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01/11 03:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed a challenging financial performance with declining revenues across key segments. Despite a positive share repurchase program, the lack of clear guidance on breaking even in marketing services, weak advertising sentiment, and no dividend plans further dampened sentiment. The Q&A session highlighted uncertainties and vague responses from management, particularly around revenue implications and growth timelines. Although there was a sequential increase in gaming revenue, the overall outlook remains negative due to the significant year-over-year declines and market challenges.
Total Revenues $126 million, down 27% year-over-year and 7% quarter-over-quarter. The decline was attributed to challenges in the market and reduced demand in certain segments.
Marketing Services Revenues $16 million, down 21% year-over-year and up 14% quarter-over-quarter. The year-over-year decline was due to reduced advertising budgets, while the quarter-over-quarter increase was driven by targeted campaigns and improved monetization opportunities.
Online Game Revenues $106 million, down 28% year-over-year and 10% quarter-over-quarter. The decline was due to intensifying market competition and evolving user demands.
GAAP Net Loss Attributable to Sohu.com Limited $20 million compared with a net loss of $38 million in the second quarter of 2024 and a net income of $182 million in the first quarter of 2025. The improvement year-over-year was due to cost optimization and better operational efficiency.
Non-GAAP Net Loss Attributable to Sohu.com Limited $20 million compared with a net loss of $34 million in the second quarter of last year and a net loss of $16 million in the first quarter of 2025. The year-over-year improvement was due to cost control measures.
Sohu Media Platform Revenues $19 million compared with $24 million in the same quarter last year. The decline was due to reduced advertising revenues.
Sohu Media Platform Operating Loss $69 million compared with an operating loss of $72 million in the same quarter last year. The slight improvement was due to operational efficiencies.
Changyou Revenues $107 million compared with $148 million in the same quarter last year. The decline was due to market challenges and reduced user spending.
Changyou Operating Profit $51 million compared with $32 million in the same quarter last year. The improvement was driven by cost management and increased efficiency.
Online game business: Performed well with revenues reaching the high end of guidance. Launched expansion packs for TLBB PC and TLBB Mobile, celebrating anniversaries and festivals, which increased player engagement. Plans to continue launching expansion packs and content updates for the TLBB series and other titles.
Sohu media platform: Optimized products and refined operations, enhancing social features. Hosted events like the 2025 Sohu K-pop Dancing Festival and Chinese costume model competition, which increased user engagement and monetization opportunities. Explored new verticals like outdoor exploration events and physics knowledge dissemination.
Global market expansion: Actively diversifying into multiple types of games, including card-based RPGs, sports games, and casual games, while expanding offerings for global markets.
Operational efficiencies in online games: Optimized research and development system to enhance efficiency and product success rate. Leveraged MMORPG strengths to diversify game offerings.
Share repurchase program: Repurchased 6.6 million ADS for $83 million, completing more than half of the total commitment.
Revenue Decline: Total revenues decreased by 27% year-over-year and 7% quarter-over-quarter. Marketing services revenues dropped 21% year-over-year, and online game revenues fell 28% year-over-year. This significant decline in revenue could adversely impact the company's financial stability and operational capacity.
Net Loss: The company reported a GAAP net loss of $20 million for the quarter, compared to a net income of $182 million in the previous quarter. This indicates financial challenges and potential difficulties in achieving profitability.
Market Competition: The online game business faces intensifying market competition and growing user demand for quality and innovation. This could pressure the company to invest more in R&D and marketing, potentially impacting margins.
Economic Uncertainty: The company's financial forecast for Q3 2025 includes a net loss of $25 million to $35 million, reflecting substantial uncertainty in achieving financial targets.
Declining Media Platform Revenue: Sohu media platform revenues dropped to $19 million from $24 million in the same quarter last year, indicating challenges in monetizing the platform effectively.
Regulatory and Operational Risks: Forward-looking statements highlight inherent risks and uncertainties, including regulatory hurdles and operational challenges, which could materially affect the company's performance.
Marketing Services Revenue Guidance: For the third quarter of 2025, marketing services revenues are expected to be between $40 million and $50 million, implying an annual decrease of 20% to 25% and a sequential decrease of 4% to 10%.
Online Game Revenue Guidance: Online game revenues are expected to be between $107 million and $117 million for the third quarter of 2025, implying an annual decrease of 8% to 16% and a sequential increase of 1% to 10%.
Net Loss Guidance: Both non-GAAP and GAAP net loss attributable to Sohu.com Limited are expected to be between $25 million and $35 million for the third quarter of 2025.
Online Game Business Strategy: The company plans to continue launching expansion packs and content updates for the TLBB series and other titles to maintain player engagement. It aims to optimize its research and development system to enhance efficiency and product success rate. Additionally, it is diversifying into multiple types of games, including card-based RPGs, sports games, and casual games, while expanding offerings for global markets.
Share Repurchase Program: As of July 31, 2025, Sohu has repurchased 6.6 million ADS for an aggregate cost of approximately $83 million, which is more than half of the total commitment.
The earnings call reveals mixed signals. While total revenues and online game revenues show strong growth, marketing services revenue declines significantly. The financial outlook indicates continued net losses, creating uncertainty. The share repurchase program is a positive sign, but competitive market pressures and vague management responses in the Q&A raise concerns. Overall, the financial performance is promising, but uncertainties in guidance and competition keep the sentiment neutral.
The earnings call revealed a challenging financial performance with declining revenues across key segments. Despite a positive share repurchase program, the lack of clear guidance on breaking even in marketing services, weak advertising sentiment, and no dividend plans further dampened sentiment. The Q&A session highlighted uncertainties and vague responses from management, particularly around revenue implications and growth timelines. Although there was a sequential increase in gaming revenue, the overall outlook remains negative due to the significant year-over-year declines and market challenges.
Despite a strong share repurchase program, the negative guidance for both marketing services and online game revenues, along with anticipated losses and competitive pressures, outweighs the positives. The Q&A section highlights concerns about advertising trends and AI's limited impact on operations. The management's vague response regarding ADR delisting risks adds uncertainty. The strong GAAP net income is mainly due to a tax reversal, not operational performance. Given these factors, a negative stock price reaction is expected.
The earnings call reflects declining revenues in key areas, including a significant annual decrease in online game and marketing services revenue, highlighting competitive and economic pressures. Despite a share repurchase program, financial guidance indicates ongoing losses. The Q&A session revealed management's unclear response to ADR delisting risks, adding uncertainty. Although there are positive aspects like stable GAAP net income and AI integration, the negative trends and lack of strong guidance suggest a likely negative stock price reaction.
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