Sohu.com Q2 2026 Earnings Call Transcript

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August 10, 2026

Key Takeaways

  • Positive Sentiment: Second-quarter results exceeded guidance: Total revenue rose 7% year over year to $136 million, while the company returned to approximately breakeven on both GAAP and non-GAAP net income, helped in part by a roughly $30 million reversal of previously recognized tax expenses.
  • Positive Sentiment: Online games performed better than expected, with revenue up 10% year over year to $116 million. Updated content and expansion packs, particularly for the older TLBB PC title, supported player engagement and Changyou’s operating profit increased to $56 million from $51 million.
  • Negative Sentiment: Management continues to characterize the macroeconomic and advertising environment as weak, with auto, FMCG, and IT advertisers remaining cautious and reducing spending. Although differentiated social-media, livestreaming, and offline-event marketing solutions helped Sohu achieve growth, the Sohu Media Platform still posted a $71 million operating loss.
  • Negative Sentiment: Third-quarter guidance points to a return to losses, with GAAP and non-GAAP net loss projected at $23 million to $30 million. Online-game revenue is expected to decline sequentially as the older TLBB titles experience a natural slowdown after their strong second-quarter performance.
  • Positive Sentiment: Sohu extended its share-repurchase authorization on an open-ended basis to complete the remaining approximately $26 million of its $150 million program, after repurchasing 9.4 million ADS for about $124 million as of August 6.
AI Generated. May Contain Errors.
Earnings Conference Call
Sohu.com Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After management prepared remarks, there will be a Q&A session. Today's conference call is being recorded. If you have any objections, you may now disconnect at this time. I would 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
Investor Relations Director at Sohu

Thanks, operator. Thank you for joining us to discuss Sohu second quarter 2026 results. On the call are Chairman and Chief Executive Officer, Dr. Charles Zhang, CFO Joanna Lv, and Vice President of Finance, James Deng. Also with us are Changyou CEO Dewen Chen, and CFO Yaobin Wang. Before management begins, I would like to remind you of the company's Safe Harbor statement shown on 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. 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
Investor Relations Director at Sohu

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 2025. With that, I will now turn the call over to Dr. Charles Zhang.

Charles Zhang
Chairman and CEO at Sohu

Thanks, Huang Pu. Thank you, everyone, for joining our call. In the second quarter of 2026, our marketing services revenues, online game revenue, and bottom line performance all exceeded our previous guidance. For the Sohu Media Platform, we continued to refine our products and host diverse events and activities to stimulate communication and interaction among users, which further strengthened the platform's social features and promoted its vigorous and healthy development. Leveraging our differentiated content and events, we were able to address advertisers' needs and continue to explore diversified monetization opportunities. For online games, we remain committed to our long-term operation strategy and continue to launch diverse content updates to deliver rich and engaging experiences for game players. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. Please be advised that this release relates to continuing operations only.

Charles Zhang
Chairman and CEO at Sohu

For the second quarter of 2026, total revenue were $136 million, up 7% year-over-year and down 4% quarter-over-quarter. Marketing services revenues were $15 million, down 3% year-over-year and up 21% quarter-over-quarter. Online game revenues were $116 million, up 10% year-over-year and down 7% quarter-over-quarter. After giving effect to reversal of a tax expense of approximately $30 million due to a reversal of uncertain tax positions previously, GAAP net income attributable to Sohu.com Limited was $200,000, compared with the net loss of $20 million in the second quarter of 2025 and a net loss of $4 million in the first quarter of 2026.

Charles Zhang
Chairman and CEO at Sohu

Non-GAAP after giving effect to the above-mentioned reversal of tax expenses, non-GAAP net income attributable to Sohu.com Limited was $500,000, compared with the net loss of $20 million in the second quarter of 2025 and the net loss of $4 million in the first quarter of 2026. I'll go through our key businesses in more detail. First, Sohu Social Media Platform. This quarter, we continued to refine our products with upgraded technologies and enhanced user experience and engagement across different scenarios. Leveraging the synergy between various offline activities and our online communities, we boosted active user interactions as well as the generation and dissemination of premium content. These efforts enabled us to expand genuine social connections among users on our platform and foster a virtuous cycle to build a prosperous and healthy social ecosystem.

Charles Zhang
Chairman and CEO at Sohu

During the quarter, in addition to the 2026 Spring Convention of Sohu Video Influencers, [Non-English content], hosted in April, where we created opportunities for broadcasters to interact and to establish in-person social connections across various verticals. We also continued with the signature event of 2026, Kickoff the Year Annual K-pop Dancing Festival, and also the 2026 Chinese Costume Hanfu Model Competition. These competitions attracted thousands of young enthusiasts to actively participate, consolidating our appeal and competitiveness in these areas based on our long-term endeavor in a dense area, we further consolidated our influence by introducing a series of engaging activities on campus, enhancing our platform's coverage and among young people.

Charles Zhang
Chairman and CEO at Sohu

We hosted attractive and innovative activities in conjunction with popular events or topics across different verticals, such as the Salute to the Ultimate Explorers, the outdoor vertical, and sports and other verticals, and World Cup related activities, World Cup watching parties. As a result, a variety of online interest clubs were developing rapidly. These distinctive events and activities garnered significant attention and recognition, and spread widely across multiple social platforms, bringing active interactions to our platform and contributing to its vigorous and high-quality development. In May, we successfully hosted our traditional event of 2026 Sohu Annual Science & Technology Conference. We invited a host of leading scholars to engage in cross-sector, high-end dialogues regarding the latest scientific trends and the developments attracting a large number of scientists and science enthusiasts to our platform.

Charles Zhang
Chairman and CEO at Sohu

At the same time, we continue to strengthen our leading position in knowledge and science-related live broadcasts class with our core IPs on myself, Charles's Physics Class, and we held live broadcasts related to the National College Entrance Examination in physics, and provided relevant learning advice for audiences. We also kept delivering public science popularization, devoting to narrowing the gap between the public and the cutting-edge science. This month, my Charles's English Class celebrated its 10th anniversary. 10 years. We've been doing this for 10 years, and has conducted for more than 2,000 live broadcasts, continuing to generate practical content and driving traffic to the platform. Relying on our unique IPs, product matrix, and differentiated campaigns, we're able to tailor marketing solutions for advertisers and tap into more monetization potential.

Charles Zhang
Chairman and CEO at Sohu

For example, we organically combine the physics knowledge, and deliver in the physics class with industry practices, applications of the applied physics, to help brand advertisers to showcase their technological strengths and advance brand value. Next, turning to our online game businesses. During the quarter, our online game business performed well with revenues exceeding our prior guidance. In our PC game business, we rolled out a series of crossover content with the renowned Wuxia comic franchise, Storm Riders, "Feng Yun," for both regular TLBB PC and TLBB Vintage. We also introduced a new character development system for regular TLBB PC. In addition, we launched the new content and gameplay for TLBB: Return to enrich the player experience. Turning to our mobile game business.

Charles Zhang
Chairman and CEO at Sohu

We launched an expansion pack to celebrate the anniversary of Legacy TLBB Mobile, as well as certain in-game promotional events, which drove an increase in player engagement. 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 enhance player engagement. Looking ahead, we'll remain committed to our top game strategy. On the product development front, we'll adhere to systematic R&D processes, drive implementation of advanced technologies, and enhance our research and development R&D capabilities through continuous experimentation and validation, striving to bring more high-quality games to the players. Regarding to our pipeline, we seek to further unlock the potential of our TLBB IP.

Charles Zhang
Chairman and CEO at Sohu

Meanwhile, as we maintain our competitive edge in the MMORPGs, we will continue to diversify our portfolio with multiple types of games and expand our product offerings with global appeal. Now, I'd like to provide an update on the ongoing share repurchase program. As of August 6, 2026, Sohu had repurchased 9.4 million ADS for an aggregate cost approximately $124 million. Moreover, Sohu today announced that its Board of Directors authorized repurchases to continue on an open-ended basis until the maximum authorized amount of $150 million is reached. With that, I'll now turn the call over to our CFO, Joanna. Please.

Joanna Lv
CFO at Sohu

Thank you, Charles. I will now walk you through the key financials of our major segments for the second quarter of 2026. All 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 were $90 million, flat with the same quarter last year. Quarterly operating loss was $71 million, compared with an operating loss $69 million in the same quarter last year. For Changyou, quarterly revenues $117 million, compared with $107 million in the same quarter last year. Quarterly operating profit was $56 million, compared with the operating profit $51 million in the same quarter last year. For third quarter of 2026, we expect marketing service revenues to be between $14 million and $15 million. This implies annual increase of 3%-10% and a sequential decrease of 1%-8%.

Joanna Lv
CFO at Sohu

Online game revenues to be between $105 million and $115 million. This implies an annual decrease of 29%-35% and a sequential decrease of 1%-10%. Both non-GAAP and GAAP net loss attributable to Sohu.com Limited to be between $30 million and $23 million. This forecast reflects Sohu's management current and the preliminary review, 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 very much. Now we will conduct the Q&A session. Just a moment for our first question, please. First question comes from Thomas Chong from Jefferies. Please go ahead.

Thomas Chong
Thomas Chong
Analyst at Jefferies

Hi, good evening, Charles, and management. Thanks for taking my question. My question is about the good result that we saw in Q2. I think last earnings call, Charles, you mentioned about the advertising sentiment is just so-so, not great. Is there any change in your view about the advertising outlook in the second half? I think that's number one. A follow-up question is more about the World Cup. I remember last time, Charles, you talked about World Cup should be a small event. Just want to see if there's any change in your view about the World Cup impact. That's number one. Number two is about the recent trend in advertising sentiment, in particular for different category like auto, IT, FMCG. Can you provide some color about the second half outlook?

Thomas Chong
Thomas Chong
Analyst at Jefferies

Secondly, I think on the gaming side, may I ask about the quarter-to-date performance so far for the TLBB series? Is it at the low-end or the high-end of the guidance quarter-to-date? Thank you.

Charles Zhang
Chairman and CEO at Sohu

Okay, your first part about the Sohu Media or Social Media Platform, the advertising, yeah, we actually beat the forecast. The answer to your question is still similar to last time that the macroeconomic situation is still very bad, actually bad and sloppy. Advertisers are now very cautious in spending. Because of our unique marketing offerings, we were able to achieve actually some kind of growth compared with Q1. Well, Q1 and seasonality, but yes, we actually have some growth beat the forecast because of our innovative marketing solution that we provided to our advertisers, especially combined our online social media platform and also offline activities with livestreaming, with events.

Charles Zhang
Chairman and CEO at Sohu

Now the marketing advertising side is very different from before, like a few years ago when actually advertisers tend to, especially brand advertisers, tend to spend less on the standard advertising on channels, on the traditional, in Chinese called [Non-English content]. They are all trying to create the maximum effect of viral distribution or viral online through key influencers or KOLs and to use the social networks. Our solution, our social platform we are able to provide exactly that kind of marketing services. In terms of categories, still the auto is 33% and FMCG 20%, IT 17%. All three areas are not doing well. I mean, the macroeconomic situation, they're all spending less. More cautious. The World Cup, actually, yes, there's not much impact in terms of the income, I mean, the advertising.

Charles Zhang
Chairman and CEO at Sohu

The World Cup, we did organize the activities of watching World Cup games and tournament, which to promote or develop or to acquire users. It's more to the consumer side, I mean, the user side. Yeah, I hope I answer your question.

Thomas Chong
Thomas Chong
Analyst at Jefferies

Thank you.

Charles Zhang
Chairman and CEO at Sohu

Gaming. Yes.

Dewen Chen
CEO at Changyou

From the past almost two months, the performance is largely in line with our expectation. Still we have more than one month time to go, and there are still some content and activities to be released, which are not very easy to forecast their performance. Eventually it will depend on the performance of these content and activities.

Charles Zhang
Chairman and CEO at Sohu

Thank you.

Dewen Chen
CEO at Changyou

Thank you.

Thomas Chong
Thomas Chong
Analyst at Jefferies

Got it. Thank you.

Operator

Thank you very much. Just a moment for our next question, please. Next question comes from the lines of Alicia Yap from Citigroup. Please go ahead with your question.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Hi. Good evening. Thank you for taking my questions.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Good evening, Charles, and management. I have two questions. First, I wanted to ask on the buyback. I think you mentioned, the board amended the existing buyback program to be open-ended rather than it was supposed to be expired, I think, in November. Just wanted to know what's the rationale behind. Does that mean that or does that imply or suggest that the remaining $26 million of the outstanding, it is highly chance that you might not finish by that November 30th, so that you are making it open-ended so that you can continue to finish that $26 million before you announce a new plan? Any kind of the reasons that you can share with us would be great. The second question is a follow-up on the online advertising guidance for the 3Q.

Alicia Yap
Alicia Yap
Analyst at Citigroup

I know it maybe it's just from previously, the base wasn't that high, but still it is the first time for a long time that you are now expecting a positive growth on the year-over-year. I know you just mentioned the macro, the budget sentiments remain quite weak, but it does look like, I don't know whether the 3Q positive growth is the beginning of the positive growth trend after your ad revenue has been declining for such a long time. Maybe if you can also illustrate despite this weak macro, but if this 3Q guidance is the first sign of potentially the more positive year-over-year trend going forward. Thank you.

Charles Zhang
Chairman and CEO at Sohu

Okay. Alicia. For your first question, you got it exactly right. Yes. Because of the daily trading volume limitation, we could not finish the $150 million by November. We extended the time to open the schedule so that we can finish that $150 million to finish the $26 million left. Your second question, yes. Basically, as I said earlier, that it's the macro still bad, sloppy, and people cautious in spending. I mean macro economy by the individual, by Sohu, we are actually achieving some kind of in Chinese called a niche. The base is small, so we are able to provide some unique marketing solutions so that advertisers buy in. They like the kind of solution that we provide to them

Charles Zhang
Chairman and CEO at Sohu

For a long time, we are looking at some kind of growth for the first time in a long time.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Mm-hmm. I see. Okay. Thanks, Charles. Lastly, if I can, I wanted to follow up on the gaming question. I think typically, 1Q, 3Q should be a seasonally stronger quarter. Your 2Q, you came in, you beat your guidance, but yet your 3Q guidance on gaming seems to be implying sequential decline rather than, seasonality-wise, it should be a sequential increase. Maybe if you can quantify it or give us some colors how you were seeing or how you're actually thinking about the seasonality versus your portfolio performance. Thank you.

Dewen Chen
CEO at Changyou

[Non-English content] The outperformance of the second quarter is mainly due to better-than-expected performance of some of our older games, including TLBB PC, for which the expansion packs that we launched worked very well for our players These older games all performed better than expected in Q2. All of them performed better than our expectations.

Dewen Chen
CEO at Changyou

Our revenue guidance for Q3 is also based on the fact that Q2 did indeed perform relatively well, for Q3, we estimate that these older games will naturally decline. The performance of the second quarter is indeed quite well. For the third quarter, we expect the older games to experience some natural decline, which is normal because they have been operated for a long time.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Okay. Thank you so much.

Dewen Chen
CEO at Changyou

Mainly because the older games performed better than expected in Q2.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Thank you.

Operator

Thank you. If you wish to ask a question to the management, please press star one one on your telephone keypad. Thank you all for the questions. This concludes the Q&A session, as I see no further questions. This also concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.

Charles Zhang
Chairman and CEO at Sohu

Thank you.

Analysts
    • Pu Huang
      Investor Relations Director at Sohu
    • Charles Zhang
      Chairman and CEO at Sohu
    • Joanna Lv
      CFO at Sohu
    • Thomas Chong
      Analyst at Jefferies
    • Dewen Chen
      CEO at Changyou
    • Alicia Yap
      Analyst at Citigroup
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