1. Sohu's Q4 revenues fell to $135 million, down 5% year-over-year. 2. Brand advertising revenue showed a 17% decline compared to fiscal 2023. 3. Online game revenue grew by 5% for the fiscal year 2024. 4. Operating loss remained flat at $25 million in Q4 compared to last year. 5. Sohu repurchased $52 million in ADS through its buyback program.
Sohu's declining revenue, particularly in advertising, may negatively impact future stock performance, similar to past reports indicating market reaction to revenue drops.
The article discusses critical financial results and trends that directly impact Sohu's performance and investor perception.
Immediate effects from the earnings downturn could influence investor sentiment in the next quarter, as seen historically with significant quarterly losses affecting shares.
("Sohu" or the "Company"), a leading Chinese online media platform and game business group, today reported unaudited financial results for the fourth quarter and fiscal year ended December 31, 2024.
Dr. Charles Zhang, Chairman and CEO of Sohu.com Limited, commented, "In the fourth quarter of 2024, our brand advertising revenues hit the high end of our previous guidance, while both our online game revenues and bottom line performance were much better than expected. For Sohu media platform, we continued to refine our products, optimized algorithms, and strictly controlled budgets. By integrating the advantages of the Sohu product matrix with our unique IPs and high energy events, we were able to promote the generation and social distribution of premium content, effectively enhance user experience to attract more users, and further unlock monetization potential. The online games business delivered solid performance, thanks to relentless efforts to produce high-quality new games and revitalize legacy games."
Total revenues were US$135 million, down 5% year-over-year and 11% quarter-over-quarter.
Brand advertising revenues were US$19 million, down 7% year-over-year and up 1% quarter-over-quarter.
Online game revenues were US$110 million, down 4% year-over-year and 14% quarter-over-quarter.
Both GAAP and non-GAAP gross margin were 73%, compared with 76% in the fourth quarter of 2023 and 74% in the third quarter of 2024.
Both GAAP and non-GAAP gross margin for the brand advertising business were 6%, compared with 16% in the fourth quarter of 2023 and 9% in the third quarter of 2024.
Both GAAP and non-GAAP gross margin for online games were 83%, compared with 87% in the fourth quarter of 2023 and 84% in the third quarter of 2024.
Both GAAP and non-GAAP operating expenses were US$123 million, down 8% year-over-year and 2% quarter-over-quarter. The year-over-year decrease was mainly due to a decrease in Changyou's product development expenses.
GAAP operating loss was US$25 million, compared with an operating loss of US$25 million in the fourth quarter of 2023 and an operating loss of US$13 million in the third quarter of 2024.
Non-GAAP operating loss was US$25 million, compared with an operating loss of US$26 million in the fourth quarter of 2023 and an operating loss of US$13 million in the third quarter of 2024.
GAAP income tax expense was US$14 million, compared with income tax expense of US$14 million in the fourth quarter of 2023 and income tax expense of US$15 million in the third quarter of 2024.
Non-GAAP income tax expense was US$10 million, compared with income tax expense of US$10 million in the fourth quarter of 2023 and income tax expense of US$11 million in the third quarter of 2024.
GAAP net loss attributable to Sohu.com Limited was US$21 million, or a net loss of US$0.69 per fully-diluted American depositary share ("ADS," each ADS representing one Sohu ordinary share), compared with a net loss of US$13 million in the fourth quarter of 2023 and a net loss of US$16 million in the third quarter of 2024.
Non-GAAP net loss attributable to Sohu.com Limited was US$15 million, or a net loss of US$0.49 per fully-diluted ADS, compared with a net loss of US$11 million in the fourth quarter of 2023 and a net loss of US$12 million in the third quarter of 2024.
As of December 31, 2024, cash and cash equivalents, short-term investments and long-term time deposits totaled approximately US$1.2 billion.
Total revenues were US$598 million, flat compared with 2023.
Brand advertising revenues were US$73 million, down 17% compared with 2023.
Online game revenues were US$502 million, up 5% compared with 2023.
Both GAAP and non-GAAP gross margin were 72%, compared with 76% in 2023.
Both GAAP and non-GAAP gross margin for the brand advertising business were 9%, compared with 20% in 2023.
Both GAAP and non-GAAP gross margin for online games were 82%, compared with 86% in 2023.
For 2024, both GAAP and non-GAAP operating expenses totaled US$542 million, flat compared with 2023.
Both GAAP and non-GAAP operating loss were US$109 million, compared with an operating loss of US$87 million in 2023.
GAAP income tax expense was US$52 million, compared with income tax expense of US$60 million in 2023.
Non-GAAP income tax expense was US$37 million, compared with income tax expense of US$48 million in 2023.
GAAP net loss attributable to Sohu.com Limited was US$100 million, or a net loss of US$3.13 per fully-diluted ADS, compared with a net loss of US$66 million in 2023.
Non-GAAP net loss attributable to Sohu.com Limited was US$83 million, or a net loss of US$2.60 per fully-diluted ADS, compared with a net loss of US$51 million in 2023.
Fourth Quarter 2024 Unaudited Financial Results
Total revenues were US$111 million, a decrease of 5% year-over-year and 14% quarter-over-quarter. Online game revenues were US$110 million, a decrease of 4% year-over-year and 14% quarter-over-quarter. Online advertising revenues were US$1 million, a decrease of 29% year-over-year and 8% quarter-over-quarter.
Both GAAP and non-GAAP gross profit were US$92 million, compared with US$100 million for the fourth quarter of 2023 and US$108 million for the third quarter of 2024.
GAAP operating expenses were US$45 million, a decrease of 15% year-over-year and 2% quarter-over-quarter. The year-over-year decrease was mainly due to a decrease in outsourcing and licensing fees related to product development.
Non-GAAP operating expenses were US$44 million, a decrease of 17% year-over-year and 2% quarter-over-quarter.
GAAP operating profit was US$48 million, compared with US$48 million for the fourth quarter of 2023 and US$62 million for the third quarter of 2024.
Non-GAAP operating profit was US$48 million, compared with US$47 million for the fourth quarter of 2023 and US$62 million for the third quarter of 2024.
Total revenues were US$506 million, an increase of 4% year-over-year. Online game revenues were US$502 million, an increase of 5% year-over-year. Online advertising revenues were US$4 million, a decrease of 25% year-over-year.
Both GAAP and non-GAAP gross profit were US$415 million, compared with US$418 million for 2023.
GAAP operating expenses were US$219 million, an increase of 1% year-over-year.
Non-GAAP operating expenses were US$219 million, an increase of 2% year-over-year.
GAAP operating profit was US$196 million, compared with US$202 million for 2023.
Non-GAAP operating profit was US$196 million, compared with US$203 million for 2023.
Under the previously-announced share repurchase program of up to US$150 million of the outstanding ADSs, Sohu had repurchased 4,180,158 ADSs for an aggregate cost of approximately US$52 million as of February 13, 2025.
For the first quarter of 2025, Sohu estimates:
For the first quarter 2025 guidance, the Company has adopted a presumed exchange rate of RMB7.18=US$1.00, as compared with the actual exchange rate of approximately RMB7.10=US$1.00 for the first quarter of 2024, and RMB7.15=US$1.00 for the fourth quarter of 2024.
This forecast reflects Sohu's management's current and preliminary view, which is subject to substantial uncertainty.
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/(loss), net income/(loss), net income/(loss) attributable to Sohu.com Limited and diluted net income/(loss) attributable to Sohu.com Limited per ADS, which are adjusted from results based on GAAP to exclude 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 imposed by the U.S. TCJA. 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.
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; 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 interest expense recognized in connection with the Toll Charge.
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.
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 U.S. dollar results; fluctuations in Sohu's quarterly operating results; the possibilities that Sohu will be unable to recoup its investment in video content and will be unable to develop a series of successful games for mobile platforms or successfully monetize mobile games it develops or acquires; Sohu's reliance on online advertising sales and online games for its revenues; and the impact of the U.S. TCJA. Further information regarding these and other risks is included in Sohu's annual report on Form 20-F for the year ended December 31, 2023, and other filings with and information furnished to the U.S. Securities and Exchange Commission.
Sohu's management team will host a conference call at 4:30 a.m. U.S. Eastern Time, February 18, 2025 (5:30 p.m. Beijing/Hong Kong time, February 18, 2025) following the quarterly results announcement. Participants can register for the conference call by clicking here, which will lead them to the conference registration website. Upon registration, participants will receive details for the conference call, including the dial-in numbers and a unique access PIN. Please dial in 10 minutes before the call is scheduled to begin.
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/
Sohu.com Limited (NASDAQ: SOHU) was established by Dr. Charles Zhang, one of China's internet pioneers, in the 1990s. Sohu operates one of the leading Chinese online media platforms and also engages in the online game business in the Chinese mainland. Sohu has built one of the most comprehensive matrices of Chinese language web properties, consisting of Sohu News App, Sohu Video App, the mobile portal m.sohu.com, the PC portal www.sohu.com, and the online games platform www.changyou.com/en/.
As a mainstream media platform with social features, Sohu is indispensable to the daily life of millions of Chinese, providing to a vast number of users a network of web properties and community-based products, which offer a broad array of content such as news, information, text, picture, video and live broadcasting. Sohu also attracts users to be highly engaged in content generation and distribution, and actively interact with each other on the platform. Sohu's online game business is conducted by its subsidiary Changyou which 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.
In China:
Ms. Huang, Pu
Sohu.com Limited
Tel: +86 (10) 6272-6645
E-mail: ir@sohu.com
In the United States:
Ms. Bergkamp, Linda
Christensen
Tel: +1 (480) 614-3004
E-mail: linda@christensenpr.com