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- 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.
- GAAP net loss attributable to Sohu.com Limited was US$21 million, 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[1] net loss attributable to Sohu.com Limited was US$15 million, 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.
- 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.
- GAAP net loss attributable to Sohu.com Limited was US$100 million, compared with a net loss of US$66 million in 2023.
- Non-GAAP net loss attributable to Sohu.com Limited was US$83 million, compared with a net loss of US$51 million in 2023.
Fourth Quarter Financial Results
Revenues
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.
Gross Margin
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.
Operating Expenses
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.
Operating Loss
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.
Income Tax Expense
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.
Net Loss
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.
Liquidity and Capital Resources
As of December 31, 2024, cash and cash equivalents, short-term investments and long-term time deposits totaled approximately US$1.2 billion.
Fiscal Year 2024 Financial Results
Revenues
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.
Gross Margin
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.
Operating Expenses
For 2024, both GAAP and non-GAAP operating expenses totaled US$542 million, flat compared with 2023.
Operating Loss
Both GAAP and non-GAAP operating loss were US$109 million, compared with an operating loss of US$87 million in 2023.
Income Tax Expense
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.
Net Loss
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.
Supplementary Information for Changyou Results[3]
Fourth Quarter 2024 Operating Results
- For PC games, total average monthly active user accounts[4] (MAU) were 2.3 million, an increase of 2% year-over-year and 9% quarter-over-quarter. Total quarterly aggregate active paying accounts[5] (APA) were 1.0 million, an increase of 9% year-over-year and 14% quarter-over-quarter. The quarter-over-quarter increase in MAU, and the year-over-year and quarter-over-quarter increases in APA were mainly because the content updates that Changyou launched for TLBB PC during the quarter were well received by players.
- For mobile games, total average MAU were 2.6 million, an increase of 53% year-over-year and a decrease of 20% quarter-over-quarter. Total quarterly APA were 0.4 million, an increase of 25% year-over-year and a decrease of 61% quarter-over-quarter. The year-over-year increases in MAU and APA were mainly from new games launched during recent quarters, including Journey Renewed: Fate Fantasy, which is the international version of New Westward Journey and was launched in Southeast Asia during the fourth quarter of 2024. The quarter-over-quarter decreases in MAU and APA were mainly due to the natural decline of New Westward Journey in the Chinese mainland market.
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.
Fiscal Year 2024 Unaudited Financial Results
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.
Recent Development
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.
Business Outlook
For the first quarter of 2025, Sohu estimates:
- Brand advertising revenues to be between US$13 million and US$14 million; this implies an annual decrease of 13% to 19%, and a sequential decrease of 26% to 31%.
- Online game revenues to be between US$105 million and US$115 million; this implies an annual decrease of 2% to 11%, and a sequential decrease of 4% to a sequential increase of 5%.
- Non-GAAP net loss attributable to Sohu.com Limited to be between US$16 million and US$26 million; and GAAP net loss attributable to Sohu.com Limited to be between US$20 million and US$30 million.
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 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; 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, 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.
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/(loss), net income/(loss), net income/(loss) attributable to Sohu.com Limited, and diluted net income/(loss) 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, and the impact of income tax related to changes in the fair value of 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 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.
Conference Call and Webcast
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/
About Sohu
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.
For investor and media inquiries, please contact:
In China:
Ms. Huang, Pu
Sohu.com Limited
Tel: +86 (10) 6272-6645
E-mail: ir@contact.sohu.com
In the United States:
Ms. Bergkamp, Linda
Christensen
Tel: +1 (480) 614-3004
E-mail: linda.bergkamp@christensencomms.com
| [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 U.S. Tax Cuts and Jobs Act signed into law on December 22, 2017 (the "U.S. TCJA"). 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." |
| [2] The bankruptcy proceedings of Changyou's wholly-owned subsidiary Shanghai Jingmao Culture Communication Co., Ltd. ("Shanghai Jingmao"), which operated Changyou's cinema advertising business, were concluded by a Chinese mainland bankruptcy court in the third quarter of 2023. The Company recognized a US$35 million disposal gain within discontinued operations in the condensed consolidated statements of operations for the third quarter of 2023. Unless indicated otherwise, results presented in this press release are related to continuing operations only, and exclude the disposal gain related to Shanghai Jingmao. |
| [3] "Changyou Results" consist of the results of Changyou's online game business and its 17173.com Website. |
| [4] Monthly active user accounts refers to the number of registered accounts that are logged in to these games at least once during the month. |
| [5] Quarterly aggregate active paying accounts refers to the number of accounts from which game points are utilized at least once during the quarter. |
| SOHU.COM LIMITED | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | |||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||
| Dec. 31, 2024 | Sep. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2024 | Dec. 31, 2023 | |||||||
| Revenues: | |||||||||||
| Brand advertising | $ | 18,865 | $ | 18,677 | $ | 20,195 | $ | 73,465 | $ | 88,689 | |
| Online games | 109,859 | 127,721 | 114,759 | 502,389 | 479,697 | ||||||
| Others | 5,960 | 5,594 | 6,405 | 22,545 | 32,286 | ||||||
| Total revenues | 134,684 | 151,992 | 141,359 | 598,399 | 600,672 | ||||||
| Cost of revenues: | |||||||||||
| Brand advertising (includes share-based compensation expense of nil, nil, nil, $1, and $7, respectively) | 17,787 | 17,040 | 16,966 | 66,579 | 71,103 | ||||||
| Online games (includes share-based compensation expense of nil, nil, $-44, nil, and $10, respectively) | 18,133 | 20,292 | 15,123 | 88,495 | 65,029 | ||||||
| Others | 1,113 | 2,283 | 1,733 | 10,759 | 9,625 | ||||||
| Total cost of revenues | 37,033 | 39,615 | 33,822 | 165,833 | 145,757 | ||||||
| Gross profit | 97,651 | 112,377 | 107,537 | 432,566 | 454,915 | ||||||
| Operating expenses: | |||||||||||
| Product development (includes share-based compensation expense of nil, $6, $-572, $19, and $156, respectively) | 61,584 | 62,231 | 69,553 | 255,233 | 279,842 | ||||||
| Sales and marketing (includes share-based compensation expense of $-1, $9, $4, $22, and $26, respectively) | 48,588 | 48,494 | 50,813 | 235,824 | 213,449 | ||||||
| General and administrative (includes share-based compensation expense of $243, $29, $-393, $-72, and $509, respectively) | 12,672 | 14,692 | 12,450 | 50,910 | 48,934 | ||||||
| Total operating expenses | 122,844 | 125,417 | 132,816 | 541,967 | 542,225 | ||||||
| Operating loss | (25,193) | (13,040) | (25,279) | (109,401) | (87,310) | ||||||
| Other income, net | 8,448 | 3,635 | 15,949 | 22,144 | 35,746 | ||||||
| Interest income | 8,632 | 9,074 | 11,578 | 38,625 | 45,222 | ||||||
| Exchange difference | 1,240 | (988) | (823) | 464 | 692 | ||||||
| Income/(loss) before income tax expense | (6,873) | (1,319) | 1,425 | (48,168) | (5,650) | ||||||
| Income tax expense | 14,387 | 15,028 | 14,044 | 52,070 | 60,420 | ||||||
| Net loss from continuing operations | (21,260) | (16,347) | (12,619) | (100,238) | (66,070) | ||||||
| Net income from discontinued operations, net of tax [6] | - | - | - | - | 35,426 | ||||||
| Net loss | (21,260) | (16,347) | (12,619) | (100,238) | (30,644) | ||||||
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