BEIJING, Oct. 25 /PRNewswire-Asia-FirstCall/ -- Sohu.com
Inc. (Nasdaq: SOHU), China's
leading online media, communications, search, online games and
wireless value-added services group, today reported unaudited
financial results for the third quarter ended September 30, 2010.
Third Quarter 2010 Highlights (1)
- Record high total revenues and record high revenues for brand
advertising, search and online games. All such operating parameters
exceeded high end of Group guidance.
- Total revenues were US$164.1
million, up 20% year-on-year, and 12%
quarter-over-quarter.
- Brand advertising revenues were US$59.1
million, up 22% year-over-year and 11%
quarter-over-quarter.
- Search revenues reached US$5.4
million, up 134% year-over-year and 38%
quarter-over-quarter.
- Online game revenues reached US$85.6
million, up 25% year-over-year and 10%
quarter-over-quarter.
- Before deducting the share of net income pertaining to the
Non-Controlling Interest, GAAP net income for the third quarter of
2010 was US$54.0 million, up 15%
year-over-year and 19% quarter-over-quarter. Non-GAAP net income
was US$61.3 million, up 19 %
year-over-year and up 17% quarter-over-quarter, exceeding high end
of Group guidance.
- After deducting the share of net income pertaining to the
Non-Controlling Interest, GAAP net income was US$38.7 million, up 12% year-over-year and
24% quarter-over-quarter, or US$1.01 per fully diluted share, and non-GAAP net
income was US$45.2 million, up 21%
year-over-year and quarter-over-quarter, or US$ 1.16 per fully diluted share, exceeding high
end of Group guidance.
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Dr. Charles Zhang, Chairman and
CEO of Sohu.com, commented, "I'm pleased to report that we had a
record quarter, with strong growth in each of our major business
segments. Online video, our potential future revenue driver,
is gaining significant traction as we add high-definition content
and leverage the synergies of the Sohu platform to make our video
products even more attractive to both users and advertisers. Also
we believed that the introduction of strategic investors to our
Sogou search business leaves our search business in a more
competitive position and offers great promise for future
collaboration and services with China's largest e-commerce website."
"Our largest business segment, online games, powered by the
successful release of new expansion packs for our proprietary
flagship product and the launch of new licensed games, once again
achieved solid results. The results also demonstrated the merits of
using feedback to direct research and development efforts in our
games. We continue to invest in employee recruitment and training.
We are positive on the outlook of the industry and look to bring
more proprietary games to market with an expanded team of talented
engineers."
Commenting on Sohu's brand advertising business, Ms.
Belinda Wang, Co-President and COO,
said, "Our brand advertising business also set new records in the
third quarter. Our expanding group of advertising partners is
taking advantage of strong economic conditions in China along with particular strength in each
of their end markets. More specifically, they are looking to
us to help maximize their advertising spending based on our
significant investments in our online platform and other
value-added solutions.
Third Quarter Financial Results
Revenues
Total revenues for the third quarter ended September 30, 2010 were US$164.1 million, up 20% year-over-year and 12%
quarter-over-quarter.
Brand advertising revenues for the third quarter of 2010 totaled
a record high of US$59.1 million, up
22% year-over-year and 11% quarter-over-quarter.
Search revenues for the third quarter of 2010 were US$5.4 million, up 134% year-over-year and 38%
quarter-over-quarter.
Online game revenues for the third quarter of 2010 were
US$85.6 million, up 25%
year-over-year and 10% quarter-over-quarter.
Wireless revenues for the third quarter of 2010 were
US$13.6 million, down 19%
year-over-year and up 23% quarter-over-quarter.
Gross Margin
Gross margin was 74% for the third quarter of 2010, compared
with 73% in the second quarter of 2010 and 76% in the third quarter
of 2009. Non-GAAP gross margin for the third quarter of 2010 was
74%, compared with 74% in the second quarter of 2010 and 76% in the
third quarter of 2009.
Brand advertising gross margin for the third quarter of 2010 was
61%, compared with 58% in the second quarter of 2010 and 68% in the
third quarter of 2009. Non-GAAP brand advertising gross margin for
the third quarter of 2010 was 62 %, compared with 60% in the second
quarter of 2010 and 69% in the third quarter of 2009.
Online game gross margin for the third quarter of 2010 was 90%,
compared with 91% in the second quarter of 2010 and 93% in the
third quarter of 2009. Non-GAAP online game gross margin for the
third quarter of 2010 was 90%, compared with 91% in the second
quarter of 2010 and 93% in the third quarter of 2009.
Wireless gross margin for the third quarter of 2010 was 46%,
compared with 48% in the second quarter of 2010 and 43% in the
third quarter of 2009. Non-GAAP wireless gross margin for the third
quarter of 2010 was 46%, compared with 48% in the second quarter of
2010 and 43% in the third quarter of 2009.
Operating Expenses
For the third quarter of 2010, Sohu's operating expenses totaled
US$55.6 million. Non-GAAP operating
expenses totaled US$50.1 million,
down 1% sequentially from US$50.8
million and up 7% year-over-year.
Operating Margin
Operating margin was 40% for the third quarter of 2010, compared
with 35% in the second quarter of 2010 and 39% in the third quarter
of 2009. Non-GAAP operating margin was 44% for the third quarter of
2010, compared with 39% in the previous quarter and 42% in the
third quarter of 2009.
Income Tax Expense
For the third quarter of 2010, excluding non-cash income tax
expense of US$0.7 million recorded
for tax benefits from share-based awards, non-GAAP income tax
expense was US$10.6 million, compared
with US$5.7 million in the previous
quarter.
Net Income
Before deducting the share of net income pertaining to the
Non-Controlling Interest, GAAP net income for the third quarter of
2010 was US$54.0 million, up 15%
year-over-year and 19% quarter-over-quarter. Non-GAAP net income
for the third quarter of 2010 was US$61.3
million, up 19% year-over-year and 17% quarter-over-quarter,
exceeding Group guidance by US$4.8
million.
After deducting the share of net income pertaining to the
Non-Controlling Interest, GAAP net income for the third quarter of
2010 was US$38.7 million, or
US$1.01 per fully diluted share.
Non-GAAP net income for the third quarter of 2010 was US$45.2 million, or US$1.16 per fully diluted share, an increase of
21% quarter-over-quarter, exceeding Group guidance.
Cash Balance
Sohu group continued to maintain a debt-free balance sheet and a
strong cash position of US$534.7
million as of September 30,
2010.
Ms. Carol Yu, Co-President and
CFO of Sohu, commented, "We achieved a strong third quarter with
record revenues in each of our major business categories, and
strong growth in our operations. The strategic investment
from Alibaba gives our search business a great opportunity to
compete and capture market share. The financing proceeds
would fund the future development of Sogou business. And Sohu
Group's healthy operating cash flows, strong balance sheet, and
growing platform point the way for us to further expand and deliver
long-term value to our shareholders."
Supplementary Information for Online Game Business
Operational Results
Aggregate registered accounts for Changyou's games(2) as of
September 30, 2010 increased 7%
quarter-over-quarter and 40% year-over-year to 105.2 million.
Aggregate peak concurrent users ("PCU") for Changyou's games was
approximately 980,000, a decrease of 14% quarter-over-quarter and
an increase of 14% year-over-year.
Aggregate active paying accounts ("APA") for Changyou's games
was approximately 2.61 million, a decrease of 6%
quarter-over-quarter and an increase of 9% year-over-year.
ARPU for Changyou's games increased 16% quarter-over-quarter and
13% year-over-year to RMB214, which
is consistent with Changyou's intention to have ARPU within a range
that keeps Changyou's games affordable for the majority of game
players in China.
Revenues
Total revenues for the third quarter of 2010 increased
10% quarter-over-quarter and 25% year-over-year to US$85.6 million.
Revenues from game operations for the third quarter of
2010 increased 11% quarter-over-quarter and 25% year-over-year to
US$83.6 million. The increases were
mainly due to the continued popularity of TLBB, in China and higher spending from game
players.
Overseas licensing revenues for the third quarter of 2010
decreased 7% quarter-over-quarter and increased 11% year-over-year
to US$2.0 million. The sequential
decrease was mainly the result of greater competition in mature
online game markets abroad. The year-over-year increase was largely
due to increased momentum of TLBB in Vietnam and Malaysia.
Recent Business Developments
Closing of Minority Strategic Investment in
Sogou
On October 22, 2010, Sohu's online
search subsidiary Sogou Inc. completed the sale of newly-issued
Series A Preferred Shares to Alibaba Investment Limited, a private
investment subsidiary of Alibaba Group Holding Limited, China Web
Search (HK) Limited, an investment vehicle of Yunfeng Fund, LP, and
Photon Group Limited, the investment fund of Sohu's Chairman and
Chief Executive Officer Dr. Charles
Zhang, for $15 million,
$9 million, and $24 million, respectively, that represent
approximately 10%, 6% and 16%, respectively, of the outstanding
share capital of Sogou on a fully-diluted basis. Sohu and Sogou
have established a share incentive program for Sogou management and
key employees as well as certain members of Sohu's executive
management. Sohu will retain approximately 53% of Sogou on a
fully-diluted basis, and intends in any event to retain a majority
of the outstanding share capital of Sogou on a fully-diluted
basis.
Open Beta Testing of Immortal
Faith
On September 9, 2010, Changyou
began open beta testing of Immortal Faith, Changyou's first 2D
mythical massively multi-player online role-playing game
("MMORPG"). Set against a backdrop of a number of ancient Chinese
myths and folk tales, the game allows players to battle demons and
assist deities in the conquest of various fairy kingdoms found in
Chinese mythology. The game allows users to experience the life
journey of becoming immortal by participating in the specially
designed fighting modes and utilizing the game's featured dynamic
fighting moves.
Business Outlook
For the fourth quarter of 2010, Sohu estimates:
- Total revenues to be between US$163
million and US$168 million, with advertising revenues of
US$64 million to US$66 million.
- Brand advertising revenues to be between US$58 million and US$60 million.
- Online game revenues to be between US$86
million and US$89 million.
- Non-GAAP net income before deducting the share of non-GAAP net
income pertaining to the Non-Controlling Interest to be between
US$59 million and US$61.5
million.
- Non-GAAP net income after deducting the share of non-GAAP net
income pertaining to the Non-Controlling Interest to be between
US$43 million and US$45 million
- Non-GAAP fully diluted earnings per share to be between
US$1.10 and US$1.15.
- Compensation expense and income tax expense related to
share-based awards, assuming no new grants of share-based awards,
to be between US$7.5 million and US$8.5
million, which includes Changyou's share-based compensation
expense for the fourth quarter of 2010, which is expected to be
between US$1.5 million and US$2.0
million. Considering Sohu's share in Changyou, the estimated
impact of this expense under US GAAP is expected to reduce Sohu's
fully diluted earnings per share for the fourth quarter of 2010 by
19 US cents to 22 US cents.
(1) Explanation of the Group's non-GAAP financial measures
and related reconciliations to GAAP financial measures are included
in the accompanying "Non-GAAP Disclosure" and the "Reconciliation
to Unaudited Condensed Consolidated Statements of Operations."
(2) Comprises the following games operated in China: Tian Long Ba
Bu ("TLBB"), Blade Online, Blade Hero 2, Da Hua Shui Hu,
Zhong Hua Ying Xiong and Immortal
Faith.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements
presented in accordance with United States Generally Accepted
Accounting Principles ("GAAP"), Sohu's management uses non-GAAP
measures of cost of revenues, operating expenses, income tax
expense, net income and net income per share, which are adjusted
from results based on GAAP to exclude the impact of share-based
awards granted to employees in the consolidated statements of
operations, which consists mainly of share-based compensation
expense and non-cash tax benefits from excess tax deductions
related to share-based awards. 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 impact of share-based
awards from its non-GAAP financial measure is useful for itself and
investors. Further, the impact of share-based awards 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 awards does not involve
any upfront or subsequent cash outflow, Sohu does not factor this
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 measure for commissions and bonuses
are based on non-GAAP financial measures that exclude the impact of
share-based awards.
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 cost of revenues, operating expenses, net income and net
income per share, excluding the impact of share-based awards, is
that the impact of share-based awards has been and will continue to
be a significant recurring expense in Sohu's business for the
foreseeable future. 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, the
current global financial and credit markets crisis and its
potential impact on the Chinese economy, the slower growth the
Chinese economy experienced during the latter half of 2008 and in
2009, which could recur in the future, the uncertain regulatory
landscape in the People's Republic of
China, fluctuations in Sohu's quarterly operating results,
and Sohu's reliance on online advertising sales, online games and
wireless services (most wireless revenues are collected from a few
mobile network operators) 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,
2009, and other filings with the Securities and Exchange
Commission.
Conference Call and Webcast
Sohu's management team will host a conference call on
October 25, 2010 (8:30 p.m. Beijing/Hong
Kong time, October 25, 2010)
at 8:30 a.m. U.S. Eastern Time.
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The dial-in details for the live
conference call are:
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US Toll-Free:
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+1-877-941-2927
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International:
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+1-480-629-9722
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Hong Kong:
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+852-3009-5027
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Passcode:
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SOHU
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Please dial in 10 minutes before
the call is scheduled to begin and provide the pass code to join
the call.
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A telephone replay of the call
will be available after the conclusion of the conference call at
11:00 a.m. Eastern Time on October
25 through November 8,
2010. The dial-in details for the
telephone replay are:
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International:
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+852-3056-2777
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Passcode:
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4374336
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The live webcast and archive of the conference call will be
available on the Investor Relations section of Sohu's website at
http://corp.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; interactive search
engine www.sogou.com; #1 games information portal www.17173.com;
the top real estate website www.focus.cn; #1 online alumni club
www.chinaren.com; wireless value-added services provider
www.goodfeel.com.cn; leading online mapping service provider
www.go2map.com; and developer and operator of online games
www.changyou.com.
Sohu corporate services consist of brand advertising on its
matrix of websites as well as paid listing and bid listing on its
in-house developed search directory and engine. Sohu also offers
wireless value-added services such as news, information, music,
ringtone and picture content sent over mobile phones. The Company's
massively multiplayer online role-playing game (MMORPG) subsidiary,
Changyou.com (Nasdaq: CYOU), currently operates six online games,
including Tian Long Ba Bu, one of
the most popular online games in China, and the licensed Blade Online, Blade
Hero 2, Da Hua Shui Hu, Zhong Hua Ying
Xiong and Immortal Faith. Sohu.com, established by Dr.
Charles Zhang, one of China's internet pioneers, is in its
fourteenth year of operation.
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For investor and media
inquiries, please contact:
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In China:
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Ms. Li Mei
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Sohu.com Inc.
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Tel:+86 (10)
6272-6596
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E-mail: ir@contact.sohu.com
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Mr. Chen Yuan Yuan
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Christensen
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Tel:+86 (10)
5971-2001
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E-mail: ychen@ChristensenIR.com
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In the United
States:
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Mr. Jeff Bloker
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Christensen
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Tel: +1 (480)
614-3003
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E-mail: jbloker@ChristensenIR.com
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SOHU.COM
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED,
IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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Three Months
Ended
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Nine Months
Ended
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Sep.
30,
2010
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Jun.
30,
2010
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Sep.
30,
2009
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Sep.
30,
2010
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Sep.
30,
2009
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Revenues:
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|
|
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|
|
|
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Advertising
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|
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Brand
advertising
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$
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59,083
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$
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53,162
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$
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48,502
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$
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151,757
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$
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131,197
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Sponsored
search
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5,367
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3,891
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2,292
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12,092
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5,623
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|
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Subtotal of
advertising revenues
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64,450
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57,053
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50,794
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163,849
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136,820
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Online games
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85,623
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77,721
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68,684
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235,416
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196,887
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Wireless
and others
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13,991
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11,323
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17,107
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40,350
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45,701
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Total
revenues
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164,064
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146,097
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136,585
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439,615
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379,408
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|
|
|
|
|
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|
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Cost of revenues:
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|
|
|
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|
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Advertising
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|
|
|
|
|
|
|
|
|
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Brand advertising
(includes share-based compensation expense of
$1,022,
$1,204,
$149,
$3,193 and
$646,
respectively)
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23,256
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22,256
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15,418
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62,795
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43,213
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Sponsored
search (includes share-based compensation expense of
$1,
$1,
$19,
$3 and
$25,
respectively)
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3,803
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3,507
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2,728
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10,223
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7,291
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Subtotal of
cost of advertising revenues
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27,059
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25,763
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18,146
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73,018
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50,504
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Online games (includes
share-based
compensation expense of $40,
$43,
$169,
$150 and
$267,
respectively)
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8,537
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7,008
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4,713
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20,929
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12,086
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Wireless and others
(includes share-based compensation expense of $0,
$0,
$11,
$0 and
$12,
respectively)
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7,580
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6,150
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10,331
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20,976
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26,972
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Total cost
of revenues
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43,176
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38,921
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33,190
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114,923
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89,562
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Gross profit
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120,888
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107,176
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103,395
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324,692
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289,846
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Operating expenses:
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|
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|
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Product development
(includes share-based compensation expense of
$2,238,
$2,218,
$2,204,
$6,901 and
$6,777,
respectively)
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19,454
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16,881
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14,531
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51,853
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42,482
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Sales and marketing
(includes share-based compensation expense of $1,271,
$1,176,
$152,
$3,402 and
$651,
respectively)
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25,410
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29,606
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25,457
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78,025
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68,093
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General and administrative
(includes share-based compensation expense of $1,989,
$1,811,
$1,780,
$5,893 and
$5,007,
respectively)
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10,619
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9,384
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10,721
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29,886
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27,823
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Amortization of
intangible assets
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163
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|
139
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|
93
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|
410
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|
295
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Total
operating expenses
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55,646
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56,010
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|
50,802
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160,174
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138,693
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|
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|
|
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Operating profit
|
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65,242
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|
51,166
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52,593
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164,518
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151,153
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|
|
|
|
|
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Other (expense) /
income
|
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(939)
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(330)
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|
40
|
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(1,294)
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|
103
|
|
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Interest income
and exchange
difference
|
|
1,050
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|
958
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|
1,469
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|
3,207
|
|
3,865
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|
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Income before income tax
expense
|
|
65,353
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|
51,794
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|
54,102
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|
166,431
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|
155,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income tax expense
|
|
11,340
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|
6,329
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|
7,022
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|
25,632
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|
21,577
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|
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Income from
continuing operations
|
|
54,013
|
|
45,465
|
|
47,080
|
|
140,799
|
|
133,544
|
|
|
Gain from
discontinued e-commerce operations
|
|
–
|
|
–
|
|
–
|
|
–
|
|
446
|
|
|
Net income
|
|
54,013
|
|
45,465
|
|
47,080
|
|
140,799
|
|
133,990
|
|
|
Less: Net
income attributable to the
noncontrolling interest
|
|
13,004
|
|
12,012
|
|
9,726
|
|
36,146
|
|
18,506
|
|
|
Net income attributable to
Sohu.com Inc.
|
|
41,009
|
|
33,453
|
|
37,354
|
|
104,653
|
|
115,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share attributable to Sohu.com
Inc.
|
$
|
1.08
|
$
|
0.88
|
$
|
0.97
|
$
|
2.77
|
$
|
3.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic
net income per share attributable to Sohu.com
Inc.
|
|
37,896
|
|
37,822
|
|
38,410
|
|
37,832
|
|
38,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share attributable to Sohu.com
Inc.
|
$
|
1.01
|
$
|
0.82
|
$
|
0.88
|
$
|
2.55
|
$
|
2.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing diluted
net income per share
attributable to Sohu.com
Inc.
|
|
38,377
|
|
38,289
|
|
39,082
|
|
38,370
|
|
38,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOHU.COM
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED,
IN THOUSANDS)
|
|
|
|
As
of
Sep. 30,
2010
|
|
As
of
Dec. 31,
2009
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
534,662
|
$
|
563,782
|
|
|
Investment in debt
securities
|
|
74,615
|
|
–
|
|
|
Accounts receivable,
net
|
|
70,102
|
|
46,610
|
|
|
Prepaid and other current
assets
|
|
19,866
|
|
10,781
|
|
|
Total current
assets
|
|
699,245
|
|
621,173
|
|
|
Fixed assets, net
|
|
119,207
|
|
115,088
|
|
|
Goodwill
|
|
67,736
|
|
55,555
|
|
|
Intangible assets,
net
|
|
13,478
|
|
7,933
|
|
|
Restricted cash
|
|
–
|
|
–
|
|
|
Prepaid non-current
assets
|
|
138,992
|
|
26,207
|
|
|
Other assets,
net
|
|
7,963
|
|
2,317
|
|
|
Total assets
|
$
|
1,046,621
|
$
|
828,273
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
|
7,475
|
$
|
4,602
|
|
|
Accrued liabilities to suppliers
and agents
|
|
57,907
|
|
41,103
|
|
|
Receipts in advance and deferred
revenue
|
|
49,555
|
|
36,944
|
|
|
Accrued salary and
benefits
|
|
31,258
|
|
28,860
|
|
|
Tax payables
|
|
24,044
|
|
21,953
|
|
|
Other accrued
liabilities
|
|
22,986
|
|
17,035
|
|
|
Total current
liabilities
|
$
|
193,225
|
$
|
150,497
|
|
|
|
|
|
|
|
|
Contingent
consideration
|
|
1,343
|
|
–
|
|
|
Total
liabilities
|
$
|
194,568
|
$
|
150,497
|
|
Commitments and
contingencies
|
|
–
|
|
–
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Sohu.com Inc.
shareholders' equity
|
|
738,236
|
|
609,781
|
|
|
Noncontrolling
interest
|
|
113,817
|
|
67,995
|
|
|
Total shareholders'
equity
|
$
|
852,053
|
$
|
677,776
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders'
equity
|
$
|
1,046,621
|
$
|
828,273
|
|
|
|
|
|
|
|
|
|
SOHU.COM INC.
RECONCILIATIONS TO UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED,
IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
NON-GAAP NET
INCOME EXCLUDING IMPACT OF SHARE-BASED
AWARDS
|
|
|
|
Three Months
Ended Sep.
30,
2010
|
|
|
Three Months
Ended Jun.
30,
2010
|
|
|
Three Months
Ended Sep.
30, 2009
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
|
Advertising revenues
|
$
|
64,450
|
|
–
|
|
64,450
|
|
$
|
57,053
|
$
|
–
|
$
|
57,053
|
|
$
|
50,794
|
$
|
–
|
$
|
50,794
|
|
|
Less: Cost
of advertising
revenues
|
|
27,059
|
|
(1,023)
|
|
26,036
|
|
|
25,763
|
|
(1,205)
|
|
24,558
|
|
|
18,146
|
|
(168)
|
|
17,978
|
|
|
Advertising gross
profit
|
$
|
37,391
|
|
1,023
|
|
38,414
|
|
$
|
31,290
|
$
|
1,205
|
$
|
32,495
|
|
$
|
32,648
|
$
|
168
|
$
|
32,816
|
|
|
Advertising gross
margin
|
|
58%
|
|
|
|
60%
|
|
|
55%
|
|
|
|
57%
|
|
|
64%
|
|
|
|
65%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games revenues
|
$
|
85,623
|
|
–
|
|
85,623
|
|
$
|
77,721
|
$
|
–
|
$
|
77,721
|
|
$
|
68,684
|
$
|
–
|
$
|
68,684
|
|
|
Less: Cost
of online games revenues
|
|
8,537
|
|
(40)
|
|
8,497
|
|
|
7,008
|
|
(43)
|
|
6,965
|
|
|
4,713
|
|
(169)
|
|
4,544
|
|
|
Online
games gross profit
|
$
|
77,086
|
|
40
|
|
77,126
|
|
$
|
70,713
|
$
|
43
|
$
|
70,756
|
|
$
|
63,971
|
$
|
169
|
$
|
64,140
|
|
|
Online games gross
margin
|
|
90%
|
|
|
|
90%
|
|
|
91%
|
|
|
|
91%
|
|
|
93%
|
|
|
|
93%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless and others
revenues
|
$
|
13,991
|
|
|
|
13,991
|
|
$
|
11,323
|
$
|
–
|
$
|
11,323
|
|
$
|
17,107
|
$
|
–
|
$
|
17,107
|
|
|
Less: Cost
of wireless and others
revenues
|
|
7,580
|
|
–
|
|
7,580
|
|
|
6,150
|
|
–
|
|
6,150
|
|
|
10,331
|
|
(11)
|
|
10,320
|
|
|
Wireless and
others gross profit
|
$
|
6,411
|
|
–
|
|
6,411
|
|
$
|
5,173
|
$
|
–
|
$
|
5,173
|
|
$
|
6,776
|
$
|
11
|
$
|
6,787
|
|
|
Wireless and
others gross margin
|
|
46%
|
|
|
|
46%
|
|
|
46%
|
|
|
|
46%
|
|
|
40%
|
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
164,064
|
|
|
|
164,064
|
|
$
|
146,097
|
$
|
–
|
$
|
146,097
|
|
$
|
136,585
|
$
|
–
|
$
|
136,585
|
|
|
Less: Total cost of
revenues
|
|
43,176
|
|
(1,063)
|
|
42,113
|
|
|
38,921
|
|
(1,248)
|
|
37,673
|
|
|
33,190
|
|
(348)
|
|
32,842
|
|
|
Gross profit
|
$
|
120,888
|
|
1,063
|
|
121,951
|
|
$
|
107,176
|
$
|
1,248
|
$
|
108,424
|
|
$
|
103,395
|
$
|
348
|
$
|
103,743
|
|
|
Gross margin
|
|
74%
|
|
|
|
74%
|
|
|
73%
|
|
|
|
74%
|
|
|
76%
|
|
|
|
76%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
$
|
55,646
|
|
(5,498)
|
|
50,148
|
|
$
|
56,010
|
$
|
(5,205)
|
$
|
50,805
|
|
$
|
50,802
|
$
|
(4,136)
|
$
|
46,666
|
|
|
Operating
profit
|
$
|
65,242
|
|
6,561
|
|
71,803
|
|
$
|
51,166
|
$
|
6,453
|
$
|
57,619
|
|
$
|
52,593
|
|
4,484
|
|
57,077
|
|
|
Operating margin
|
|
40%
|
|
|
|
44%
|
|
|
35%
|
|
|
|
39%
|
|
|
39%
|
|
|
|
42%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense /
(benefit)
|
$
|
11,340
|
|
(733)
|
|
10,607
|
|
$
|
6,329
|
$
|
(624)
|
$
|
5,705
|
|
$
|
7,022
|
|
–
|
|
7,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before
Non-Controlling Interest
|
$
|
54,013
|
|
7,294
|
|
61,307
|
|
$
|
45,465
|
$
|
7,077
|
$
|
52,542
|
|
$
|
47,080
|
|
4,484
|
|
51,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Sohu.com Inc. for basic net income per share
|
$
|
41,009
|
|
6,780
|
|
47,789
|
|
$
|
33,453
|
$
|
6,511
|
$
|
39,964
|
|
$
|
37,354
|
$
|
3,567
|
$
|
40,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Sohu.com Inc. for diluted net income per share
(b)
|
$
|
38,654
|
|
6,498
|
|
45,152
|
|
$
|
31,265
|
$
|
6,187
|
$
|
37,452
|
|
$
|
34,405
|
$
|
3,001
|
$
|
37,406
|
|
|
Diluted net income per
share attributable to Sohu.com
Inc.
|
$
|
1.01
|
|
|
|
1.16
|
|
$
|
0.82
|
|
|
$
|
0.96
|
|
$
|
0.88
|
|
|
|
0.96
|
|
|
Shares used in computing diluted
net income per share attributable to Sohu.com
Inc.
|
|
38,377
|
|
|
|
39,019
|
|
|
38,289
|
|
|
|
39,037
|
|
|
39,082
|
|
|
|
39,129
|
|
|
Note:
(a)
To eliminate the
impact of share-based awards as
measured using the fair value method.
(b)
To adjust Sohu's economic
interest in Changyou under the treasury stock
method.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOHU.COM INC.
RECONCILIATIONS TO UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED
IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
NON-GAAP NET
INCOME EXCLUDING IMPACT OF SHARE-BASED
AWARDS
|
|
|
|
Nine Months
Ended Sep.
30,
2010
|
|
|
Nine Months
Ended Sep.
30,
2009
|
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
|
|
Advertising revenues
|
$
|
163,849
|
|
–
|
|
163,849
|
|
$
|
136,820
|
$
|
–
|
$
|
136,820
|
|
|
|
Less: Cost
of advertising
revenues
|
|
73,018
|
|
(3,196)
|
|
69,822
|
|
|
50,504
|
|
(671)
|
|
49,833
|
|
|
|
Advertising gross
profit
|
$
|
90,831
|
|
3,196
|
|
94,027
|
|
$
|
86,316
|
$
|
671
|
$
|
86,987
|
|
|
|
Advertising gross
margin
|
|
55%
|
|
|
|
57%
|
|
|
63%
|
|
|
|
64%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games revenues
|
$
|
235,416
|
|
–
|
|
235,416
|
|
$
|
196,887
|
$
|
–
|
$
|
196,887
|
|
|
|
Less: Cost
of online games revenues
|
|
20,929
|
|
(150)
|
|
20,779
|
|
|
12,086
|
|
(267)
|
|
11,819
|
|
|
|
Online games
gross profit
|
$
|
214,487
|
|
150
|
|
214,637
|
|
$
|
184,801
|
$
|
267
|
$
|
185,068
|
|
|
|
Online games gross
margin
|
|
91%
|
|
|
|
91%
|
|
|
94%
|
|
|
|
94%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless and others
revenues
|
$
|
40,350
|
|
–
|
|
40,350
|
|
$
|
45,701
|
$
|
–
|
$
|
45,701
|
|
|
|
Less: Cost
of wireless and others
revenues
|
|
20,976
|
|
–
|
|
20,976
|
|
|
26,972
|
|
(12)
|
|
26,960
|
|
|
|
wireless
and others gross
profit
|
$
|
19,374
|
|
–
|
|
19,374
|
|
$
|
18,729
|
$
|
12
|
$
|
18,741
|
|
|
|
wireless and
others gross margin
|
|
48%
|
|
|
|
48%
|
|
|
41%
|
|
|
|
41%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
439,615
|
|
–
|
|
439,615
|
|
$
|
379,408
|
$
|
–
|
$
|
379,408
|
|
|
|
Less: Total cost of
revenues
|
|
114,923
|
|
(3,346)
|
|
111,577
|
|
|
89,562
|
|
(950)
|
|
88,612
|
|
|
|
Gross profit
|
$
|
324,692
|
|
3,346
|
|
328,038
|
|
$
|
289,846
|
$
|
950
|
$
|
290,796
|
|
|
|
Gross margin
|
|
74%
|
|
|
|
75%
|
|
|
76%
|
|
|
|
77%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
$
|
160,174
|
|
(16,196)
|
|
143,978
|
|
$
|
138,693
|
$
|
(12,435)
|
$
|
126,258
|
|
|
|
Operating
profit
|
$
|
164,518
|
|
19,542
|
|
184,060
|
|
$
|
151,153
|
|
13,385
|
|
164,538
|
|
|
|
Operating margin
|
|
37%
|
|
|
|
42%
|
|
|
40%
|
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
$
|
25,632
|
|
(1,888)
|
|
23,744
|
|
$
|
21,577
|
|
–
|
|
21,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before
Non-Controlling Interest
|
$
|
140,799
|
|
21,430
|
|
162,229
|
|
$
|
133,990
|
|
13,385
|
|
147,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Sohu.com Inc. for basic net income per share
|
$
|
104,653
|
|
19,515
|
|
124,168
|
|
$
|
115,484
|
|
11,016
|
|
126,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Sohu.com Inc. for diluted net income per share
(b)
|
$
|
97,846
|
|
18,527
|
|
116,373
|
|
$
|
109,876
|
|
9,611
|
|
119,487
|
|
|
|
Diluted net income per
share attributable to Sohu.com
Inc.
|
$
|
2.55
|
|
|
|
2.98
|
|
$
|
2.82
|
|
|
|
3.06
|
|
|
|
Shares used in computing diluted
net income per share attributable to Sohu.com
Inc.
|
|
38,370
|
|
|
|
39,045
|
|
|
38,985
|
|
|
|
39,082
|
|
|
|
Note:
(a)To eliminate
the impact of share-based awards as measured using the fair value
method.
(b)To adjust
Sohu's economic interest in Changyou under the treasury stock
method.
(c)Certain
amounts from prior periods have been reclassified to conform
with current period presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Sohu.com Inc.
Copyright . 25 PR Newswire