Sohu.com Q1 2025 Earnings Report

Sohu.com EPS Results

• Actual EPS: -$0.55
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Sohu.com Revenue Results

• Actual Revenue: $135.65 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Sohu.com Announcement Details

• Quarter: Q1 2025
• Date: 5/19/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 19, 2025
• Conference Call Time: 7:30AM ET

Sohu.com (NASDAQ:SOHU) engages in the provision of online media, video, and game products and services on personal computers (PCs) and mobile devices in China. It operates through two segments: Sohu and Changyou. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, as well as ifox, a video application for PC. It also operates Focus (www.focus.cn), which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. In addition, the company offers interactive online games for PCs and mobile devices. Further, it provides paid subscription and interactive broadcasting services. The company was incorporated in 1996 and is headquartered in Beijing, China.

Sohu.com Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 2025, Sohu reported total revenues of $136 million (down 3% YoY) with marketing services at $14 million (down 15% YoY) and online games at $117 million (flat YoY); GAAP net income was $182 million after reversing a $199 million uncertain tax position, while non-GAAP net loss was $16 million.
• The Sohu Media Platform enhanced its social network features through flagship events like the 2025 Spring Convention for video influencers and the Sohu Jin Marathon, driving user engagement, premium content creation, and customized advertiser partnerships leveraging IPs such as Charles’ Physics Class.
• Sohu’s online game business exceeded guidance in Q1 with stable revenues from TLBB PC and Mobile thanks to holiday events and system upgrades, and plans to diversify its portfolio (card-based RPGs, sports, casual) and unlock its TLBB IP for global markets.
• For Q2 2025, management forecasts marketing services revenues of $60–70 million (down 14–19% YoY, up 17–24% QoQ), online game revenues of $96–106 million (down 28–35% YoY, down 10–18% QoQ), and a non-GAAP/net loss of $20–30 million.
• Through May 2025, Sohu repurchased 5.5 million ADS for approximately $67 million under its ongoing share buyback program.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a Q and A session. Today's conference call is being recorded.

[Operator]

If you have any objections, you may disconnect at this time. I'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

[Pu Huang, Director, IR at Sohu.com]

Thanks, operator. Thank you for joining us to discuss Sohu's fourth quarter twenty twenty five results. On the call are Chairman and Chief Executive Officer, Doctor. Charles Zhang, CFO, John Liu and the Vice President of Finance, John Stone. Also with us are Chang Liu, CEO, Douwen Chen and CFO, Yao Bin Wang.

[Pu Huang, Director, IR at Sohu.com]

Before management begins their prepared remarks, I would like to remind you of the company's Safe Harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on the call may contain 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 statements.

[Pu Huang, Director, IR at Sohu.com]

For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10 F. With that, I will now turn the call over to Doctor. Fauci Zhang. Fauci, please proceed.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Thanks, Huangbu, and thank you everyone for joining our call. In the first quarter of twenty twenty five, both our marketing services revenues, this is formerly known as the brand editing revenue, and non GAAP bottom line performance reached high end of our previous guidance, while our online game revenues were well above our expectations. For the social media platform, in addition to devoting efforts in product refinements and technology improvements, we continue to concentrate on strengthening the distinctive social features, social network features of our platform. Through various unique events, we were able to engage with more users while promoting vigorous social interactions and distributions on our platform, and generating massive premium content at the same time. Leveraging our competitive advantage as a mainstream media platform and our unique IPs, we proactively explored greater monetization opportunities.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Our games business also achieved a satisfactory performance, to the high quality content updates and continued improvements to our games. Before going into each business unit in more detail, let me first give you a quick overview of our financial performance. For the first quarter of twenty twenty five, total revenues $136,000,000 down 3% year over year and up 1% quarter over quarter. Marketing services revenues were $14,000,000 down 15 year over year and 27% quarter over quarter. Online game revenues, dollars 117,000,000, flat year over year and up 7% quarter over quarter.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

GAAP net income attributable to SoHo.comLimited was $182,000,000 compared with a net loss of $25,000,000 in the first quarter of twenty twenty four, and a net loss of $21,000,000 in the fourth quarter of twenty twenty four. In this quarter, the company reversed a tax expense that had been previously recognized as an uncertain tax position and its related accrued interest expense at approximately $199,000,000 Excluding this, non GAAP net loss attributable to Seoul.comLimited was $16,000,000 compared with a net loss of $22,000,000 in the first quarter of twenty twenty four, and a net loss of $15,000,000 in the fourth quarter of twenty twenty four. Now, I will go through our key businesses in more detail. First, Sohu Media platform. We continuously optimized our products and with cutting edge technologies, while further strengthening the social features, social network features.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

By strategically integrating resources across our platforms and leveraging the synergies created by our unique offline events, we successfully attracted a wide range of broadcasters who are also our users from diverse fields and greatly increased their engagement. These help to generate more high quality content, further promote online social interaction and distribution, and ultimately build a vibrant and dynamic social community on our platform. In April, we successfully hosted the twenty twenty five Spring Convention of the Sohu Video Influencers in Beijing, where we gathered hundreds of pop star KOLs and broadcasters and users in diverse verticals such as K pop and Chinese customers, Han Fu, among others. This event offered a chance not only for enthusiastic participants with similar interests to connect and share in person, but also for them to get to know and interact with those in different fields and thus further boosted the vitality of our platform. This quarter we also hosted our traditional flagship events, the seventeenth Sohu News Marathon, Sohu Jin Marathon in Weihai City.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

As an influential cross border marathon in China, this season's event continues to be presented through immersive live broadcasting, attracting both online and offline participants. Participation. And this event not only generated a large amount of content from a real time updates posted by during the marathon and other derivative content after the race. They also promoted continuous social dissemination of related content, and supported by the active social atmosphere on our platform. And we also continue to attract users and audiences, as well as advertisers with the my physics class, Charles Physics class IP.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

In April, I was invited to give a physical physics lecture at Beijing Planetarium reflecting the white recognition of the class, of the physical class brand. And so leading position in polarization of physical physics sciences. Popularization of physics sciences. At the same time, we continue to explore the monetization potential of this IP and its derivatives, such as everything has a physical principle in various scenarios. For example, we combined the physics class with famous exhibitions, such as the twenty twenty five China AWE, the Appliance and Electronics Expo in Shanghai.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

And also twenty twenty five Shanghai International Auto Industry Exhibition, of mobile industry exhibition in China, China. In these exhibitions we provided audiences with live explanations of the physics principles involved and integrated in the activated products, and which effectively build up connections between advertisers and audiences. Through these efforts, we were able to provide advertisers with customized marketing solutions, and further demonstrated our unique monetization value. Besides the content generated from the above events, we also proactively expanded our content library. During the quarter, we released several original dramas and American TV series, introducing a large number of short dramas.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Among which Mystic Pale, And other market TV episodes like Mandalorian, were well received by our audiences. The next turning on our online game business. During the quarter, our online game business performed well with revenues exceeding our prior guidance. In our PC game business, we roll out various holiday events around Chinese New Year and Valentine's Day, as well as promotional events for regular TLBB PC. In addition to holiday events, we upgraded a character development system for TLBB Vintage to give players a whole new game experience.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

For Legacy TLBB Mobile, we launched an expansion pack to celebrate the Chinese New Year, featuring a variety of festival themes, gameplay, and a rich benefit for players. Thanks to these efforts, both player engagement and the revenue for this game remained stable on a sequential basis. Next quarter, we'll continue to launch expansion packs and content updates for the TLBB series and other titles to further keep players engaged. As market competition intensifies and user demand for quality and innovation continues to rise, we'll forge ahead with our top game strategy, staying true to our user centric philosophy. We'll continue to optimize our R and D process and enhance execution to improve efficiency and the product success rate.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

With these efforts, we look to bring more high quality games to the market. Specifically, in terms of product development, we are actively exploring opportunities to unlock the potential of our TLBB IP. Meanwhile, as we maintain our core competitiveness in MMORPGs, we will diversify our portfolio with multiple types of games, including card based RPGs, sports games, and casual games, and expand our portfolio for global markets. Now, let me give the update on the ongoing share repurchase program. As of May, '20 '20 '5, SOHU had repurchased 5,500,000.0 ADS for an aggregate cost of approximately $67,000,000 With that, I'll now turn to our CFO, Adrena. Adrena, please.

[Joanna Lv, CFO at Sohu.com]

Thank you, Charles. I will now walk you through the key financials of our major segments for the first quarter of twenty twenty five. All numbers on a non GAAP basis, you may find the reconciliation for non GAAP to GAAP measures on our IR website. For Sohu Media platform, positive revenues were $70,000,000 compared with $20,000,000 in the same quarter last year. Positive operating loss was $70,000,000 compared with an operating loss of $74,000,000 in the same quarter last year.

[Joanna Lv, CFO at Sohu.com]

For Changyou, quarterly revenues, a hundred and $80,000,000 compared with a hundred and $90,000,000 in the same quarter last year. Quarterly operating profit, $55,000,000, last with the same quarter last year. For the second quarter of twenty twenty five, we expect marketing services revenues to be between $60,000,000 and $70,000,000. This implies annual decrease of 14% to 19% and a sequential increase of 17% to 24%. Online game revenues to be between $96,000,000 and $106,000,000.

[Joanna Lv, CFO at Sohu.com]

This implies annual decrease of 28% to 35% and a sequential decrease of 10% to 18%. Both non GAAP and the GAAP net loss attributable to Sohu.comLimited to be between $20,000,000 and $30,000,000 This forecast reflects SOPA's management's current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

[Operator]

Thank you, management. First question comes from Thomas Chong of Jefferies. Please go ahead.

[Thomas Chong, Managing Director at Jefferies]

Hi. Good evening. Thanks, management, for taking my question. My first question is about our marketing services. Can management comment about the recent trend in advertising sentiment?

[Thomas Chong, Managing Director at Jefferies]

And how does it across a different category such as FMCG, IT, auto, food, and electronics? And what should how should we think about the second half advertising outlook? Should we expect a recovery trend in advertising momentum in the second half? And my second question is about AI. Can management comment about how AI benefit our advertising and online games operations?

[Thomas Chong, Managing Director at Jefferies]

Are we seeing our eCPM or traffic benefits from better recommendation? And and also for gaming, we are seeing efficiencies or productivity increase in our gaming business? Thank you.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Okay. The first question is about the marketing services, which is a formerly called advertising. And this quarter, the sectors wise, auto is doing better. And yeah, so 26%. Auto is doing better.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

And IT services stays stable. And FMCG is stable, but luxury goods and alcohol is not is, you know, the spending is dropping a little bit. So that's the overall situation. And yeah. So, we have auto advertising, our marketing services 26%, and IT services 17%, and FMCG 16%.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

For the second half, think, well, probably similar, right? Economy is still not doing well. And we will only expect to talk to our the social network platform to have a accelerated growth, so that we have a larger, much larger platform so that we can get a larger market share of the advertising market. Your second question is about the

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

AI impact, right? So first of all, AI and deep sea development. So first of all, our platform, media platform now take the social network as our central center strategy. And the social network is really people to people interaction. It has relatively less exposure to AI and, you know, large model or deep seq, a lot of language model and deep seq.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Unlike those, you know, information retrieval services like search engines, or you know, the recommendations. Yeah, we do have the recommendations on Sohu News app and the Sohu Video. But now we, those video and the app, news app, the strategy is centered around social network. So it has less exposure or less impact by this. So of course we can, you know, take advantage of the AI development, or the advent of AI to improve some efficiency, but it's kind of like, you know, generate generational content or some abstract of the articles, and also for the live streaming and the video tools to do live streaming and to the subtitles, or the digital image, all those kind of things we need help our users to, you know, with better tools.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

That's kind of beneficial, but it's marginal. It's not that big. So what I'm saying is that the AI development, you know, pose as kind of a threat or kind of impact to certain companies that mainly depend on information retrieval providing, you know, retrieval. But we for us now with the sort of network strategy, have less exposure to this kind of threat. Yeah, I like game, I think AI impact is beneficial. Right? It's better. Right? It helps.

[Executive]

We have largely applied AI technology in terms of art design, art production, UI design, the audio effect design, and material for marketing. It has greatly improved our efficient efficiency. We've also achieved some progress in terms of the planning in terms through the ways to make AI to learn by themselves. Thank you.

[Thomas Chong, Managing Director at Jefferies]

Thank you.

[Operator]

Thank you for the questions. Okay. One goes on for the next question. Next question comes from Patricia Young of Citigroup. Please go ahead.

[Alicia Yap, Analyst at Citigroup]

Hello. Thank you. Good evening, Charles and management. Thanks for taking my questions. I have two, three questions.

[Alicia Yap, Analyst at Citigroup]

First is that I wanted to follow-up on the AI. Just wondering which AI model Sohu is currently integrating or incorporate into you know, your gaming? Are you, you know, using DeepSeek or other comparable AI, large language model? And then I I understand you mentioned about social network on your media, which is less impacted. But if you were to incorporate that into into your search and recommended functions within your Sohu portal, which, you know, again, which AI models or tools that you will be using?

[Alicia Yap, Analyst at Citigroup]

I assume you're not going to develop your own large language model. So this is the first question. Thank you.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Yeah, both in our SOHO video app and the SOHO news app, both now are social network centered application. But it also has these recommendation channels and also search engine, search box. Both of them are integrating some deep and also some open we actually developed, you know, based on some open source language model, we developed ourselves based on some, you know, some open source language model.

[Executive]

For online gaming business, we've employed different kinds of AI tools, a lot of different AI large language models to to use the in the production of different aspects, for example, example, for the art design, for the audio, for music, for video production. We also developed our own AI agent that can very conveniently based on our own needs and demand to integrate different AI tools to automatically finish the job.

[Alicia Yap, Analyst at Citigroup]

Okay. Thank thank you. My second question my second question is, I actually not quite understand the the the tax reversal. So, you elaborate again? What is which business is that is related to that tax reversal that you have to gain this quarter?

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Tax reversal.

[Alicia Yap, Analyst at Citigroup]

The tax gain that you actually have.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Oh, okay. Tax, next tax. Okay. Tax, tax. I think it's accounting issue. So let me let Joanna to expand.

[Joanna Lv, CFO at Sohu.com]

This is mainly accounting treatment. The nature is that on certain tax matters, which is calculated by weighted average basis according to a different possibility. Now, the uncertainty is gone. So, in this quarter, we totally reversed that. Is that?

[Alicia Yap, Analyst at Citigroup]

I see. Is that related to the social media business or is the gaming business?

[Joanna Lv, CFO at Sohu.com]

A so called.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

So company. So company.

[Alicia Yap, Analyst at Citigroup]

Okay. I see.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

It's accounting. It's accounting accounting. Yeah. It's accounting issue. So it's not just the uncertainty now become a certainty.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

There's no, yeah, there's no actually cash flow or real money flowing. So, it's just accounting.

[Alicia Yap, Analyst at Citigroup]

I see. Okay. And then last question. I know, I mean, maybe now we have less risk, but obviously this whole ADR delisting risk is on and off. Right?

[Alicia Yap, Analyst at Citigroup]

As the having all the noises. Just in the event, if that risk go up again, it's the management or are we thinking about any of the alternative? Like, for example, coming back to Hong Kong for the secondary listing? Appreciate any comment on that.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Well, it's still up in the air, basically. It's not, you know, it's a, we will just, anything happened, we'll have a, you know, now we don't have any, because it's not happening, right? It's just a kind of speculation.

[Alicia Yap, Analyst at Citigroup]

I see. But if that's really, really coming, then you obviously have an alternative plan that you actually are in, you know, already thinking about it.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Not thinking about it. So when it happens, we'll start thinking about it.

[Alicia Yap, Analyst at Citigroup]

Okay. All right. Great. Thank you.

[Charles Zhang, Founder, Chairman & CEO at Sohu.com]

Yes, we we always have time, right? We are not a company that has to be listed, right? We have a period of time that is not listed. Right? So we always have time to think about those things.

[Operator]

Right?

[Alicia Yap, Analyst at Citigroup]

Okay.

[Alicia Yap, Analyst at Citigroup]

All right. Okay. Great. Thank you. Thank you so much, Charles. Thank you for the answer.

[Operator]

You for the questions. Currently no further question at this time. That concludes today's conference call. Thank you all back for participating. You may now disconnect your lines.

Participants

Executives

• Pu Huang, Director, IR
• Charles Zhang, Founder, Chairman & CEO
• Joanna Lv, CFO

Analysts

• Thomas Chong, Managing Director at Jefferies
• Executive
• Alicia Yap, Analyst at Citigroup