Sohu.com Q2 2025 Earnings Call Transcript

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August 4, 2025

Key Takeaways

  • Negative Sentiment: Total Q2 revenues of $126 million declined 27% year-over-year and GAAP net loss narrowed to $20 million, but full-year non-GAAP net loss is still forecast at $25 million–$35 million.
  • Neutral Sentiment: Social media platform engagement was driven by differentiated events—such as the Sohu K-pop dance festival and Chinese Hanfu competitions—to bolster community interaction and content distribution.
  • Positive Sentiment: Online games hit the high end of guidance as TLBB PC and mobile anniversary expansions, Dragon Boat Festival events and a Vintage skill upgrade system lifted player engagement; new content and diversification into card RPGs, sports and casual games are slated next.
  • Positive Sentiment: Share repurchase program remains active, with 6.6 million ADS bought back for approximately $83 million, reflecting management’s confidence in the company’s long-term prospects.
  • Negative Sentiment: Marketing services revenue fell 21% year-over-year to $16 million amid macroeconomic uncertainty and cautious advertiser spending, with Q3 marketing services guide implying another 4%–10% sequential decline.
AI Generated. May Contain Errors.
Earnings Conference Call
Sohu.com Q2 2025
00:00 / 00:00

There are 7 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's Second 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 question and answer 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.

Speaker 1

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

Speaker 1

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 this 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.

Speaker 1

For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including our most recent annual report on Form 20 F. With that, I will now turn the call over to Doctor. Charles Zhang. Charles, please proceed.

Speaker 2

Thanks, Huangpu, and thank you everyone for joining our call. In the 2025, our marketing services revenues were in line with our expectations, while our online game revenues and the bottom line performance hit the high end of our guidance. For social media platform, we continue to focus on refining products, enhancing the operation of our social networks, and improving synergies across our product matrix. During the quarter we hosted differentiated events that not only attracted numerous participants with shared interests, but also encouraged them to build social connections and interact vibrantly with each other on our platform. With these efforts, we were able to increase our user engagement, further consolidate our brand influence, and capture more monetization opportunities.

Speaker 2

Our online games delivered solid results underpinned by our dedication to serving users' needs through compelling new content and continued optimization of our games. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the 2025, total revenues were $126,000,000 down 27% year over year and 7% quarter over quarter. Marketing services revenues were $16,000,000 down 21% year over year and up 14% quarter over quarter. Online game revenues were $106,000,000 down 28% year over year and 10% quarter over quarter.

Speaker 2

GAAP net loss attributable to Silver dot com Limited was $20,000,000 compared with a net loss of $38,000,000 in the 2024. And the net income of US $182,000,000 in the 2025. Non GAAP net loss attributable to tosovo.comlimited was $20,000,000 compared with a net loss of $34,000,000 in the second quarter of last year, and a net loss of $16,000,000 in the 2025. Now I'll go through our key businesses in more detail. First, Sohu Media Platform.

Speaker 2

We kept optimizing our products and refining operations while continuing to enhance its social features. We actively hosted diverse and distinctive events and activities, generated plenty of premium content and stimulated social distributions, and improved the interactive experience inherent in our product metrics. These robustly supported the thriving development of our online communities. This quarter, on last year's success, continue to expand our influence in the area of K pop and the Chinese custom Hanfu by hosting a series of attractive events and competitions. For example, in June, in K pop we launched the twenty twenty five Sohu K pop dancing festival.

Speaker 2

We would often have that same, as we do it every year. Which attracted the participation of numerous K pop enthusiasts. And quickly become became a blockbuster event in the field of K pop dancing. So in July we held a special K pop random dancing event with K pop Superstar's Vision, which is the NCT, the South Korean NCT, which also gained significant traction. During the quarter we also hosted the twenty twenty Chinese custom model competition, which has completed almost 80 contacts in nearly 30 regions in China so far this year.

Speaker 2

In addition, we continue to explore new verticals. In June we held the first salute to the automated explorer, attracting lots of outdoor ultimate explorer broadcasters, you know, self media hosts and celebrities who share their insights through speeches and panel discussions. These events not only provided opportunities for participants to connect and communicate, but also stimulated them to actively interact with each other on our platform in the longer term. With these we were able to successfully enhance user metrics and foster a vibrant social atmosphere. In terms of leading IP, the physics class, my physics class is continuing to deliver cutting edge physics knowledge to a wide range of audiences.

Speaker 2

Under various scenarios. During the quarter, July and myself conducted several high end dialogues with Norbert Lawitz and famous well known highly achieved physicists and entrepreneurs in topics ranging from physics knowledges to the latest industry trends and social interest. Promoting a multinational dissemination, dissemination of so whose brand influence and attracting greater traffic to our platform. These competitions and live broadcasting events not only brought vitality and premium content to our platform, but also brought us more exposure and recognition from advertisers providing us with additional monetization opportunities. Leveraging the advantages of our product matrix and our brand influence, we were able to satisfy the needs of advertisers by delivering differentiated marketing solutions through targeted campaigns.

Speaker 2

Next, to our online game business. During quarter, our online game business performed well, with revenues reaching the high end of our guidance. In our PC game businesses, we launched an expansion pack regular TLBB PC to celebrate its eighteenth anniversary, as well as various events for the Dragon Boat Festival, which we received an enthusiastic response from the community. We fully upgraded the skill enhancement system of TLBB Vintage to refresh the combat experience of players of each clan. And we celebrated eighth anniversary of Legacy TLBB Mobile with an expansion pack filled with diverse gameplay and generous rewards, effectively increasing player engagement.

Speaker 2

Next quarter we will continue to launch expansion packs and the content updates for the TLBB series and other titles to further keep players engaged. The mid intensifying market competition, growing user demand for the quality and innovation will advance our top games strategy anchored in user trans centric principles. By continuously optimizing our research and development system, we aim to enhance the efficiency and product success rate. Specifically in product offerings, we are actively exploring opportunities to unlock the potential of our TLBB IP. Meanwhile, building upon our core strengths in MMORPGs, we are diversifying into multiple types of games, including card based RPGs, sports games, and casual games, as well as expanding our offerings for global markets.

Speaker 2

Now I'd like to give an update on the ongoing share repurchase program. As of July 2025, SOHO had repurchased 6,600,000.0 ADS for aggregated cost of approximately 83,000,000 US dollars. So about one and a half of the total. With that, I will now turn the call over to Joanna, our CFO.

Speaker 3

Thank you, Charles. I will now walk you through the key financials of our major segments for the 2025. All the numbers on a non GAAP basis, you may find a reconciliation of non GAAP to GAAP measures on our IR website. For Sohu Media platform, quarterly revenues $19,000,000 compared with $24,000,000 in the same quarter last year. Quarterly operating loss was $69,000,000 compared with an operating loss $72,000,000 in the same quarter last year.

Speaker 3

For Changyou, quarterly revenues $107,000,000 compared with $148,000,000 in the same quarter last year. Quarterly operating profit was $51,000,000 compared with operating profit of $32,000,000 in the same quarter last year. For 2025, we expect marketing services revenues to be between $40,000,000 and $50,000,000. This implies annual decrease of 20% to 25% and a sequential decrease of 4% to 10%. Online game revenues to be between $107,000,000 and $117,000,000.

Speaker 3

This implies annual decrease of 8% to 16% and a sequential increase of 1% to 10%. Both non GAAP and GAAP net loss attributable to total.com Limited to be between $25,000,000 and $35,000,000 This forecast reflects management 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. We will now begin the question and answer session. We will now take our first question from the line of Thomas Chong at Jefferies. Please go ahead, Thomas.

Speaker 4

Hi. Good evening. Thanks management for taking my questions. I mean, first of all, may I ask about our marketing services revenue? You talk about our marketing services revenue, basically, largely in line with the low end of the previous guidance.

Speaker 4

And we saw that in q three, it seems that the advertising revenue is is still suffering some sequential weaknesses. I just want to get some color for management with regards to our thoughts about the recent advertising sentiment. Is there any changes or deterioration because of the macro uncertainties. Any color that can be shared about the trend of different categories like OTO, IT, FMCG, these categories? That's on the marketing services part.

Speaker 4

And then on AI part, can management comment about how AI is applied into our operations in advertising and gaming? And are we also using our own model or third party models? And and then lastly, the the the share buyback program, can management share about other than the share buyback program, Are we thinking of any other capital return like a dividend or other program to shareholders? Thank you. Okay.

Speaker 2

All right, Thomas. So the question about the forecast for the future Q3 advertising situation. Yes, it's kind of there's a weakness because of the microeconomic situation is not that good. And a lot of uncertainties and also the downgrade of consumptions because of people just don't have less disposable income to buy things. And also the competition of companies, the profit margin is lower and so they're more cautious in investing in marketing spending.

Speaker 2

And as to sectors, still our largest sector is auto sector, and followed by FMCG and IT services. For auto sectors, it's, well, it's now kind of stabilized with the price war is getting steady, and it's the new energy, I mean electric cars market share is expanding. Well, the luxury cars and also joint ventures are kind of shrinking. So with this kind of market situation we have this unique events and IPs and create it or, you know, to launch the kind of a unique events and combine it with our online properties to have some kind of unique marketing opportunities so that they still, yeah, they do spend still on SOHO. Yeah, that's about so we're trying to yeah.

Speaker 2

So the whole macroeconomic situation is really not that good, but since our advertising market share is very small, so if we are successful in our social media success platforms, we will just get a larger share. So, we hope. But that will not happen in the next few quarters. We'll continue to build our user base. As to your second question about the AI application, I think, yeah, it improves, especially in the online game part, right?

Speaker 2

It does improve the efficiency or productivity on a game. But for the media platform and social networks, it helps help our users to get answers or get results with a search capability on each app. So now people are actually doing information search on each separate apps, not, you know. So we are using the AI to improve the AI answering question, answering capability of the SOHO video and the SOHO news app. But that two apps mostly social networks.

Speaker 2

Now we turn it into a social network platform. The AI help is only marginal. Right. So we are using the open source language model and then build on based on that, build on that, you know, to develop on that. So we're using various models, you know, a lot of language model.

Speaker 2

About share buyback, yes, are halfway into it, and over $83,000,000 already consumed. And we don't have any plan to have other investments or capital investment because we are finding a major user base building and social network war. So we need a war chest to fight, to do, you know, to battle, to do the battle. Yeah. That's why I hope you answered your question.

Speaker 4

Got it. Thank you, Charles, for the detailed answer. Thank you.

Operator

Thank you. Our next question comes from the line of Alicia Yap from Citigroup. Please ask your question, Alicia.

Speaker 5

Oh, hi. Good evening. Can you hear me okay?

Speaker 2

Yeah.

Speaker 5

Hello? Can you hear me? Okay. Good evening, management.

Speaker 2

Yeah. We can hear you. Yeah. Alicia. Yeah.

Speaker 5

Good evening, Charles and management. Thanks for taking my questions. Few questions for me. First is that, just wondering if you can share with us when should we expect the loss from the marketing service revenue to last? In other words, do you have a breakeven timing that you can share with us?

Speaker 5

This is the first question. Second question is related to the gaming guidance. It seems like sequentially we are guiding a sequential increase. So if management can elaborate a little bit the reason for the sequential improvement on the game revenue. And then the third question is, I think, Charles, on your opening remark, you mentioned a little bit on those like K pop or these events.

Speaker 5

So just wondering how those events actually able to help you accelerate your user growth for your Sohu app. I mean, Sohu user app. Sorry, Sohu app user Yeah, sure. Yeah, sorry. Yeah, thank you.

Speaker 5

That's all my questions. Yeah.

Speaker 2

Well, so the as I said, you know, with the current this traditional internet media platform, it's very for this kind of user base, it's very hard to break even, Especially when we have, we actually have three products that we're focusing on three products. So it's kind of a multiple, you know, battlefield. There's three battlefields to fight. That's why. Since all the social network products and the user base growth is nonlinear, it could hit a critical point, critical mass that explode or grow exponentially and sometimes in the future.

Speaker 2

And we don't know what that critical point is, so we don't know. So until that happens, you know, before that I don't think we will be able to break even because we have a So yeah, I don't know. But we hope, I hope, I'm optimistic, I'm hopeful, I'm optimistic that I'm confident that it will happen. The critical point for a social network group to to break, you know, to grow. As to the gain sequential increase, yeah?

Speaker 6

The old games performed are expected to perform relatively stable during the third quarter. And we also rolled out a new version, a new game for TLBB PC on the July 25, which is called TLBB or TLBB return in English. We expect the new game will bring some addition of revenue.

Speaker 2

Yeah. Well, K pop event, it's just like the Han Fu event and other. Yeah. And also the third question. All these events are community builders because when people actually this competition is, you know, continue the whole year competition and the events, and then people get to know each other and people to become users and broadcasters or self media.

Speaker 2

People get into your immediate communities by groups, right? So now we are

Speaker 1

the I

Speaker 2

see. Sohu video is the most top K pop platform in China. That's why when the South Korean pop, you know, K pop teams and they're coming to China to do events after, you know, competitions among platforms and then Sohu video is the designated or chosen platform to do that, because we are the number one in this field. And also in Hanfu. And we are building verticals after verticals and become the best in the verticals.

Speaker 2

And that helps to help us consolidate or attract our user base.

Speaker 5

I see. Thanks, Charles. I'll just follow-up on that. Is there any revenue implication from these events that will contribute to the I mean, already the second quarter,

Speaker 2

or maybe we can

Speaker 5

carry forward to the third quarter? Yeah.

Speaker 2

Yes. The revenue sponsorship for these events are unlike those physics class or other, you know, unlike those ones, this is a secondary or less, I mean, it's not a priority, but we do get sponsorship, yes, for the K pop and for the Hanfuh events.

Speaker 5

I see. I see. But we All right. Great.

Speaker 2

Thank you. Yeah, we really accept the top sponsor, like the name sponsor. We refuse the name sponsor. I mean the title of sponsorship, right? Yeah.

Speaker 2

Because our goal is to develop users and to market our brand, the product brand.

Speaker 6

All right.

Speaker 5

Thank you. Okay. Thank you. Thank

Operator

you. I'm showing no further questions. And with that, we conclude our conference call for today. Thank you for your participation. You may now disconnect your

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