohu Group had cash and cash equivalents, short-term investments and time deposit of US$1.44 billion, compared with US$1.42 billion as of December 31, 2015.

Ms. Carol Yu, President and CFO of Sohu.com Inc. commented, “With our strong balance sheet and abundant cash on hand, the Sohu Group is well gear up to make investments in strategic areas, such as online video as well as Sogou’s artificial intelligence initiative. I believe these investments will yield long-term returns for our shareholders.”

Business Outlook

For the second quarter of 2016, Sohu estimates:

 

    Total revenues to be between US$420 million and US$450 million.

 

    Brand advertising revenues to be between US$125 million and US$135 million; this implies an annual decrease of 11% to 17% and a sequential increase of nil to 8%. Sohu Media Portal revenues to be between 35% and 38% of total brand advertising revenues. Sohu Video revenues to be between 36% and 39% of total brand advertising revenues.

 

    Sogou revenues to be between US$175 million and US$185 million; this implies an annual growth of 19% to 25% and a sequential increase of 19% to 26%.

 

    Online game revenues to be between US$95 million and US$105 million; this implies an annual decrease of 39% to 45% and a sequential decrease of 7% to a sequential increase of 2%.

 

    Before deducting the share of non-GAAP net income pertaining to non-controlling interest, non-GAAP net loss to be between US$35 million and US$45 million.

 

    Non-GAAP net loss attributable to Sohu.com Inc. to be between US$50 million and US$60 million, and non-GAAP loss per fully-diluted share to be between US$1.30 and US$1.55.

 

    Assuming no new grants of share-based awards and that the market price of our shares is unchanged; we estimate that compensation expense relating to share-based awards will be around US$6 million to US$7 million.

 

    GAAP net loss attributable to Sohu.com Inc. to be between US$56 million and US$66 million, and GAAP loss per fully-diluted share to be between US$1.45 and US$1.70.

For the second quarter 2016 guidance, the Company has adopted a presumed exchange rate of RMB6.6=US$1.00, as compared with the actual exchange rate of approximately RMB6.12=US$1.00 for the second quarter of 2015, and RMB6.53=US$1.00 for the first quarter of 2016.

Non-GAAP Disclosure

To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Sohu’s management uses non-GAAP measures of gross profit, operating profit, net income, net income attributable to Sohu.com Inc. and diluted net income attributable to Sohu.com Inc. per share, which are adjusted from results based on GAAP to exclude the impact of the share-based awards, which consist mainly of share-based compensation expenses and non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

 

3


Sohu’s management believes excluding the share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions and dividend and deemed dividend to non-controlling preferred shareholders from its non-GAAP financial measure is useful for itself and investors. Further, the impact of share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts, which have been the basis for information Sohu provides to analysts and investors as guidance for future operating performance. As the impact of share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders does not involve subsequent cash outflow or is reflected in the cash flows at the equity transaction level, Sohu does not factor this impact in 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 the share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders.

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 Inc. and diluted net income attributable to Sohu.com Inc. per share, excluding share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders is that the impact of share-based awards and non-cash tax benefits from excess tax deductions related to share-based awards has been and will continue to be a significant recurring expense in Sohu’s business for the foreseeable future, income/expense from the adjustment of contingent consideration previously recorded for acquisitions may recur in the future, and dividend and deemed dividend to non-controlling preferred shareholders may recur when Sohu and its affiliates enter into equity transactions. 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 interim 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 US dollar results; recent slow-downs in the growth of the Chinese economy; the uncertain regulatory landscape in the People’s Republic of China; fluctuations in Sohu’s quarterly operating results; Sohu’s current and projected future losses due to increased spending by Sohu for video content; the possibilities that Sohu will be unable to recoup its investment in video content and that Changyou will be unable to develop a series of successful games for mobile platforms or successfully monetize mobile games it develops or acquires; and Sohu’s reliance on online advertising sales, online games and mobile services for its revenues. Further information regarding these and other risks is included in Sohu’s annual report on Form 10-K for the year ended December 31, 2015, and other filings with the Securities and Exchange Commission.

Conference Call and Webcast

Sohu’s management team will host a conference call at 8:30 a.m. U.S. Eastern Time, April 25, 2016 (8:30 p.m. Beijing/Hong Kong time, April 25, 2016) following the quarterly results announcement.

 

4


The dial-in details for the live conference call are:

 

US Toll-Free:    +1-866-519-4004
International:    +65-6713-5090
Hong Kong:    +852-3018-6771
China Mainland    +86-800-819-0121 / +86-400-620-8038
Passcode:    SOHU

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call at 11:30 a.m. Eastern Time on April 25 through May 2, 2016. The dial-in details for the telephone replay are:

 

International:    +1-646-254-3697
Passcode:    88025391

The live Webcast and archive of the conference call will be available on the Investor Relations section of Sohu’s Website at http://investors.sohu.com/.

About Sohu.com

Sohu.com Inc. (NASDAQ: SOHU) is China’s premier online brand and indispensable to the daily life of millions of Chinese, providing a network of Web properties and community based/Web 2.0 products which offer the vast Sohu user community a broad array of choices regarding information, entertainment and communication. Sohu has built one of the most comprehensive matrices of Chinese language web properties and proprietary search engines, consisting of the mass portal and leading online media destination www.sohu.com; the interactive search engine www.sogou.com; the developer and operator of online games www.changyou.com/en/ and the leading online video Website tv.sohu.com .

Sohu corporate services consist of online brand advertising on its matrix of websites as well as bid listing and home page on its in-house developed search directory and engine. Sohu also provides multiple news and information service on mobile platforms, including Sohu News App and mobile news portal m.sohu.com. Sohu’s online game subsidiary, Changyou.com (NASDAQ: CYOU) has a diverse portfolio of popular online games, such as Tian Long Ba Bu (“TLBB”), one of the most popular PC games in China, as well as a number of mobile games. Changyou also owns and operates the 17173.com Website, a leading game information portal in China. Sohu.com, established by Dr. Charles Zhang, one of China’s internet pioneers, is in its twentieth year of operation.

For investor and media inquiries, please contact:

In China:

 

Mr. Eric Yuan
Sohu.com Inc.
Tel:   +86 (10) 6272-6593
E-mail:   ir@contact.sohu.com

In the United States:

 

Ms. Linda Bergkamp

Christensen
Tel:   +1 (480) 614-3004
E-mail:   lbergkamp@christensenir.com

 

5


SOHU.COM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

     Three Months Ended  
     Mar. 31, 2016     Dec. 31, 2015     Mar. 31, 2015  

Revenues:

      

Online advertising

      

Brand advertising

   $ 125,503      $ 140,927      $ 133,821   

Search and search-related

     133,814        151,251        105,126   
  

 

 

   

 

 

   

 

 

 

Subtotal

     259,317        292,178        238,947   
  

 

 

   

 

 

   

 

 

 

Online games

     102,529        127,001        184,994   

Others

     46,106        46,924        31,391   
  

 

 

   

 

 

   

 

 

 

Total revenues

     407,952        466,103        455,332   
  

 

 

   

 

 

   

 

 

 

Cost of revenues:

      

Online advertising

      

Brand advertising (includes stock-based compensation expense of $62, $534 and $155, respectively)

     85,636        87,625        104,552   

Search and search-related (includes stock-based compensation expense of $0, $211 and $53, respectively)

     62,092        68,108        49,919   
  

 

 

   

 

 

   

 

 

 

Subtotal

     147,728        155,733        154,471   
  

 

 

   

 

 

   

 

 

 

Online games (includes stock-based compensation expense of $-7, $45 and $44, respectively)

     26,133        28,266        49,485   

Others (includes stock-based compensation expense of $0, $0 and $0, respectively)

     18,986        17,552        18,198   
  

 

 

   

 

 

   

 

 

 

Total cost of revenues

     192,847        201,551        222,154   
  

 

 

   

 

 

   

 

 

 

Gross profit

     215,105        264,552        233,178   

Operating expenses:

      

Product development (includes stock-based compensation expense of $-3, $9,665 and $4,776, respectively)

     82,679        102,402        102,191   

Sales and marketing (includes stock-based compensation expense of $14, $1,482 and $245, respectively)

     90,047        98,230        83,128   

General and administrative (includes stock-based compensation expense of $367, $13,042 and $6,953, respectively)

     27,607        44,946        45,164   
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     200,333        245,578        230,483   
  

 

 

   

 

 

   

 

 

 

Operating profit

     14,772        18,974        2,695   

Other income

     3,924        1,590        3,154   

Interest income

     5,139        6,004        6,035   

Exchange difference

     (1,022     1,885        (183
  

 

 

   

 

 

   

 

 

 

Income before income tax expense

     22,813        28,453        11,701   

Income tax expense

     11,868        19,656        16,300   
  

 

 

   

 

 

   

 

 

 

Net Income /(loss)

     10,945        8,797        (4,599
  

 

 

   

 

 

   

 

 

 

Less: Net income attributable to the noncontrolling interest shareholders

     31,231        39,197        26,521   
  

 

 

   

 

 

   

 

 

 

Net loss attributable to Sohu.com Inc.

     (20,286     (30,400     (31,120
  

 

 

   

 

 

   

 

 

 

Basic net loss per share attributable to Sohu.com Inc.

   $ (0.52   $ (0.79   $ (0.81
  

 

 

   

 

 

   

 

 

 

Shares used in computing basic net loss per share attributable to Sohu.com Inc.

     38,666        38,646        38,525   
  

 

 

   

 

 

   

 

 

 

Diluted net loss per share attributable to Sohu.com Inc.

   $ (0.53   $ (0.80   $ (0.81
  

 

 

   

 

 

   

 

 

 

Shares used in computing diluted net loss per share attributable to Sohu.com Inc.

     38,666        38,646        38,525   
  

 

 

   

 

 

   

 

 

 

 

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SOHU.COM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

 

     As of Mar. 31, 2016      As of Dec. 31, 2015  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 1,202,376       $ 1,245,205   

Restricted time deposits

     —           227,285   

Short-term investments

     101,004         174,515   

Accounts receivable, net

     254,785         273,617   

Prepaid and other current assets

     204,929         158,890   
  

 

 

    

 

 

 

Total current assets

     1,763,094         2,079,512   
  

 

 

    

 

 

 

Long-term investments

     73,211         62,093   

Fixed assets, net

     506,756         508,692   

Goodwill

     154,411         154,219   

Intangible assets, net

     45,417         55,415   

Time deposits

     137,506         —     

Restricted time deposits

     9,271         136,694   

Prepaid non-current assets

     5,898         6,254   

Other assets

     27,625         39,315   
  

 

 

    

 

 

 

Total assets

   $ 2,723,189       $ 3,042,194   
  

 

 

    

 

 

 

LIABILITIES

     

Current liabilities:

     

Accounts payable

   $ 144,670       $ 129,025   

Accrued liabilities

     314,297         309,657   

Receipts in advance and deferred revenue

     128,230         135,385   

Accrued salary and benefits

     78,152         99,631   

Taxes payable

     58,005         67,480   

Deferred tax liability

     25,518         24,884   

Short-term bank loans

     —           344,500   

Other short-term liabilities

     189,084         154,017   
  

 

 

    

 

 

 

Total current liabilities

   $ 937,956       $ 1,264,579   
  

 

 

    

 

 

 

Long-term accounts payable

     4,239         4,600   

Long-term tax payable

     19,439         24,732   

Deferred tax liabilities

     18,248         17,531   
  

 

 

    

 

 

 

Total long-term liabilities

   $ 41,926       $ 46,863   
  

 

 

    

 

 

 

Total liabilities

   $ 979,882       $ 1,311,442   
  

 

 

    

 

 

 

SHAREHOLDERS’ EQUITY:

     

Sohu.com Inc. shareholders’ equity

     1,222,814         1,241,022   

Noncontrolling Interest

     520,493         489,730   
  

 

 

    

 

 

 

Total shareholders’ equity

   $ 1,743,307       $ 1,730,752   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 2,723,189       $ 3,042,194   
  

 

 

    

 

 

 

 

7


SOHU.COM INC.

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

 

    Three Months Ended Mar. 31, 2016     Three Months Ended Dec. 31, 2015     Three Months Ended Mar. 31, 2015  
    GAAP     Non-GAAP
Adjustments
          Non-GAAP     GAAP     Non-GAAP
Adjustments
          Non-GAAP     GAAP     Non-GAAP
Adjustments
          Non-GAAP  
      62        (a         534        (a         155        (a  
   

 

 

         

 

 

         

 

 

     

Brand advertising gross profit

  $ 39,867      $ 62        $ 39,929      $ 53,302      $ 534        $ 53,836      $ 29,269      $ 155        $ 29,424   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Brand advertising gross margin

    32         32     38         38     22         22
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 
              211        (a         53        (a  
           

 

 

         

 

 

     

Search and search-related gross profit

  $ 71,722      $ —          (a   $ 71,722      $ 83,143      $ 211        $ 83,354      $ 55,207      $ 53        $ 55,260   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Search and search-related gross margin

    54         54     55         55     53         53
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 
      62        (a         745        (a         208        (a  
   

 

 

         

 

 

         

 

 

     

Online advertising gross profit

  $ 111,589      $ 62        $ 111,651      $ 136,445      $ 745        $ 137,190      $ 84,476      $ 208        $ 84,684   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Online advertising gross margin

    43         43     47         47     35         35
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 
      (7     (a         45        (a         44        (a  
   

 

 

         

 

 

         

 

 

     

Online games gross profit

  $ 76,396      $ (7     $ 76,389      $ 98,735      $ 45        $ 98,780      $ 135,509      $ 44        $ 135,553   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Online games gross margin

    75         75     78         78     73         73
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 

Others gross profit

  $ 27,120      $ —          (a   $ 27,120      $ 29,372      $ —          (a   $ 29,372      $ 13,193      $ —          (a   $ 13,193   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Others gross margin

    59         59     63         63     42         42
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 
      55        (a         790        (a         252        (a  
   

 

 

         

 

 

         

 

 

     

Gross profit

  $ 215,105      $ 55        $ 215,160      $ 264,552      $ 790        $ 265,342      $ 233,178      $ 252        $ 233,430   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Gross margin

    53         53     57         57     51         51
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 
      433        (a         24,979        (a         12,226        (a  
   

 

 

         

 

 

         

 

 

     

Operating profit

  $ 14,772      $ 433        $ 15,205      $ 18,974      $ 24,979        $ 43,953      $ 2,695      $ 12,226        $ 14,921   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Operating margin

    4         4     4         9     1         3
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 
      448        (a         25,047        (a         12,226        (a  
   

 

 

         

 

 

         

 

 

     

Net income /(loss) before Non-Controlling Interest

  $ 10,945      $ 448        $ 11,393      $ 8,797      $ 25,047        $ 33,844      $ (4,599   $ 12,226        $ 7,627   
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 
      448        (a         25,047        (a         12,226        (a  
      (1,403     (b         (7,352     (b         (6,152     (b  
   

 

 

         

 

 

         

 

 

     

Net loss attributable to Sohu.com Inc. for diluted net loss per share

  $ (20,576   $ (955     $ (21,531   $ (30,746   $ 17,695        $ (13,051   $ (31,341   $ 6,074        $ (25,267
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Diluted net loss per share attributable to Sohu.com Inc.

  $ (0.53       $ (0.56   $ (0.80       $ (0.34   $ (0.81       $ (0.66
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 

Shares used in computing diluted net loss per share attributable to Sohu.com Inc.

    38,666            38,666        38,646            38,646        38,525            38,525   
 

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

 

Note:

(a) To eliminate the impact of share-based awards as measured using the fair value method.
(b) To adjust Sohu’s economic interests in Changyou and Sogou under the treasury stock method.

 

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