SOHU.COM REPORTS SECOND QUARTER 2023 UNAUDITED FINANCIAL RESULTS
- None.
- None.
Second Quarter Highlights
- Total revenues were
US , down$152 million 22% year-over-year and6% quarter-over-quarter. - Brand advertising revenues were US
$24 million , down4% year-over-year and up6% quarter-over-quarter. - Online game revenues were US
$118 million , down25% year-over-year and9% quarter-over-quarter. - GAAP net loss attributable to Sohu.com Limited was
US , compared with net income of$21 million US in the second quarter of 2022 and a net loss of$9 million US in the first quarter of 2023.$18 million - Non-GAAP[1] net loss attributable to Sohu.com Limited was
US , compared with net income of$18 million US in the second quarter of 2022 and a net loss of$12 million US in the first quarter of 2023.$13 million
Dr. Charles Zhang, Chairman and CEO of Sohu.com Limited, commented, "In the second quarter of 2023, we delivered stable performance, with both revenues and the bottom line meeting our expectations. At Sohu Media, we enhanced the user experience through continuous refinements to our products and technology and by offering users a steady stream of reliable content in real time. At Sohu Video, with consistent execution of our "Twin Engine" strategy, we expanded our portfolio of long and short-form video content and proactively improved their social distribution. Leveraging our advanced live broadcasting technology and Sohu product matrix, we hosted traditional flagship events and innovative content marketing campaigns which generated abundant premium content and attracted more users. This put us in a position to explore more monetization opportunities and gain advertising dollars. Online games remained steady, generating revenues in line with our prior guidance."
[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 equity investments with readily determinable fair values, and the related income tax impact; and interest expense recognized in connection with the one-time transition tax (the "Toll Charge") imposed by the |
Second Quarter Financial Results
Revenues
Total revenues were
Brand advertising revenues were US
Online game revenues were US
Gross Margin
Both GAAP and non-GAAP gross margin were
Both GAAP and non-GAAP gross margin for the brand advertising business were
Both GAAP and non-GAAP gross margin for online games were
Operating Expenses
GAAP operating expenses were US
Operating Profit/(Loss)
GAAP operating loss was
Non-GAAP operating loss was US
Income Tax Expense
GAAP income tax expense was US
Net Income/(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 June 30, 2023, cash and cash equivalents, short-term investments and long-term time deposits totaled approximately
Supplementary Information for Changyou Results[2]
Second Quarter 2023 Operating Results
- For PC games, total average monthly active user accounts[3] (MAU) were 2.2 million, a decrease of
4% year-over-year and flat quarter-over-quarter. Total quarterly aggregate active paying accounts[4] (APA) were 0.9 million, a decrease of12% year-over-year and4% quarter-over-quarter. The year-over-year decrease in APA was mainly due to the natural decline of TLBB PC. - For mobile games, total average MAU were 1.3 million, a decrease of
35% year-over-year and19% quarter-over-quarter. Total quarterly APA were 0.3 million, a decrease of35% year-over-year and15% quarter-over-quarter. The decreases in MAU and APA were due to the natural decline of our older games.
[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. |
Second Quarter 2023 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
Business Outlook
For the third quarter of 2023, Sohu estimates:
- Brand advertising revenues to be between
US and$21 million US ; this implies an annual decrease of$24 million 7% to18% , and a sequential decrease of nil to12% . - Online game revenues to be between
US and$108 million US ; this implies an annual decrease of$118 million 21% to27% , and a sequential decrease of nil to9% . This guidance excludes revenue projections for the New TLBB Mobile game, which is scheduled to launch in the third quarter of 2023. Given that the game is not yet launched, revenue projections for the game remain uncertain. Therefore the Company believes that it is appropriate to take a conservative approach with its third quarter guidance. - Non-GAAP net loss attributable to Sohu.com Limited to be between US
$20 million andUS ; and GAAP net loss attributable to Sohu.com Limited to be between$30 million US million and US$23 $33 million .
For the third quarter 2023 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 equity investments with readily determinable fair values, and the related income tax impact; 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 equity investments with readily determinable fair values, and the related income tax impact; 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 equity investments with readily determinable fair values, and the related income tax impact, 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 and changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values, and the related income tax impact, 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 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 equity investments with readily determinable fair values, and the related income tax impact 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 7:30 a.m.
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. Charles Zhang, one of
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 Tian Long Ba Bu ("TLBB") PC and Legacy TLBB Mobile.
For investor and media inquiries, please contact:
In
Ms. Pu Huang | |
Sohu.com Limited | |
Tel: | +86 (10) 6272-6645 |
E-mail: |
In
Ms. Linda Bergkamp | |
Christensen | |
Tel: | +1 (480) 614-3004 |
E-mail: |
SOHU.COM LIMITED | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | |||||||
Three Months Ended | |||||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |||||
Revenues: | |||||||
Brand advertising | $ | 23,883 | $ | 22,524 | $ | 24,923 | |
Online games | 118,426 | 129,463 | 157,294 | ||||
Others | 9,781 | 9,806 | 12,563 | ||||
Total revenues | 152,090 | 161,793 | 194,780 | ||||
Cost of revenues: | |||||||
Brand advertising (includes share-based compensation | 16,705 | 18,687 | 23,964 | ||||
Online games (includes share-based compensation | 15,839 | 19,028 | 25,691 | ||||
Others | 4,477 | 2,728 | 3,345 | ||||
Total cost of revenues | 37,021 | 40,443 | 53,000 | ||||
Gross profit | 115,069 | 121,350 | 141,780 | ||||
Operating expenses: | |||||||
Product development (includes share-based | 69,492 | 73,048 | 65,098 | ||||
Sales and marketing (includes share-based compensation | 57,153 | 52,443 | 53,359 | ||||
General and administrative (includes share-based | 11,372 | 14,311 | 13,229 | ||||
Total operating expenses | 138,017 | 139,802 | 131,686 | ||||
Operating profit/(loss) | (22,948) | (18,452) | 10,094 | ||||
Other income, net | 5,131 | 3,797 | 7,235 | ||||
Interest income | 11,041 | 11,084 | 3,720 | ||||
Exchange difference | 3,067 | (1,074) | 4,943 | ||||
Income/(loss) before income tax expense | (3,709) | (4,645) | 25,992 | ||||
Income tax expense | 17,747 | 13,289 | 17,323 | ||||
Net income/(loss) | (21,456) | (17,934) | 8,669 | ||||
Less: Net income/(loss) attributable to the | (261) | (1) | 1 | ||||
Net income/(loss) attributable to Sohu.com Limited | (21,195) | (17,933) | 8,668 | ||||
Basic net income/(loss) per share/ADS attributable to | $ | (0.62) | $ | (0.53) | $ | 0.25 | |
Shares/ADSs used in computing basic net income/(loss) per | 34,091 | 34,091 | 34,535 | ||||
Diluted net income/(loss) per share/ADS attributable to | $ | (0.62) | $ | (0.53) | $ | 0.25 | |
Shares/ADSs used in computing diluted net income/(loss) | 34,091 | 34,091 | 34,535 | ||||
5 Each ADS represents one ordinary share. |
SOHU.COM LIMITED | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(UNAUDITED, IN THOUSANDS) | ||||
As of Jun. 30, 2023 | As of Dec. 31, 2022 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 482,623 | $ | 697,821 |
Restricted cash | 3,168 | 3,641 | ||
Short-term investments | 528,615 | 473,624 | ||
Accounts receivable, net | 58,531 | 67,541 | ||
Prepaid and other current assets | 87,530 | 83,093 | ||
Total current assets | 1,160,467 | 1,325,720 | ||
Fixed assets, net | 270,338 | 288,226 | ||
Goodwill | 46,868 | 47,415 | ||
Long-term investments, net | 24,104 | 26,012 | ||
Intangible assets, net | 3,629 | 5,394 | ||
Long-term time deposits | 370,796 | 265,802 | ||
Other assets | 10,914 | 19,207 | ||
Total assets | $ | 1,887,116 | $ | 1,977,776 |
LIABILITIES | ||||
Current liabilities: | ||||
Accounts payable | $ | 47,647 | $ | 56,449 |
Accrued liabilities | 112,025 | 126,461 | ||
Receipts in advance and deferred revenue | 47,632 | 48,080 | ||
Accrued salary and benefits | 57,105 | 60,754 | ||
Taxes payables | 9,826 | 10,612 | ||
Other short-term liabilities | 117,941 | 114,532 | ||
Total current liabilities | $ | 392,176 | $ | 416,888 |
Long-term other payables | 1,223 | 1,795 | ||
Long-term tax liabilities | 451,911 | 448,043 | ||
Other long-term liabilities | 207 | 340 | ||
Total long-term liabilities | $ | 453,341 | $ | 450,178 |
Total liabilities | $ | 845,517 | $ | 867,066 |
SHAREHOLDERS' EQUITY: | ||||
Sohu.com Limited shareholders' equity | 1,040,593 | 1,109,442 | ||
Noncontrolling interest | 1,006 | 1,268 | ||
Total shareholders' equity | $ | 1,041,599 | $ | 1,110,710 |
Total liabilities and shareholders' equity | $ | 1,887,116 | $ | 1,977,776 |
SOHU.COM LIMITED | ||||||||||||||||||
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES | ||||||||||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | ||||||||||||||||||
Three Months Ended Jun. 30, 2023 | Three Months Ended Mar. 31, 2023 | Three Months Ended Jun. 30, 2022 | ||||||||||||||||
GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | ||||||||||
(21) | (a) | 13 | (a) | 14 | (a) | |||||||||||||
Brand advertising gross profit | $ | 7,178 | $ | (21) | $ | 7,157 | $ | 3,837 | $ | 13 | $ | 3,850 | $ | 959 | $ | 14 | $ | 973 |
Brand advertising gross margin | 30 % | 30 % | 17 % | 17 % | 4 % | 4 % | ||||||||||||
18 | (a) | 18 | (a) | 42 | (a) | |||||||||||||
Online games gross profit | $ | 102,587 | $ | 18 | $ | 102,605 | $ | 110,435 | $ | 18 | $ | 110,453 | $ | 131,603 | $ | 42 | $ | 131,645 |
Online games gross margin | 87 % | 87 % | 85 % | 85 % | 84 % | 84 % | ||||||||||||
- | (a) | - | (a) | - | (a) | |||||||||||||
Others gross profit | $ | 5,304 | $ | - | $ | 5,304 | $ | 7,078 | $ | - | $ | 7,078 | $ | 9,218 | $ | - | $ | 9,218 |
Others gross margin | 54 % | 54 % | 72 % | 72 % | 73 % | 73 % | ||||||||||||
(3) | (a) | 31 | (a) | 56 | (a) | |||||||||||||
Gross profit | $ | 115,069 | $ | (3) | $ | 115,066 | $ | 121,350 | $ | 31 | $ | 121,381 | $ | 141,780 | $ | 56 | $ | 141,836 |
Gross margin | 76 % | 76 % | 75 % | 75 % | 73 % | 73 % | ||||||||||||
Operating expenses | $ | 138,017 | $ | (261) | (a) $ | 137,756 | $ | 139,802 | $ | (714) | (a) $ | 139,088 | $ | 131,686 | $ | (1,330) | (a) $ | 130,356 |
258 | (a) | 745 | (a) | 1,386 | (a) | |||||||||||||
Operating profit/(loss) | $ | (22,948) | $ | 258 | $ | (22,690) | $ | (18,452) | $ | 745 | $ | (17,707) | $ | 10,094 | $ | 1,386 | $ | 11,480 |
Operating margin | -15 % | -15 % | -11 % | -11 % | 5 % | 6 % | ||||||||||||
Income tax expense | $ | 17,747 | $ | (3,061) | (d)$ | 14,686 | $ | 13,289 | $ | (2,420) | (c,d)$ | 10,869 | $ | 17,323 | $ | (1,405) | (c,d)$ | 15,918 |
258 | (a) | 745 | (a) | 1,386 | (a) | |||||||||||||
- | 2,218 | (b) | 978 | (b) | ||||||||||||||
- | (555) | (c) | (244) | (c) | ||||||||||||||
3,061 | (d) | 2,975 | (d) | 1,649 | (d) | |||||||||||||
Net income/(loss) before non- | $ | (21,456) | $ | 3,319 | $ | (18,137) | $ | (17,934) | $ | 5,383 | $ | (12,551) | $ | 8,669 | $ | 3,769 | $ | 12,438 |
258 | (a) | 745 | (a) | 1,386 | (a) | |||||||||||||
- | 2,218 | (b) | 978 | (b) | ||||||||||||||
- | (555) | (c) | (244) | (c) | ||||||||||||||
3,061 | (d) | 2,975 | (d) | 1,649 | (d) | |||||||||||||
Net income/(loss) attributable to | $ | (21,195) | $ | 3,319 | $ | (17,876) | $ | (17,933) | $ | 5,383 | $ | (12,550) | $ | 8,668 | $ | 3,769 | $ | 12,437 |
Diluted net income/(loss) per | $ | (0.62) | $ | (0.52) | $ | (0.53) | $ | (0.37) | $ | 0.25 | $ | 0.36 | ||||||
Shares/ADSs used in computing | 34,091 | 34,091 | 34,091 | 34,091 | 34,535 | 34,535 | ||||||||||||
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 impacts 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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SOURCE Sohu.com Limited
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