In the news release, Sohu.com Reports Fourth Quarter and Fiscal
Year 2016 Unaudited Financial Results, issued 21-Feb-2017 by Sohu.com over PR Newswire, we are
advised by the company that the third paragraph, final two
sentences, should not be included: "For 2016, our total revenues
reach RMB4.4 billion, up 19% from
2015. Excluding the impact of certain one-time items, non-GAAP net
income reached RMB640 million."
rather than as originally issued inadvertently. The complete,
corrected release follows:
Sohu.com Reports Fourth Quarter and Fiscal Year 2016 Unaudited
Financial Results
BEIJING, Feb. 21, 2017 /PRNewswire/ -- Sohu.com Inc.
(NASDAQ: SOHU), China's leading
online media, video, search and gaming business group, today
reported unaudited financial results for the fourth quarter and
fiscal year ended December 31,
2016.
Fourth Quarter Highlights
- Total revenues were US$412
million[1], down 12% year-over-year and flat
quarter-over-quarter.
- Brand advertising revenues were US$99
million, down 30% year-over-year and 11%
quarter-over-quarter.
- Sogou[2] revenues were US$172
million, up 4% year-over-year and 3%
quarter-over-quarter.
- Online game revenues were US$95
million, down 25% year-over-year and 3%
quarter-over-quarter.
- GAAP net loss attributable to Sohu.com Inc. was US$66 million, or US$1.71 loss per fully-diluted share.
- Non-GAAP[3] net loss attributable to Sohu.com Inc.
was US$69 million, or US$1.79 loss per fully-diluted share.
[1] For
the fourth quarter of 2016, on a yearly basis, depreciation of the
RMB against the U.S. dollar impacted our reported financial
results. If the exchange rate in the fourth quarter of 2016 had
been the same as it was in the fourth quarter of 2015, or
RMB6.39=US$1.00, total revenues in the fourth quarter of 2016 would
have been US$440 million, or US$28 million higher than GAAP total
revenues, and down 6% year-over-year.
[2] Sogou operates the search and search-related
business and offers Internet value-added services ("IVAS") with
respect to Web games developed by third-party developers. In the
statements of operations, revenues from search and search-related
services are recorded as "Search and search-related" revenue, and
revenues from IVAS are recorded as "Others" revenue.
[3] Non-GAAP results exclude share-based compensation
expense, non-cash tax benefits from excess tax deductions related
to share-based awards, income/expense from the adjustment of
contingent consideration previously recorded for acquisitions and
dividend and deemed dividend to non-controlling preferred
shareholders of Sogou. Explanation of the Company's non-GAAP
financial measures and related reconciliations to GAAP financial
measures are included in the accompanying "Non-GAAP Disclosure" and
"Reconciliations of Non-GAAP Results of Operation Measures to the
Nearest Comparable GAAP Measures."
|
Fiscal Year 2016 Highlights
- Total revenues were US$1.65
billion, down 15% compared with 2015.
- Brand advertising revenues were US$448
million, down 22% compared with 2015.
- Sogou revenues were US$660
million, up 12% compared with 2015.
- Online game revenues were US$396
million, down 38% compared with 2015.
- GAAP net loss attributable to Sohu.com Inc. was US$226 million, or US$5.83 loss per fully-diluted share.
- Non-GAAP net loss attributable to Sohu.com Inc. was
US$219 million, or US$5.65 loss per fully-diluted share.
Dr. Charles Zhang, Chairman and
CEO of Sohu.com Inc., commented, "Looking back at 2016, we faced a
challenging operating environment. The sluggish economy,
intensified competition and tightening regulatory rules on search
industry impacted Sohu Group's financial performance. However,
these challenges didn't stop us from pursuing innovation across our
key products and exploring new business opportunities. We saw
encouraging progress in each of our major business lines. For Sohu
Media Portal, through improved content and product design, the Sohu
News App gained solid user traction. For Sohu Video, we made
original production one of our top priorities as we released
several hit shows and the exclusive content helped us rapidly
expand our subscriber base. For Sogou, mobile search traffic and
revenues continued to outgrow the industry, and we have made
artificial intelligence, or AI, a major cornerstone of our
long-term strategic direction. And lastly, Changyou focused their
efforts on building a pipeline of high quality mobile games. It now
prepares to roll out a few promising titles, including the Legacy
TLBB mobile game, in 2017. "
Mr. Xiaochuan Wang, CEO of Sogou,
commented, "In 2016, Sogou strengthened its competitive position
through product differentiation and AI-powered technology
innovation. We launched and upgraded a series of vertical channels,
including English, Academic and Healthcare. We also rolled out the
first cross-language search engine globally that uses our
proprietary machine translation technology. Sogou's traffic and
revenue share trended higher. Compared to a year ago, mobile search
traffic grew 70%. As the No. 1 mobile app for voice input in
China, Sogou Mobile Keyboard's
daily voice input more than doubled to over 200 million times."
Fourth Quarter Financial Results
Revenues
Total revenues for the fourth quarter of 2016 were US$412 million, down 12% year-over-year and flat
quarter-over-quarter.
Total online advertising revenues, which include revenues from
the brand advertising and search and search-related businesses, for
the fourth quarter of 2016 were US$251
million, down 14% year-over-year and 4%
quarter-over-quarter.
Brand advertising revenues for the fourth quarter of 2016
totaled US$99 million, down 30%
year-over-year and 11% quarter-over-quarter. The year-over-year
decrease was mainly attributable to a decrease in the video
advertising business. The quarter-over-quarter decrease was mainly
attributable to decreases in revenues from the media portal and
17173 advertising businesses.
Search and search-related revenues for the fourth quarter of
2016 were US$153 million, up 1%
year-over-year and quarter-over-quarter.
Online game revenues for the fourth quarter of 2016 were
US$95 million, down 25%
year-over-year and 3% quarter-over-quarter.
Gross Margin
Both GAAP and non-GAAP gross margin was 44% for the fourth
quarter of 2016, compared with 57% in the fourth quarter of 2015
and 46% in the third quarter of 2016.
Both GAAP and non-GAAP gross margin for the online advertising
business for the fourth quarter of 2016 was 33%, compared with 47%
in the fourth quarter of 2015 and 32% in the third quarter of
2016.
Both GAAP and non-GAAP gross margin for the brand advertising
business in the fourth quarter of 2016 was 9%, compared with 38% in
the fourth quarter of 2015 and 8% in the third quarter of 2016. The
year-over-year decrease was mainly due to decreased video revenues
and increased video content cost.
Both GAAP and non-GAAP gross margin for the search and
search-related business in the fourth quarter of 2016 was 48%,
compared with 55% in the fourth quarter of 2015 and 49% in the
third quarter of 2016. The year-over-year decrease was mainly due
to higher traffic acquisition cost as a percentage of search and
search-related revenues.
Both GAAP and non-GAAP gross margin for online games in the
fourth quarter of 2016 was 78%, compared with 78% in the fourth
quarter of 2015 and 76% in the third quarter of 2016.
Operating Expenses
For the fourth quarter of 2016, GAAP operating expenses totaled
US$232 million, down 6%
year-over-year and 3% quarter-over-quarter. Non-GAAP operating
expenses were US$229 million, up 3%
year-over-year and 1% quarter-over-quarter.
Operating Profit /(Loss)
GAAP operating loss for the fourth quarter of 2016 was
US$52 million, compared with an
operating profit of US$19 million in
the fourth quarter of 2015 and an operating loss of US$52 million in the third quarter of 2016. The
year-over-year change in profitability was mainly attributable to
the decrease in brand advertising and online games revenues,
coupled with the increase in video content cost.
Non-GAAP operating loss for the fourth quarter of 2016 was
US$49 million, compared with an
operating profit of US$44 million in
the fourth quarter of 2015 and an operating loss of US$38 million in the third quarter of 2016.
Other Income
Other income for the fourth quarter of 2016 was US$6 million, compared with other income of
US$2 million in the fourth quarter of
2015 and other income of US$4 million
in the third quarter of 2016.
Income Tax Expense
Both GAAP and non-GAAP income tax expense was US$6 million for the fourth quarter of 2016,
compared with income tax expense of US$20
million in the fourth quarter of 2015 and income tax expense
of US$1 million in the third quarter
of 2016.
Net Income /(Loss)
Before deducting the share of net income pertaining to
non-controlling interest, GAAP net loss for the fourth quarter of
2016 was US$37 million, compared with
a net income of US$9 million in the
fourth quarter of 2015 and net loss of US$42
million in the third quarter of 2016. Before deducting the
share of net income pertaining to non-controlling interest,
non-GAAP net loss for the fourth quarter of 2016 was US$34 million, compared with a net income of
US$34 million in the fourth quarter
of 2015 and net loss of US$29 million
in the third quarter of 2016.
GAAP net loss attributable to Sohu.com Inc. for the fourth
quarter of 2016 was US$66 million, or
US$1.71 loss per fully-diluted share,
compared with a net loss of US$31
million in the fourth quarter of 2015 and net loss of
US$75 million in the third quarter of
2016. Non-GAAP net loss attributable to Sohu.com Inc. for the
fourth quarter of 2016 was US$69
million, or US$1.79 loss per
fully-diluted share, compared with a net loss of US$13 million in the fourth quarter of 2015 and
net loss of US$65 million in the
third quarter of 2016.
Liquidity
As of December 31, 2016, the Sohu
Group had cash and cash equivalents and short-term investments of
US$1.30 billion compared with
US$1.42 billion as of December 31, 2015.
Fiscal Year 2016 Financial Results
Revenues
Total revenues for 2016 were US$1.65
billion, down 15% compared with 2015.
Total online advertising revenues, which include revenues from
the brand advertising and search and search-related businesses, for
2016 were US$1.05 billion, down 6%
compared with 2015.
Brand advertising revenues for 2016 were US$448 million, down 22% compared with 2015,
mainly due to the drag of the video businesses.
Search and search-related revenues for 2016 were US$597 million, up 11% compared with 2015. The
increase was mainly driven by continued growth in mobile
traffic.
Online game revenues for 2016 were US$396
million, down 38% compared with 2015. The year-over-year
decrease was mainly due to the natural decline in revenues of
Changyou's older games, and a decrease in Web game revenues upon
the completion of the sale of the 7Road business in 2015.
Gross Margin
Both GAAP and non-GAAP gross margin was 48% for 2016, compared
with 56% in 2015.
Both GAAP and non-GAAP gross margin for the online advertising
business for 2016 was 37%, compared with 44% in 2015.
Both GAAP and non-GAAP gross margin for the brand advertising
business for 2016 was 17%, compared with 34% in 2015. The decrease
mainly reflected a decrease in advertising revenues and increasing
video content cost.
Both GAAP and non-GAAP gross margin for the search and
search-related business for 2016 was 51%, compared with 56% in
2015. The decrease in gross margin was mainly due to higher traffic
acquisition costs as a percentage of search and search-related
revenues.
Both GAAP and non-GAAP gross margin for online games for 2016
was 76%, compared with 75% in 2015.
Operating Expenses
For 2016, GAAP operating expenses totaled US$908 million, down 9% compared with 2015.
Non-GAAP operating expenses were US$889
million, down 6% compared with 2015. The decreases were
primarily due to decreases in salary and compensation expenses.
Operating Profit /(Loss)
GAAP operating loss for 2016 was US$117
million, compared with an operating profit of US$82 million in 2015.
Non-GAAP operating loss for 2016 was US$98 million, compared with an operating profit
of US$136 million in 2015.
Other Income /(Expense)
Other expense for 2016 was US$11
million, mainly related to a donation of US$27.8 million made by Sogou to Tsinghua
University in the second quarter of 2016, compared with other
income of US$75 million in 2015,
which included gain recognized from the divestment of 7Road in the
third quarter of 2015.
Income Tax Expense
Both GAAP and non-GAAP income tax expense for 2016 was
US$21 million, compared with income
tax expense of US$77 million in
2015.
Net Income /(Loss)
Before deducting the share of net income pertaining to
non-controlling interest, GAAP net loss for 2016 was US$115 million, compared with net income of
US$109 million in 2015. Before
deducting the share of net income pertaining to non-controlling
interest, non-GAAP net loss for 2016 was US$96 million, compared with net income of
US$162 million in 2015.
GAAP net loss attributable to Sohu.com Inc. for 2016 was
US$226 million, or US$5.83 loss per fully-diluted share, compared
with a net loss of US$51 million in
2015. Non-GAAP net loss attributable to Sohu.com Inc. for 2016 was
US$219 million, or US$5.65 loss per fully-diluted share, compared
with a net loss of US$4 million in
2015.
Business Outlook
For the first quarter of 2017, Sohu estimates:
- Total revenues to be between US$345
million and US$375 million.
- Brand advertising revenues to be between US$75 million and US$85 million; this implies an
annual decrease of 32% to 40% and a sequential decrease of 14% to
24%.
- Sogou revenues to be between US$145
million and US$155 million; this implies an annual decrease
of 2% to an annual increase of 5% and a sequential decrease of 10%
to 15%.
- Online game revenues to be between US$80
million and US$90 million; this implies an annual decrease
of 12% to 22% and a sequential decrease of 6% to 16%.
- Before deducting the share of non-GAAP net income pertaining to
non-controlling interest, non-GAAP net loss to be
between US$45 million and US$55
million. Assuming no new grants of share-based awards and
that the market price of our shares is unchanged; we estimate that
compensation expense relating to share-based awards will be
around US$5 million. Including the impact of these share-based
awards, GAAP net loss before non-controlling interest to be
between US$50 million and US$60
million.
- Non-GAAP net loss attributable to Sohu.com Inc. to be
between US$60 million and US$70
million, and non-GAAP loss per fully-diluted share to be
between US$1.55 and US$1.80.
Including the impact of the aforementioned share-based awards, and
netting off approximately US$1 million of Sohu's economic
interests in Changyou and Sogou, GAAP net loss attributable
to Sohu.com Inc. to be between US$64
million and US$74 million, and GAAP loss per
fully-diluted share to be between US$1.65 and
US$1.90.
For the first quarter 2017 guidance, the Company has adopted a
presumed exchange rate of RMB7.00=US$1.00, as
compared with the actual exchange rate of approximately
RMB6.53=US$1.00 for the first quarter of 2016, and
RMB6.83=US$1.00 for the fourth quarter of 2016.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States of
America ("GAAP"), Sohu's management uses non-GAAP measures
of gross profit, operating profit, net income, net income
attributable to Sohu.com Inc. and diluted net income attributable
to Sohu.com Inc. per share, which are adjusted from results based
on GAAP to exclude the impact of the share-based awards, which
consist mainly of share-based compensation expenses and non-cash
tax benefits from excess tax deductions related to share-based
awards, income/expense from the adjustment of contingent
consideration previously recorded for acquisitions, and dividend
and deemed dividend to non-controlling preferred shareholders.
These measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results.
Sohu's management believes excluding the share-based
compensation expense, non-cash tax benefits from excess tax
deductions related to share-based awards, income/expense from the
adjustment of contingent consideration previously recorded for
acquisitions and dividend and deemed dividend to non-controlling
preferred shareholders from its non-GAAP financial measure is
useful for itself and investors. Further, the impact of share-based
compensation expense, non-cash tax benefits from excess tax
deductions related to share-based awards, income/expense from the
adjustment of contingent consideration previously recorded for
acquisitions, and dividend and deemed dividend to non-controlling
preferred shareholders cannot be anticipated by management and
business line leaders and these expenses were not built into the
annual budgets and quarterly forecasts, which have been the basis
for information Sohu provides to analysts and investors as guidance
for future operating performance. As the impact of share-based
compensation expense, non-cash tax benefits from excess tax
deductions related to share-based awards, income/expense from the
adjustment of contingent consideration previously recorded for
acquisitions, and dividend and deemed dividend to non-controlling
preferred shareholders does not involve subsequent cash outflow or
is reflected in the cash flows at the equity transaction level,
Sohu does not factor this impact in when evaluating and approving
expenditures or when determining the allocation of its resources to
its business segments. As a result, in general, the monthly
financial results for internal reporting and any performance
measures for commissions and bonuses are based on non-GAAP
financial measures that exclude the share-based compensation
expense, non-cash tax benefits from excess tax deductions
related to share-based awards, income/expense from the adjustment
of contingent consideration previously recorded for acquisitions,
and dividend and deemed dividend to non-controlling preferred
shareholders.
The non-GAAP financial measures are provided to enhance
investors' overall understanding of Sohu's current financial
performance and prospects for the future. A limitation of using
non-GAAP gross profit, operating profit, net income, net income
attributable to Sohu.com Inc. and diluted net income attributable
to Sohu.com Inc. per share, excluding share-based compensation
expense, non-cash tax benefits from excess tax deductions
related to share-based awards, income/expense from the adjustment
of contingent consideration previously recorded for acquisitions,
and dividend and deemed dividend to non-controlling preferred
shareholders is that the impact of share-based awards and non-cash
tax benefits from excess tax deductions related to share-based
awards has been and will continue to be a significant recurring
expense in Sohu's business for the foreseeable future,
income/expense from the adjustment of contingent consideration
previously recorded for acquisitions may recur in the future,
and dividend and deemed dividend to non-controlling preferred
shareholders may recur when Sohu and its affiliates enter into
equity transactions. In order to mitigate these limitations Sohu
has provided specific information regarding the GAAP amounts
excluded from each non-GAAP measure. The accompanying tables
include details on the reconciliation between the GAAP financial
measures that are most directly comparable to the non-GAAP
financial measures that have been presented.
Notes to Financial Information
Financial information in this press release other than the
information indicated as being non-GAAP is derived from Sohu's
unaudited interim financial statements prepared in accordance with
GAAP.
Safe Harbor Statement
This announcement contains forward-looking statements. It is
currently expected that the Business Outlook will not be updated
until release of Sohu's next quarterly earnings announcement;
however, Sohu reserves right to update its Business Outlook at any
time for any reason. Statements that are not historical facts,
including statements about Sohu's beliefs and expectations, are
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 statement. Potential
risks and uncertainties include, but are not limited to,
instability in global financial and credit markets and its
potential impact on the Chinese economy; exchange rate
fluctuations, including their potential impact on the Chinese
economy and on Sohu's reported US dollar results; recent slow-downs
in the growth of the Chinese economy; the uncertain regulatory
landscape in the People's Republic of
China; fluctuations in Sohu's quarterly operating results;
Sohu's current and projected future losses due to increased
spending by Sohu for video content; the possibilities that Sohu
will be unable to recoup its investment in video content and that
Changyou will be unable to develop a series of successful games for
mobile platforms or successfully monetize mobile games it develops
or acquires; and Sohu's reliance on online advertising sales,
online games and mobile services for its revenues. Further
information regarding these and other risks is included in Sohu's
annual report on Form 10-K for the year ended December 31, 2015, and other filings with the
Securities and Exchange Commission.
Conference Call and Webcast
Sohu's management team will host a conference call at
8:30 a.m. U.S. Eastern Time,
February 21, 2017 (9:30 p.m. Beijing/Hong
Kong time, February 21, 2017)
following the quarterly results announcement.
The dial-in details for the live conference call are:
US
Toll-Free:
|
+1-866-519-4004
|
International:
|
+65-6713-5090
|
Hong Kong:
|
+852-3018-6771
|
China
Mainland
|
+86-800-819-0121 /
+86-400-620-8038
|
Passcode:
|
SOHU
|
Please dial in 10 minutes before the call is scheduled to begin
and provide the passcode to join the call.
A telephone replay of the call will be available after the
conclusion of the conference call at 11:30
a.m. Eastern Time on February 21
through February 28, 2017. The dial-in details for the
telephone replay are:
International:
|
+1-646-254-3697
|
Passcode:
|
60086018
|
The live Webcast and archive of the conference call will be
available on the Investor Relations section of Sohu's Website at
http://investors.sohu.com/.
About Sohu.com
Sohu.com Inc. (NASDAQ: SOHU) is China's premier online brand and indispensable
to the daily life of millions of Chinese, providing a network of
Web properties and community based/Web 2.0 products which offer the
vast Sohu user community a broad array of choices regarding
information, entertainment and communication. Sohu has built one of
the most comprehensive matrices of Chinese language web properties
and proprietary search engines, consisting of the mass portal and
leading online media destination www.sohu.com; the interactive
search engine www.sogou.com; the developer and operator of online
games www.changyou.com/en/ and the leading online video
Website tv.sohu.com.
Sohu corporate services consist of online brand advertising on
its matrix of websites as well as bid listing and home page on its
in-house developed search directory and engine. Sohu also provides
multiple news and information service on mobile platforms,
including Sohu News App and mobile news portal m.sohu.com. Sohu's
online game subsidiary, Changyou.com (NASDAQ: CYOU) has a diverse
portfolio of popular online games, such as Tian Long Ba Bu ("TLBB"), one of the most
popular PC games in China, as well
as a number of mobile games. Changyou also owns and operates the
17173.com Website, a leading game information portal in
China. Sohu.com, established by
Dr. Charles Zhang, one of
China's internet pioneers, is in
its twenty-first year of operation.
For investor and media inquiries, please contact:
In China:
Mr. Eric
Yuan
|
Sohu.com
Inc.
|
Tel:
|
+86 (10)
6272-6593
|
E-mail:
|
ir@contact.sohu.com
|
In the United
States:
Ms. Linda
Bergkamp
|
Christensen
|
Tel:
|
+1 (480)
614-3004
|
E-mail:
|
lbergkamp@christensenir.com
|
SOHU.COM
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
Dec. 31,
2016
|
|
Sep. 30,
2016
|
|
Dec.
31, 2015
|
|
Dec.
31, 2016
|
|
Dec.
31, 2015
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Online
advertising
|
|
|
|
|
|
|
|
|
|
|
Brand
advertising
|
$
|
98,695
|
$
|
110,871
|
$
|
140,927
|
$
|
447,956
|
$
|
577,114
|
Search and
search-related
|
|
152,500
|
|
150,667
|
|
151,251
|
|
597,133
|
|
539,521
|
Subtotal
|
|
251,195
|
|
261,538
|
|
292,178
|
|
1,045,089
|
|
1,116,635
|
Online
games
|
|
95,400
|
|
98,553
|
|
127,001
|
|
395,709
|
|
636,846
|
Others
|
|
65,164
|
|
50,491
|
|
46,924
|
|
209,633
|
|
183,610
|
Total revenues
|
|
411,759
|
|
410,582
|
|
466,103
|
|
1,650,431
|
|
1,937,091
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
|
Online
advertising
|
|
|
|
|
|
|
|
|
|
|
Brand
advertising (includes stock-based
compensation expense of $-91, $265, $534, $163 and
$1,381, respectively)
|
|
89,658
|
|
102,137
|
|
87,625
|
|
371,085
|
|
383,187
|
Search and
search-related (includes stock-based
compensation expense of $168, $4, $211, $172 and
$330, respectively)
|
|
79,611
|
|
76,457
|
|
68,108
|
|
290,158
|
|
238,944
|
Subtotal
|
|
169,269
|
|
178,594
|
|
155,733
|
|
661,243
|
|
622,131
|
Online games (includes
stock-based compensation
expense of $-5, $26, $45, $31 and $37, respectively)
|
|
20,936
|
|
23,719
|
|
28,266
|
|
96,168
|
|
156,315
|
Others
|
|
41,606
|
|
20,571
|
|
17,552
|
|
102,389
|
|
80,618
|
Total cost of
revenues
|
|
231,811
|
|
222,884
|
|
201,551
|
|
859,800
|
|
859,064
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
179,948
|
|
187,698
|
|
264,552
|
|
790,631
|
|
1,078,027
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Product development
(includes stock-based
compensation expense of $3,383, $4,105, $9,665, $9,184
and $19,343, respectively)
|
|
91,499
|
|
90,007
|
|
102,402
|
|
353,144
|
|
398,143
|
Sales and marketing
(includes stock-based
compensation expense of $1,467, $752, $1,482, $2,394 and
$3,055, respectively)
|
|
116,183
|
|
110,584
|
|
98,230
|
|
434,780
|
|
383,931
|
General and administrative
(includes stock-based
compensation expense of $-1,949, $8,018, $13,042, $7,176
and $29,297, respectively)
|
|
23,914
|
|
38,670
|
|
44,946
|
|
119,841
|
|
173,160
|
Goodwill impairment and
impairment of intangibles via
acquisitions of businesses
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40,324
|
Total operating expenses
|
|
231,596
|
|
239,261
|
|
245,578
|
|
907,765
|
|
995,558
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
/profit
|
|
(51,648)
|
|
(51,563)
|
|
18,974
|
|
(117,134)
|
|
82,469
|
|
|
|
|
|
|
|
|
|
|
|
Other income
/(expense)
|
|
6,258
|
|
3,678
|
|
1,590
|
|
(10,713)
|
|
74,526
|
Interest
income
|
|
5,051
|
|
6,327
|
|
7,748
|
|
22,499
|
|
30,643
|
Interest
expense
|
|
(205)
|
|
(209)
|
|
(1,744)
|
|
(1,356)
|
|
(7,184)
|
Exchange
difference
|
|
9,257
|
|
702
|
|
1,885
|
|
12,803
|
|
5,337
|
(Loss) /income
before income tax expense
|
|
(31,287)
|
|
(41,065)
|
|
28,453
|
|
(93,901)
|
|
185,791
|
Income tax
expense
|
|
5,800
|
|
974
|
|
19,656
|
|
21,072
|
|
76,936
|
Net (loss)
/income
|
|
(37,087)
|
|
(42,039)
|
|
8,797
|
|
(114,973)
|
|
108,855
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to the noncontrolling
interest shareholders
|
|
28,810
|
|
32,775
|
|
39,197
|
|
109,048
|
|
146,542
|
Deemed dividend to
non-controlling Sogou
series A preferred shareholders
|
|
-
|
|
-
|
|
-
|
|
-
|
|
11,911
|
Net loss attributable
to Sohu.com Inc.
|
|
(65,897)
|
|
(74,814)
|
|
(30,400)
|
|
(224,021)
|
|
(49,598)
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per
share attributable to Sohu.com Inc.
|
$
|
(1.70)
|
$
|
(1.93)
|
$
|
(0.79)
|
$
|
(5.79)
|
$
|
(1.28)
|
Shares used in
computing basic net loss per share
attributable to Sohu.com Inc.
|
|
38,739
|
|
38,728
|
|
38,646
|
|
38,706
|
|
38,598
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net loss per
share attributable to Sohu.com Inc.
|
$
|
(1.71)
|
$
|
(1.94)
|
$
|
(0.80)
|
$
|
(5.83)
|
$
|
(1.32)
|
Shares used in
computing diluted net loss per share
attributable to Sohu.com Inc.
|
|
38,739
|
|
38,728
|
|
38,646
|
|
38,706
|
|
38,598
|
SOHU.COM
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED, IN
THOUSANDS)
|
|
|
|
As of Dec. 31,
2016
|
|
As of Dec. 31,
2015
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
1,050,957
|
$
|
1,245,205
|
Restricted time
deposits (a)
|
|
-
|
|
227,285
|
Short-term
investments
|
|
247,926
|
|
174,515
|
Accounts receivable, net
|
|
189,167
|
|
273,617
|
Prepaid and other current assets (b)
|
|
260,133
|
|
154,217
|
Assets held for sale
(c)
|
|
103,079
|
|
-
|
Total current assets
|
|
1,851,262
|
|
2,074,839
|
Long-term
investments
|
|
74,273
|
|
62,093
|
Fixed assets,
net
|
|
503,631
|
|
508,692
|
Goodwill
(c)
|
|
68,290
|
|
154,219
|
Intangible assets,
net
|
|
32,131
|
|
55,415
|
Restricted time
deposits (a)
|
|
269
|
|
136,694
|
Prepaid non-current
assets
|
|
4,734
|
|
6,254
|
Other assets
(b)
|
|
29,100
|
|
43,988
|
Total assets
|
$
|
2,563,690
|
$
|
3,042,194
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
$
|
193,209
|
$
|
129,025
|
Accrued liabilities
|
|
324,876
|
|
309,657
|
Receipts in advance and deferred revenue
|
|
118,951
|
|
135,385
|
Accrued salary and benefits
|
|
92,475
|
|
99,631
|
Taxes payable
|
|
40,014
|
|
67,480
|
Short-term bank loans (a)
|
|
-
|
|
344,500
|
Other short-term liabilities
|
|
159,315
|
|
154,017
|
Liabilities held for
sale (c)
|
|
3,902
|
|
-
|
Total current liabilities
|
$
|
932,742
|
$
|
1,239,695
|
|
|
|
|
|
Long-term accounts
payable
|
|
744
|
|
4,600
|
Long-term tax
payable
|
|
32,625
|
|
24,732
|
Deferred tax
liabilities (b)
|
|
39,784
|
|
42,415
|
Total long-term
liabilities
|
$
|
73,153
|
$
|
71,747
|
Total liabilities
|
$
|
1,005,895
|
$
|
1,311,442
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
Sohu.com Inc. shareholders' equity
|
|
993,580
|
|
1,241,022
|
Noncontrolling Interest
|
|
564,215
|
|
489,730
|
Total shareholders' equity
|
$
|
1,557,795
|
$
|
1,730,752
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
2,563,690
|
$
|
3,042,194
|
Note:
|
(a)
|
Changyou had repaid
all of the remaining bank loans of $345 million, and restricted
time deposits of $355 million that secured these loans were
released during the first quarter of 2016.
|
(b)
|
The Company early
adopted the Accounting Standards Update 2015-17, Balance Sheet
Classification of Deferred Taxes, retrospectively from the fourth
quarter of 2016. The guidance requires current deferred income tax
assets and liabilities to be classified as non-current assets and
liabilities in balance sheet. As a result of the adoption of this
guidance, $4.7 million of current deferred tax assets recorded in
prepaid and other current assets, and $24.9 million of deferred tax
liabilities were reclassified to non-current as of December 31,
2015.
|
(c)
|
Changyou's management
had an intention to divest its interest in MoboTap in the third
quarter of 2016. Therefore, the assets and liabilities of MoboTap
were recognized as "Assets held for sale" and "Liabilities held for
sale," respectively, since the third quarter of 2016.
|
SOHU.COM
INC.
|
RECONCILIATIONS OF
NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
Three Months
Ended Dec. 31, 2016
|
|
Three Months
Ended Sep. 30, 2016
|
|
Three Months
Ended Dec. 31, 2015
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(91)
|
(a)
|
|
|
|
|
265
|
(a)
|
|
|
|
|
534
|
(a)
|
|
Brand advertising
gross profit
|
$
|
9,037
|
$
|
(91)
|
$
|
8,946
|
$
|
8,734
|
$
|
265
|
$
|
8,999
|
$
|
53,302
|
$
|
534
|
$
|
53,836
|
Brand advertising
gross
margin
|
|
9%
|
|
|
|
9%
|
|
8%
|
|
|
|
8%
|
|
38%
|
|
|
|
38%
|
|
|
|
|
168
|
(a)
|
|
|
|
|
4
|
(a)
|
|
|
|
|
211
|
(a)
|
|
Search and
search-related
gross profit
|
$
|
72,889
|
$
|
168
|
$
|
73,057
|
$
|
74,210
|
$
|
4
|
$
|
74,214
|
$
|
83,143
|
$
|
211
|
$
|
83,354
|
Search and
search-related
gross margin
|
|
48%
|
|
|
|
48%
|
|
49%
|
|
|
|
49%
|
|
55%
|
|
|
|
55%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
|
(a)
|
|
|
|
|
269
|
(a)
|
|
|
|
|
745
|
(a)
|
|
Online advertising
gross profit
|
$
|
81,926
|
$
|
77
|
$
|
82,003
|
$
|
82,944
|
$
|
269
|
$
|
83,213
|
$
|
136,445
|
$
|
745
|
$
|
137,190
|
Online advertising
gross
margin
|
|
33%
|
|
|
|
33%
|
|
32%
|
|
|
|
32%
|
|
47%
|
|
|
|
47%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
(a)
|
|
|
|
|
26
|
(a)
|
|
|
|
|
45
|
(a)
|
|
Online games gross
profit
|
$
|
74,464
|
$
|
(5)
|
$
|
74,459
|
$
|
74,834
|
$
|
26
|
$
|
74,860
|
$
|
98,735
|
$
|
45
|
$
|
98,780
|
Online games gross
margin
|
|
78%
|
|
|
|
78%
|
|
76%
|
|
|
|
76%
|
|
78%
|
|
|
|
78%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others gross
profit
|
$
|
23,558
|
$
|
-
|
(a) $
|
23,558
|
$
|
29,920
|
$
|
-
|
(a) $
|
29,920
|
$
|
29,372
|
$
|
-
|
(a)$
|
29,372
|
Others gross
margin
|
|
36%
|
|
|
|
36%
|
|
59%
|
|
|
|
59%
|
|
63%
|
|
|
|
63%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72
|
(a)
|
|
|
|
|
295
|
(a)
|
|
|
|
|
790
|
(a)
|
|
Gross
profit
|
$
|
179,948
|
$
|
72
|
$
|
180,020
|
$
|
187,698
|
$
|
295
|
$
|
187,993
|
$
|
264,552
|
$
|
790
|
$
|
265,342
|
Gross
margin
|
|
44%
|
|
|
|
44%
|
|
46%
|
|
|
|
46%
|
|
57%
|
|
|
|
57%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
231,596
|
$
|
(2,901)
|
(a) $
|
228,695
|
$
|
239,261
|
$
|
(12,875)
|
(a)$
|
226,386
|
$
|
245,578
|
$
|
(24,189)
|
(a)$
|
221,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,973
|
(a)
|
|
|
|
|
13,170
|
(a)
|
|
|
|
|
24,979
|
(a)
|
|
Operating (loss)
/profit
|
$
|
(51,648)
|
$
|
2,973
|
$
|
(48,675)
|
$
|
(51,563)
|
$
|
13,170
|
$
|
(38,393)
|
$
|
18,974
|
$
|
24,979
|
$
|
43,953
|
Operating
margin
|
|
-13%
|
|
|
|
-12%
|
|
-13%
|
|
|
|
-9%
|
|
4%
|
|
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
|
5,800
|
$
|
-
|
(a)$
|
5,800
|
$
|
974
|
$
|
-
|
(a)$
|
974
|
$
|
19,656
|
$
|
-
|
(a)$
|
19,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,973
|
(a)
|
|
|
|
|
13,147
|
(a)
|
|
|
|
|
25,047
|
(a)
|
|
Net (loss)
/income
before non-controlling interest
|
$
|
(37,087)
|
$
|
2,973
|
$
|
(34,114)
|
$
|
(42,039)
|
$
|
13,147
|
$
|
(28,892)
|
$
|
8,797
|
$
|
25,047
|
$
|
33,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,973
|
(a)
|
|
|
|
|
13,147
|
(a)
|
|
|
|
|
25,047
|
(a)
|
|
|
|
|
|
(6,051)
|
(b)
|
|
|
|
|
(2,806)
|
(b)
|
|
|
|
|
(7,352)
|
(b)
|
|
Net loss
attributable to
Sohu.com Inc. for diluted net
loss per share
|
$
|
(66,411)
|
$
|
(3,078)
|
$
|
(69,489)
|
$
|
(75,286)
|
$
|
10,341
|
$
|
(64,945)
|
$
|
(30,746)
|
$
|
17,695
|
$
|
(13,051)
|
Diluted
net loss per share
attributable to Sohu.com Inc.
|
$
|
(1.71)
|
|
|
$
|
(1.79)
|
$
|
(1.94)
|
|
|
$
|
(1.68)
|
$
|
(0.80)
|
|
|
$
|
(0.34)
|
Shares used in
computing
diluted net loss per share
attributable to Sohu.com Inc.
|
|
38,739
|
|
|
|
38,739
|
|
38,728
|
|
|
|
38,728
|
|
38,646
|
|
|
|
38,646
|
Note:
|
(a)
|
To eliminate the
impact of share-based awards as measured using the fair value
method.
|
(b)
|
To adjust Sohu's
economic interests in Changyou and Sogou under the treasury stock
method.
|
SOHU.COM
INC.
|
RECONCILIATIONS OF
NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
Twelve Months
Ended Dec. 31, 2016
|
|
Twelve Months
Ended Dec. 31, 2015
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
163
|
(a)
|
|
|
|
|
1,381
|
(a)
|
|
Brand advertising
gross profit
|
$
|
76,871
|
$
|
163
|
$
|
77,034
|
$
|
193,927
|
$
|
1,381
|
$
|
195,308
|
Brand advertising
gross
margin
|
|
17%
|
|
|
|
17%
|
|
34%
|
|
|
|
34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172
|
(a)
|
|
|
|
|
330
|
(a)
|
|
Search and
search-related
gross profit
|
$
|
306,975
|
$
|
172
|
$
|
307,147
|
$
|
300,577
|
$
|
330
|
$
|
300,907
|
Search and
search-related
gross margin
|
|
51%
|
|
|
|
51%
|
|
56%
|
|
|
|
56%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
335
|
(a)
|
|
|
|
|
1,711
|
(a)
|
|
Online advertising
gross profit
|
$
|
383,846
|
$
|
335
|
$
|
384,181
|
$
|
494,504
|
$
|
1,711
|
$
|
496,215
|
Online advertising
gross
margin
|
|
37%
|
|
|
|
37%
|
|
44%
|
|
|
|
44%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
(a)
|
|
|
|
|
37
|
(a)
|
|
Online games gross
profit
|
$
|
299,541
|
$
|
31
|
$
|
299,572
|
$
|
480,531
|
$
|
37
|
$
|
480,568
|
Online games gross
margin
|
|
76%
|
|
|
|
76%
|
|
75%
|
|
|
|
75%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others gross
profit
|
$
|
107,244
|
$
|
-
|
(a)$
|
107,244
|
$
|
102,992
|
$
|
-
|
(a)$
|
102,992
|
Others gross
margin
|
|
51%
|
|
|
|
51%
|
|
56%
|
|
|
|
56%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
366
|
(a)
|
|
|
|
|
1,748
|
(a)
|
|
Gross
profit
|
$
|
790,631
|
$
|
366
|
$
|
790,997
|
$
|
1,078,027
|
$
|
1,748
|
$
|
1,079,775
|
Gross
margin
|
|
48%
|
|
|
|
48%
|
|
56%
|
|
|
|
56%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
907,765
|
$
|
(18,754)
|
(a)$
|
889,011
|
$
|
995,558
|
$
|
(51,695)
|
(a)$
|
943,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,120
|
(a)
|
|
|
|
|
53,443
|
(a)
|
|
Operating (loss)
/profit
|
$
|
(117,134)
|
$
|
19,120
|
$
|
(98,014)
|
$
|
82,469
|
$
|
53,443
|
$
|
135,912
|
Operating
margin
|
|
-7%
|
|
|
|
-6%
|
|
4%
|
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
|
21,072
|
$
|
-
|
(a)$
|
21,072
|
$
|
76,936
|
$
|
-
|
(a)$
|
76,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,118
|
(a)
|
|
|
|
|
53,511
|
(a)
|
|
Net (loss) /profit
before non-
controlling interest
|
$
|
(114,973)
|
$
|
19,118
|
$
|
(95,855)
|
$
|
108,855
|
$
|
53,511
|
$
|
162,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,511
|
(a)
|
|
|
|
|
|
19,118
|
(a)
|
|
|
|
|
(18,230)
|
(b)
|
|
|
|
|
|
(12,260)
|
(b)
|
|
|
|
|
11,911
|
(c)
|
|
Net loss attributable
to
Sohu.com Inc for diluted net
loss per share
|
$
|
(225,660)
|
$
|
6,858
|
$
|
(218,802)
|
$
|
(50,829)
|
$
|
47,192
|
$
|
(3,637)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net
loss per share
attributable to Sohu.com Inc.
|
$
|
(5.83)
|
|
|
$
|
(5.65)
|
$
|
(1.32)
|
|
|
$
|
(0.09)
|
Shares used in
computing
diluted net loss per share
attributable to Sohu.com Inc.
|
|
38,706
|
|
|
|
38,706
|
|
38,598
|
|
|
|
38,693
|
Note:
|
(a)
|
To eliminate the
impact of share-based awards measured using the fair value
method.
|
(b)
|
To adjust Sohu's
economic interests in Changyou and Sogou under the treasury stock
method.
|
(c)
|
Dividend or deemed
dividend to non-controlling Sogou series A preferred
shareholders.
|
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SOURCE Sohu.com