What Sohu.com (SOHU) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue and profitability weakened: Revenue from continuing operations fell 26% year over year to $133 million, and Sohu reported a $15 million net loss versus $9 million in net income a year earlier. Online game revenue declined 30%, weighing on results.
• Q4 outlook includes an unresolved inconsistency: Sohu forecast marketing services revenue of $30 million to $40 million, but management described that range as a 6% to 13% sequential decline—even though Q3 marketing revenue was $15 million. CEO Charles Zhang attributed advertising softness to project timing and a less robust Double 11 event.
• Share repurchases are nearing the program limit: Sohu had bought back 10.1 million American depositary shares for about $134 million as of November 5, leaving roughly $16 million of its $150 million authorization; management said it had no plan yet for a new program.

Sohu.com NASDAQ: SOHU reported a third-quarter loss as online game revenue fell 30% from a year earlier, while management said marketing services benefited from projects that landed in the quarter rather than the fourth quarter.

The company reported total revenue from continuing operations of $133 million for the third quarter of 2026, down 26% year over year and 2% from the preceding quarter. Its GAAP net loss attributable to Sohu.com Limited was $15 million, compared with net income of $9 million a year earlier and $200,000 in the second quarter. The non-GAAP net loss was also $15 million.

Chairman and CEO Charles Zhang said marketing services revenue reached the high end of the company’s guidance, while game revenue and bottom-line results were in line with expectations.

Gaming Decline Weighs on Revenue

Online game revenue fell to $114 million from the prior year and was down 2% sequentially. Marketing services revenue rose 10% year over year to $15 million, although it declined 2% from the second quarter.

CFO Joanna Lv said revenue at Changyou, Sohu’s gaming business, was $115 million, compared with $163 million a year earlier. Changyou’s non-GAAP operating profit fell to $59 million from $88 million.

The Sohu social media platform generated $19 million in quarterly revenue, up from $17 million a year earlier. Its non-GAAP operating loss widened to $74 million from $71 million.

Zhang said the gaming business introduced festival-themed content and gameplay for titles in the TLBB series during the quarter. The company plans additional expansion packs and content updates next quarter, while continuing to develop games in multiple genres and products with global appeal.

Marketing Outlook and Guidance Discrepancy

For the fourth quarter, Lv said Sohu expects marketing services revenue of $30 million to $40 million and online game revenue of $111 million to $121 million. The company also forecast a GAAP and non-GAAP net loss attributable to Sohu.com Limited of $17 million to $27 million.

Lv described the marketing forecast as implying a sequential decline of 6% to 13%. That characterization conflicts with the stated $30 million to $40 million range, which is above the $15 million in marketing services revenue reported for the third quarter. The discrepancy was not resolved on the call.

Asked about fourth-quarter advertising softness, Zhang said it did not indicate a broader change in advertiser sentiment. He attributed the weakness to the timing of projects, including some larger projects that occurred in the third quarter, and said the Double 11 e-commerce event appeared less robust than in the previous year.

Zhang said the company’s marketing business increasingly relies on projects combining elements such as offline events, livestreaming and online discussion rather than traditional advertising campaigns. He said growth in 2027 would depend in part on whether Sohu can rapidly expand its social network user base.

Short-Form Drama and Share Repurchases

Changyou CEO Dewen Chen said, through a translator, that AI short dramas compete with games for users’ entertainment time. He said Changyou had adjusted games to make them lighter and reduce the time required from players, an approach he said had been effective.

Chen said he was unsure whether casual or hardcore games were more affected, but believed both faced a long-term impact. He also said the formats offer different experiences: games are interactive and multiplayer, while AI short dramas are passive. He expects the two to coexist.

Zhang said Sohu had repurchased 10.1 million American depositary shares for approximately $134 million as of November 5 under its $150 million repurchase program. He said the company intended to use the approximately $16 million remaining, but did not yet have a plan for a new program.

About Sohu.com (NASDAQ:SOHU)

Sohu.com Limited NASDAQ: SOHU is a Chinese internet company that operates online media, entertainment and gaming businesses. Through its Sohu-branded platforms, the company provides news, information, sports coverage, entertainment content and other digital services to users primarily in China.

Sohu also offers online video services and develops and operates online games through its Changyou business. Its gaming portfolio has historically included massively multiplayer online role-playing games and other PC and mobile titles.

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