BEIJING, Jan. 31, 2011 /PRNewswire-Asia/ -- BEIJING, CHINA, January
31, 2011 – Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, search, gaming,
community and mobile service group, today reported unaudited
financial results for the fourth quarter and fiscal year ended
December 31, 2010.
(Logo: http://photos.prnewswire.com/prnh/20100201/CNM013LOGO
)
Fourth Quarter Highlights(1)
- Record total revenues and record revenues in each of the
Group's brand advertising, online game and search businesses. All
such operating parameters exceeded the Group's expectations.
- Total revenues were US$173.2
million, up 27% year-over-year and 6%
quarter-over-quarter.
- Brand advertising revenues were US$60.1
million, up 31% year-over-year and 2%
quarter-over-quarter.
- Online game revenues reached US$91.7
million, up 30% year-over-year and 7%
quarter-over-quarter.
- Search revenues were US$6.6
million, up 126% year-over-year and 23%
quarter-over-quarter.
- After deducting the share of net income pertaining to the
Noncontrolling Interest, GAAP net income was US$41.5 million, up 41% year-over-year and 7%
quarter-over-quarter, or US$1.07 per
fully diluted share. Non-GAAP net income was US$47.9 million, up 34% year-over-year and 6%
quarter-over-quarter, or US$1.23 per
fully diluted share.
(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."
Fiscal Year 2010 Highlights
- Record total revenues and record revenues in each of the
Group's brand advertising, online game and search businesses.
- Total revenues reached US$612.8
million, up 19% compared with 2009.
- Brand advertising revenues were US$211.8
million, up 20% compared with 2009.
- Online game revenues were US$327.1
million, up 22% compared with 2009.
- Search revenues reached US$18.6
million, up 120% compared with 2009.
- After deducting the share of net income pertaining to the
Noncontrolling Interest, GAAP net income was flat compared with
2009, reaching US$139.3 million, or
US$3.62 per fully diluted share.
Non-GAAP net income was up 6% compared with 2009, reaching
US$164.3 million, or US$4.21 per fully diluted share.
- Cash balance was US$678.4 million
as of December 31, 2010, representing
an increase of US$114.6 million from
December 31, 2009.
Dr. Charles Zhang, Chairman and
CEO of Sohu, commented, "While I am encouraged by these strong
results across our multiple business lines, I am even more excited
when we look beyond our financial performance. First, our
conscientious efforts in online video and our strategy to secure
high quality authorized content have brought our market share from
3.4% to 13.4% in a mere 12-month period. Second, while TLBB
continues to be a strong and popular game, Changyou will unveil the
full trial version of the highly anticipated Duke of Mount Deer to
players once it officially kicks off the game's marketing campaign
in March. And third, with its new capital structure in place,
Sogou's business is quickly picking up momentum. Over the fourth
quarter of 2010, active users of the Sogou browser, related search
traffic and search revenue, all grew north of 20%
quarter-to-quarter."
Commenting on Sohu's brand advertising business, Ms.
Belinda Wang, Co-President and COO,
added, "We achieved another record year in our brand advertising
business. Brand advertising revenues for the fourth quarter
rose 31% compared with the fourth quarter of 2009. We are
optimistic that we will be able to attract attention from the top
companies that are seeking effective and efficient marketing
solutions for their 2011 plans. And with advertising revenue
from online video for the year 2010 grew to three times that of
2009, we are convicted that this business has vast potential."
Fourth Quarter Financial Results
Revenues
Total revenues for the fourth quarter of 2010 were US$173.2 million, up 27% year-over-year and 6%
quarter-over-quarter.
Brand advertising revenues for the fourth quarter of 2010
totaled US$60.1 million, up 31%
year-over-year and 2% quarter-over-quarter.
Online game revenues for the fourth quarter of 2010 were
US$91.7 million, up 30%
year-over-year and 7% quarter-over-quarter.
Search revenues for the fourth quarter of 2010 were US$6.6 million, up 126% year-over-year and 23%
quarter-over-quarter.
Wireless revenues for the fourth quarter of 2010 were
US$14.4 million, down 8%
year-over-year and up 6% quarter-over-quarter.
Gross Margin
Gross margin was 74% for the fourth quarter of 2010, compared
with 74% in the third quarter of 2010 and 75% in the fourth quarter
of 2009. Non-GAAP gross margin for the fourth quarter of 2010 was
75%, compared with 74% in the third quarter of 2010 and 75% in the
fourth quarter of 2009.
Brand advertising gross margin for the fourth quarter of 2010
was 60%, compared with 61% in the third quarter of 2010 and 65% in
the fourth quarter of 2009. Non-GAAP brand advertising gross margin
for the fourth quarter of 2010 was 63%, compared with 62% in the
third quarter of 2010 and 65% in the fourth quarter of 2009.
Both GAAP and non-GAAP gross margin for online games in the
fourth quarter of 2010 were 90%, compared with 90% in the third
quarter of 2010 and 92% in the fourth quarter of 2009. The decline
in gross margin was mainly due to an increase in salaries and
benefits and higher bandwidth and server depreciation costs
associated with the operation of more games in the fourth quarter
of 2010.
Both GAAP and non-GAAP gross margin for the search business in
the fourth quarter of 2010 were 32%, compared with 32% in the third
quarter of 2010 and 2% in the fourth quarter of 2009.
Both GAAP and non-GAAP gross margin for the wireless business
for the fourth quarter of 2010 were 45%, compared with 46% in the
third quarter of 2010 and 44% in the fourth quarter of 2009.
Operating Expenses
For the fourth quarter of 2010, Sohu's operating expenses
totaled US$61.8 million, up 27%
year-over-year and 11% quarter-over-quarter. Non-GAAP operating
expenses totaled US$55.5 million, up
23% year-over-year and 11% quarter-over-quarter. The sequential
increases in both GAAP and non-GAAP operating expenses were
primarily attributable to the hiring of more game engineers and
expenses related to royalties for licensed games in the fourth
quarter of 2010.
Operating Margin
Operating margin was 38% for the fourth quarter of 2010,
compared with 40% in the previous quarter and 39% in the fourth
quarter of 2009. Non-GAAP operating margin was 43% for the fourth
quarter of 2010, compared with 44% in the previous quarter and 42%
in the fourth quarter of 2009.
Income Tax Expense
For the fourth quarter of 2010, excluding a non-cash income tax
expense reversal of US$0.7 million
recorded for tax benefits from share-based awards in connection
with the recent U.S. Congress's enactment of legislation with
favorable tax provisions that were reinstated retroactively to
January 1, 2010, non-GAAP income tax
expense was US$11.1 million, compared
with US$10.6 million in the previous
quarter.
Net Income
Before deducting the share of net income pertaining to the
Noncontrolling Interest, GAAP net income for the fourth quarter of
2010 was US$57.4 million, up 35%
year-over-year and 6% quarter-over-quarter. Non-GAAP net income for
the fourth quarter of 2010 was US$64.6
million, up 28% year-over-year and 5% quarter-over-quarter,
exceeding the high end of the Group's expectations.
After deducting the share of net income pertaining to the
Noncontrolling Interest, GAAP net income for the fourth quarter of
2010 was US$41.5 million, or
US$ 1.07 per fully diluted share.
Non-GAAP net income for the fourth quarter of 2010 was US$47.9 million, or US$
1.23 per fully diluted share, up 34% year-over-year and 6%
quarter-over-quarter, exceeding the high end of the Group's
expectations.
Cash Balance
Sohu Group continued to maintain a debt-free balance sheet and a
strong cash position of US$678.4
million as of December 31,
2010.
Fiscal Year 2010 Financial Results
Revenues
Total revenues for fiscal year 2010 were US$612.8 million, up 19% compared with 2009.
Brand advertising revenues for fiscal year 2010 were
US$211.8 million, up 20% compared
with 2009.
Online game revenues for fiscal year 2010 were US$327.1 million, up 22% compared with 2009.
Search revenues for fiscal year 2010 were US$18.6 million, up 120% compared with 2009.
Wireless revenues for fiscal year 2010 were US$52.3 million, down 14% compared with 2009.
Gross Margin
Gross margin was 74% and non-GAAP gross margin was 75% for
fiscal year 2010, compared with 76% for both GAAP and non-GAAP
gross margin in 2009.
Brand advertising gross margin was 59% for fiscal year 2010,
compared with 66% in 2009. Brand advertising non-GAAP gross margin
was 61% for fiscal year 2010, compared with 67% in 2009.
Online game gross margin was 91% for fiscal year 2010, compared
with 93% in 2009. Online game non-GAAP gross margin was 91% for
fiscal year 2010, compared with 94% in 2009. The decline in gross
margin was mainly due to an increase in salaries and benefits and
higher bandwidth and server depreciation costs associated with the
operation of more games in 2010.
Both GAAP and non-GAAP gross margin for the search business were
24% for fiscal year 2010, compared with -14% in 2009.
Both GAAP and non-GAAP gross margin for the wireless business
were 46% for fiscal year 2010, compared with 43% in 2009.
Operating Expenses
For fiscal year 2010, Sohu's operating expenses totaled
US$221.9 million, up 18% compared
with 2009. Non-GAAP operating expenses increased 16% to
US$199.4 million. The year-over-year
increase primarily reflects an increase in salaries and
compensation expenses as a result of increased headcount, an
increase in content and bandwidth costs, as well as an increase in
expenses related to royalties for licensed games at Changyou.
Operating Margin
Operating margin for fiscal year 2010 was 38%, compared with 40%
in 2009. Non-GAAP operating margin was 42%, compared with 43% in
2009.
Income Tax Expense
For fiscal year 2010, excluding non-cash income tax expense of
US$1.2 million recorded for the tax
benefits from share-based awards, non-GAAP income tax expense was
US$34.9 million, compared with
US$29.8 million in the previous
year.
Net Income
Before deducting the share of net income pertaining to the
Noncontrolling Interest, GAAP net income for fiscal year 2010 was
US$198.2 million, up 12% compared
with 2009; non-GAAP net income for fiscal year 2010 was
US$226.8 million, up 15% compared
with 2009.
After deducting the share of net income pertaining to the
Noncontrolling Interest, GAAP net income for fiscal year 2010 was
US$139.3 million, or US$3.62 per fully diluted share. Non-GAAP net
income for fiscal year 2010 was US$164.3
million, or US$4.21 per fully
diluted share.
Ms. Carol Yu, Co-President and
CFO of Sohu, commented, "While we are pleased with this set of
record financial results for both the quarter and the year, we are
even more upbeat about Sohu's bright future. Our past
investments in both online video and search are starting to bear
fruit and emerging to be new growth engines for our shareholders.
"
Supplementary Information for Online Game
Results
Fourth Quarter 2010
Operational Results
Aggregate registered accounts for Changyou's games (2) as of
December 31, 2010 increased 6%
quarter-over-quarter and 38% year-over-year to 111.4 million.
Aggregate peak concurrent users ("PCU") for Changyou's games
increased 5% quarter-over-quarter and 7% year-over-year to
1,030,000.
Aggregate active paying accounts ("APA") for Changyou's games
increased 3% quarter-over-quarter and 13% year-over-year to 2.7
million.
Average revenue per active paying account ("ARPU") for
Changyou's games increased 2% quarter-over-quarter and 12%
year-over-year to RMB219, which is
consistent with Changyou's intention of having ARPU remain within a
range that keeps Changyou's games affordable for the majority of
game players in China.
(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, Immortal Faith
and San Jie Qi Yuan.
Fourth Quarter and Fiscal Year 2010
Revenues
Total revenues for the fourth quarter of 2010 increased
7% quarter-over-quarter and 30% year-over-year to US$91.7 million. Total revenues for the fiscal
year 2010 were US$327.1 million, an
increase of 22% from US$267.6 million
in 2009.
Revenues from game operations for the fourth quarter of
2010 increased 7% quarter-over-quarter and 30% year-over-year to
US$89.5 million. Revenues from game
operations in 2010 were US$318.9
million, an increase of 23% from US$259.8 million in 2009. The increases for the
fourth quarter and the full year were mainly due to the continued
popularity of TLBB in China.
Overseas licensing revenues for the fourth quarter of
2010 were $2.2 million, an increase
of 11% sequentially and 7% year-over-year. The increases for the
fourth quarter were mainly due to increased momentum of TLBB in
Vietnam and revenue contribution
for a full quarter from the game in Thailand in the fourth quarter of 2010.
Overseas licensing revenues in 2010 were US$8.2 million, an increase of 5% from
US$7.8 million in 2009. The increases
for the full year were largely due to increased momentum of TLBB in
Vietnam and Malaysia.
Recent Business Developments
Open Beta Testing of San Jie Qi
Yuan
On December 3, 2010, Changyou
began open beta testing of San Jie Qi Yuan, a 2D turn-based
cartoon-style massively multi-player online role-playing game.
Adapted from one of the four great classical novels, Journey to the
West, the game allows users to experience fast-paced martial arts
combat in entertaining 2D graphics within a mythical fantasy world
in ancient China. The game was
licensed from a game studio in China and is operated by Changyou's
wholly-owned subsidiary I.C.E. Entertainment Limited.
Changyou To Acquire Remaining Stake in
Jing Mao
In January 2011, Changyou entered
into a definitive agreement under which Changyou will acquire the
remaining 50% of the equity in Shanghai Jing Mao Cultural
Communications Ltd. and its affiliate ("Jing Mao"). Jing Mao is primarily engaged
in cinema advertising in China.
The purpose of the acquisition is to secure additional advertising
resources for the promotion of Changyou's online games. Following
the completion of the transaction, Changyou will hold 100% of the
equity in Jing Mao. Jing Mao will be consolidated into Changyou's
financial statements starting from February
1, 2011.
Business Outlook
For the first quarter of 2011, Sohu estimates:
- Total revenues to be between $164.5
million and $169.5 million
- Brand Advertising revenues to be between $55.0 million and $57.0 million. This implies a
sequential decline of 5% to 8%, and 39% to 44% year-over-year
growth.
- Total revenues from Changyou to be between US$92.0 million and US$95.0 million, of which
revenues from online games, which are revenues exclusive of
revenues from Jing Mao, are expected
to be between US$91.0 million and US$93.0
million.
- Search revenues to be around $6.5
million.
- Before deducting the share of non-GAAP net income pertaining to
the Noncontrolling Interest, Sohu estimates its pro forma non-GAAP
net income to be between $54.5 million and
$57.0 million.
- After deducting the share of non-GAAP net income pertaining to
the Noncontrolling Interest, Sohu estimates non-GAAP net income to
be between $40.0 million and $42.0
million and non-GAAP fully diluted earnings per share to be
between $1.03 and $1.08.
- Assuming no new grants of share-based awards, Sohu estimates
that compensation expenses and income tax expenses relating to
share-based awards will be around $5.0
million to $6.0 million, which includes $1.5 million to $2.0 million for Changyou.
Considering Sohu's shares in Changyou, the estimated impact of this
expense is expected to reduce Sohu's fully diluted earnings per
share for the first quarter of 2011, under US GAAP, by 11 to 13 cents.
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.
On June 20, 2006, Sohu
discontinued its own e-commerce platform of physical consumer
goods. While processing the disposal of its e-commerce business,
Sohu is reporting the related business activities as discontinued
operations. Sohu's income statement separates out discontinued
operations for both current and prior periods in order to focus on
continuing operations and provide a consistent basis for comparing
financial performance over time.
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 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
January 31, 2011 (9:30 p.m. Beijing/Hong
Kong time, January 31, 2011)
at 8:30 a.m. U.S. Eastern Time.
The dial-in details for the live conference call are:
US Toll-Free:
|
+1-877-941-2927
|
|
International:
|
+1-480-629-9724
|
|
Hong Kong:
|
+852-3009-5027
|
|
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 10:30
a.m. Eastern Time on January 31
through February 8, 2011. The dial-in details for the
telephone replay are:
International:
|
+852-3056-2777
|
|
Passcode:
|
4398395
|
|
|
|
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 seven online games
in China, including the in-house
developed 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, Immortal Faith and San Jie Qi Yuan. Sohu.com,
established by Dr. Charles Zhang,
one of China's internet pioneers,
is in its fifteenth year of operation.
For investor and media inquiries, please contact:
In China:
Ms. Mei Li
Sohu.com Inc.
Tel: +86 (10) 6272-6596
E-mail: ir@contact.sohu.com
In the United
States:
Mr. Jeff Bloker
Christensen
Tel: +1 (480) 614-3003
E-mail: jbloker@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,
2010
|
|
Sep.
30,
2010
|
|
Dec.
31,
2009
|
|
Dec.
31,
2010
|
|
Dec.
31,
2009
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Brand
advertising
|
$
|
60,064
|
$
|
59,083
|
$
|
45,876
|
$
|
211,821
|
$
|
177,073
|
|
Online games
|
|
91,735
|
|
85,623
|
|
70,698
|
|
327,151
|
|
267,585
|
|
Sponsored search
|
|
6,596
|
|
5,357
|
|
2,914
|
|
18,649
|
|
8,491
|
|
Wireless and others
|
|
14,767
|
|
14,001
|
|
16,343
|
|
55,156
|
|
62,090
|
|
Total revenues
|
|
173,162
|
|
164,064
|
|
135,831
|
|
612,777
|
|
515,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Brand advertising
(includes stock-based
compensation expense of $1,610, $1,022,
$141,
$4,803 and $787,
respectively)
|
|
23,889
|
|
23,256
|
|
16,238
|
|
86,684
|
|
59,451
|
|
Online games
(includes stock-based
compensation expense of $44, $40,
$57,
$194 and $324,
respectively)
|
|
8,923
|
|
8,537
|
|
5,419
|
|
29,852
|
|
17,505
|
|
Sponsored search
(includes stock-based
compensation expense of $0,
$0,
$0, $0
and $0 ,
respectively)
|
|
4,497
|
|
3,650
|
|
2,854
|
|
14,243
|
|
9,669
|
|
Wireless and others
(includes stock-based
compensation expense of $0,
$1,
$1, $3
and $38,
respectively)
|
|
8,075
|
|
7,733
|
|
9,322
|
|
29,528
|
|
36,770
|
|
Total cost of
revenues
|
|
45,384
|
|
43,176
|
|
33,833
|
|
160,307
|
|
123,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
127,778
|
|
120,888
|
|
101,998
|
|
452,470
|
|
391,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Product development
(includes stock-based compensation expense of $2,791,
$2,238, $1,952, $9,692
and $8,729, respectively)
|
|
23,747
|
|
19,454
|
|
14,461
|
|
75,600
|
|
56,943
|
|
Sales and marketing
(includes stock-based compensation expense of $1,625,
$1,271, $96, $5,027 and $747,
respectively)
|
|
27,381
|
|
25,410
|
|
25,405
|
|
105,406
|
|
93,498
|
|
General and
administrative (includes stock-based
compensation expense of $1,879,
$1,989, $1,687, $7,772
and $6,694, respectively)
|
|
10,489
|
|
10,619
|
|
8,801
|
|
40,375
|
|
36,624
|
|
Amortization of
intangible assets
|
|
148
|
|
163
|
|
93
|
|
558
|
|
388
|
|
Total operating
expenses
|
|
61,765
|
|
55,646
|
|
48,760
|
|
221,939
|
|
187,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
66,013
|
|
65,242
|
|
53,238
|
|
230,531
|
|
204,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income/(expense)
|
|
504
|
|
(939)
|
|
239
|
|
(790)
|
|
342
|
|
Interest income and exchange
difference
|
|
1,267
|
|
1,050
|
|
1,136
|
|
4,474
|
|
5,001
|
|
Income before income tax
expenses
|
|
67,784
|
|
65,353
|
|
54,613
|
|
234,215
|
|
209,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense/(benefit)
|
|
10,399
|
|
11,340
|
|
12,168
|
|
36,031
|
|
33,745
|
|
Income from continuing
operations
|
|
57,385
|
|
54,013
|
|
42,445
|
|
198,184
|
|
175,989
|
|
Gain from
discontinued e-commerce operations
|
|
-
|
|
-
|
|
-
|
|
-
|
|
446
|
|
Net income
|
|
57,385
|
|
54,013
|
|
42,445
|
|
198,184
|
|
176,435
|
|
Less:
Net income attributable to
the Noncontrolling
Interest
|
|
13,409
|
|
13,004
|
|
10,096
|
|
49,555
|
|
28,602
|
|
Net income attributable to
Sohu.com Inc.
|
|
43,976
|
|
41,009
|
|
32,349
|
|
148,629
|
|
147,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
per share attributable to Sohu.com Inc.
|
$
|
1.16
|
$
|
1.08
|
$
|
0.84
|
$
|
3.92
|
$
|
3.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing
basic net income
per share attributable to Sohu.com Inc.
|
|
37,981
|
|
37,896
|
|
38,317
|
|
37,870
|
|
38,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share attributable to Sohu.com Inc.
|
$
|
1.07
|
$
|
1.01
|
$
|
0.76
|
$
|
3.62
|
$
|
3.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing
diluted net income
per share attributable to Sohu.com Inc.
|
|
38,669
|
|
38,377
|
|
38,920
|
|
38,445
|
|
38,969
|
|
Note:
(a)
Certain amounts from prior
periods have been reclassified to conform with current period
presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
SOHU.COM
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED,
IN THOUSANDS)
|
|
|
|
As
of Dec 31,
2010
|
|
As of Dec
31, 2009
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
678,389
|
$
|
563,782
|
|
Investment in debt
securities
|
|
75,529
|
|
–
|
|
Accounts receivable,
net
|
|
62,603
|
|
46,610
|
|
Prepaid and other current
assets
|
|
20,416
|
|
10,781
|
|
Total current
assets
|
|
836,937
|
|
621,173
|
|
Fixed assets, net
|
|
120,627
|
|
115,088
|
|
Goodwill
|
|
67,761
|
|
55,555
|
|
Intangible assets,
net
|
|
11,806
|
|
7,933
|
|
Prepaid non-current
assets
|
|
142,731
|
|
26,207
|
|
Other assets, net
|
|
7,728
|
|
2,317
|
|
Total
assets
|
$
|
1,187,590
|
$
|
828,273
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
|
5,940
|
$
|
4,602
|
|
Accrued liabilities to
suppliers and
agents
|
|
65,917
|
|
41,103
|
|
Receipts in advance and deferred
revenue
|
|
51,513
|
|
36,944
|
|
Accrued salary and
benefits
|
|
35,409
|
|
28,860
|
|
Tax payables
|
|
31,719
|
|
21,953
|
|
Other accrued
liabilities
|
|
21,174
|
|
17,035
|
|
Total current
liabilities
|
$
|
211,672
|
$
|
150,497
|
|
|
|
|
|
|
|
Contingent
consideration
|
|
1,359
|
|
–
|
|
Total liabilities
|
$
|
213,031
|
$
|
150,497
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Sohu.com Inc. shareholders' equity
|
|
796,117
|
|
609,781
|
|
Noncontrolling
Interest
|
|
178,442
|
|
67,995
|
|
Total shareholders'
equity
|
$
|
974,559
|
$
|
677,776
|
|
|
|
|
|
|
|
Total Liabilities and
shareholders' equity
|
$
|
1,187,590
|
$
|
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 Dec. 31, 2010
|
|
Three Months
Ended Sep. 30, 2010
|
|
Three Months
Ended Dec. 31, 2009
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
Brand advertising
revenues
|
$
|
60,064
|
$
|
–
|
$
|
60,064
|
$
|
59,083
|
$
|
–
|
$
|
59,083
|
$
|
45,876
|
$
|
–
|
$
|
45,876
|
|
Less: Cost
of brand advertising
revenues
|
|
23,889
|
|
(1,610)
|
|
22,279
|
|
23,256
|
|
(1,022)
|
|
22,234
|
|
16,238
|
|
(141)
|
|
16,097
|
|
Brand
advertising gross
profit
|
$
|
36,175
|
$
|
1,610
|
$
|
37,785
|
$
|
35,827
|
$
|
1,022
|
$
|
36,849
|
$
|
29,638
|
$
|
141
|
$
|
29,779
|
|
Brand
advertising gross
margin
|
|
60%
|
|
|
|
63%
|
|
61%
|
|
|
|
62%
|
|
65%
|
|
|
|
65%
|
|
Online games revenues
|
$
|
91,735
|
$
|
–
|
$
|
91,735
|
|
85,623
|
|
–
|
|
85,623
|
|
70,698
|
|
–
|
|
70,698
|
|
Less: Cost
of online games revenues
|
|
8,923
|
|
(44)
|
|
8,879
|
|
8,537
|
|
(40)
|
|
8,497
|
|
5,419
|
|
(57)
|
|
5,362
|
|
Online games
gross profit
|
$
|
82,812
|
$
|
44
|
$
|
82,856
|
$
|
77,086
|
$
|
40
|
$
|
77,126
|
$
|
65,279
|
$
|
57
|
$
|
65,336
|
|
Online games
gross margin
|
|
90%
|
|
|
|
90%
|
|
90%
|
|
|
|
90%
|
|
92%
|
|
|
|
92%
|
|
Sponsored search
revenues
|
$
|
6,596
|
$
|
–
|
$
|
6,596
|
$
|
5,357
|
$
|
–
|
$
|
5,357
|
$
|
2,914
|
$
|
–
|
|
2,914
|
|
Less: Cost
of sponsored search
revenues
|
|
4,497
|
|
–
|
|
4,497
|
|
3,650
|
|
–
|
|
3,650
|
|
2,854
|
|
–
|
|
2,854
|
|
Sponsored
search gross profit
|
$
|
2,099
|
$
|
–
|
$
|
2,099
|
$
|
1,707
|
$
|
–
|
$
|
1,707
|
$
|
60
|
$
|
–
|
|
60
|
|
Sponsored
search gross margin
|
|
32%
|
|
|
|
32%
|
|
32%
|
|
|
|
32%
|
|
2%
|
|
|
|
2%
|
|
Wireless and
others revenues
|
$
|
14,767
|
$
|
–
|
$
|
14,767
|
$
|
14,001
|
$
|
–
|
$
|
14,001
|
$
|
16,343
|
$
|
–
|
|
16,343
|
|
Less: Cost
of wireless and others revenues
|
|
8,075
|
|
–
|
|
8,075
|
|
7,733
|
|
(1)
|
|
7,732
|
|
9,322
|
|
(1)
|
|
9,321
|
|
Wireless and others gross
profit
|
$
|
6,692
|
$
|
–
|
$
|
6,692
|
$
|
6,268
|
$
|
1
|
$
|
6,269
|
$
|
7,021
|
$
|
1
|
|
7,022
|
|
Wireless and others gross
margin
|
|
45%
|
|
|
|
45%
|
|
45%
|
|
|
|
45%
|
|
43%
|
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
173,162
|
$
|
–
|
$
|
173,162
|
$
|
164,064
|
$
|
–
|
$
|
164,064
|
$
|
135,831
|
$
|
–
|
$
|
135,831
|
|
Less: Total
cost of revenues
|
|
45,384
|
|
(1,654)
|
|
43,730
|
|
43,176
|
|
(1,063)
|
|
42,113
|
|
33,833
|
|
(199)
|
|
33,634
|
|
Gross
profit
|
$
|
127,778
|
$
|
1,654
|
$
|
129,432
|
$
|
120,888
|
$
|
1,063
|
$
|
121,951
|
$
|
101,998
|
$
|
199
|
$
|
102,197
|
|
Gross
margin
|
|
74%
|
|
|
|
75%
|
|
74%
|
|
|
|
74%
|
|
75%
|
|
|
|
75%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
$
|
61,765
|
$
|
(6,295)
|
$
|
55,470
|
$
|
55,646
|
$
|
(5,498)
|
$
|
50,148
|
$
|
48,760
|
$
|
(3,735)
|
$
|
45,025
|
|
Operating profit
|
$
|
66,013
|
$
|
7,949
|
$
|
73,962
|
$
|
65,242
|
$
|
6,561
|
$
|
71,803
|
$
|
53,238
|
$
|
3,934
|
$
|
57,172
|
|
Operating margin
|
|
38%
|
|
|
|
43%
|
|
40%
|
|
|
|
44%
|
|
39%
|
|
|
|
42%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
/(benefit)
|
$
|
10,399
|
$
|
718
|
$
|
11,117
|
$
|
11,340
|
$
|
(733)
|
$
|
10,607
|
$
|
12,168
|
$
|
(3,927)
|
$
|
8,241
|
|
Net income before
Noncontrolling Interest
|
$
|
57,385
|
$
|
7,231
|
$
|
64,616
|
$
|
54,013
|
$
|
7,294
|
$
|
61,307
|
$
|
42,445
|
$
|
7,861
|
$
|
50,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Sohu.com Inc. for basic net income per share
|
$
|
43,976
|
$
|
6,699
|
$
|
50,675
|
$
|
41,009
|
$
|
6,780
|
$
|
47,789
|
$
|
32,349
|
$
|
6,996
|
$
|
39,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Sohu.com Inc for diluted net income per share (b)
|
$
|
41,489
|
$
|
6,404
|
$
|
47,893
|
$
|
38,654
|
$
|
6,498
|
$
|
45,152
|
$
|
29,396
|
$
|
6,447
|
$
|
35,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share attributable to Sohu.com
Inc.
|
$
|
1.07
|
|
|
$
|
1.23
|
$
|
1.01
|
|
|
$
|
1.16
|
$
|
0.76
|
|
|
$
|
0.92
|
|
Shares used in computing
diluted net income
per share attributable to Sohu.com
Inc.
|
|
38,669
|
|
|
|
39,079
|
|
38,377
|
|
|
|
39,019
|
|
38,920
|
|
|
|
38,957
|
|
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 and Sogou under the treasury stock method and
if-converted method,
respectively.
(c)
Certain amounts from prior
periods have been reclassified to conform with current period
presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
Twelve
Months Ended Dec. 31, 2010
|
|
Twelve
Months Ended Dec. 31, 2009
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
(a)
|
Non-GAAP
|
|
Brand Advertising
revenues
|
$
|
211,821
|
$
|
–
|
$
|
211,821
|
$
|
177,073
|
$
|
–
|
$
|
177,073
|
|
Less: Cost
of brand advertising
revenues
|
|
86,684
|
|
(4,803)
|
|
81,881
|
|
59,451
|
|
(787)
|
|
58,664
|
|
Brand
advertising gross
profit
|
$
|
125,137
|
$
|
4,803
|
$
|
129,940
|
$
|
117,622
|
$
|
787
|
$
|
118,409
|
|
Brand
advertising gross
margin
|
|
59%
|
|
|
|
61%
|
|
66%
|
|
|
|
67%
|
|
Online games revenues
|
$
|
327,151
|
$
|
–
|
$
|
327,151
|
$
|
267,585
|
$
|
–
|
$
|
267,585
|
|
Less: Cost
of online games revenues
|
|
29,852
|
|
(194)
|
|
29,658
|
|
17,505
|
|
(324)
|
|
17,181
|
|
Online games
gross profit
|
$
|
297,299
|
$
|
194
|
$
|
297,493
|
$
|
250,080
|
$
|
324
|
$
|
250,404
|
|
Online games
gross margin
|
|
91%
|
|
|
|
91%
|
|
93%
|
|
|
|
94%
|
|
Sponsored search
revenues
|
$
|
18,649
|
$
|
–
|
$
|
18,649
|
$
|
8,491
|
$
|
–
|
$
|
8,491
|
|
Less: Cost
of sponsored search
revenues
|
|
14,243
|
|
–
|
|
14,243
|
|
9,669
|
|
–
|
|
9,669
|
|
Sponsored
search gross profit
|
$
|
4,406
|
$
|
–
|
$
|
4,406
|
$
|
(1,178)
|
$
|
–
|
$
|
(1,178)
|
|
Sponsored
search gross margin
|
|
24%
|
|
|
|
24%
|
|
(14%)
|
|
|
|
(14%)
|
|
Wireless and others
revenues
|
$
|
55,156
|
$
|
–
|
$
|
55,156
|
$
|
62,090
|
$
|
–
|
$
|
62,090
|
|
Less: Cost
of wireless and others revenues
|
|
29,528
|
|
(3)
|
|
29,525
|
|
36,770
|
|
(38)
|
|
36,732
|
|
Wireless and others gross
profit
|
$
|
25,628
|
$
|
3
|
$
|
25,631
|
$
|
25,320
|
$
|
38
|
$
|
25,358
|
|
Wireless and others gross
margin
|
|
46%
|
|
|
|
46%
|
|
41%
|
|
|
|
41%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
612,777
|
$
|
–
|
$
|
612,777
|
$
|
515,239
|
$
|
–
|
$
|
515,239
|
|
Less: Total
cost of revenues
|
|
160,307
|
|
(5,000)
|
|
155,307
|
|
123,395
|
|
(1,149)
|
|
122,246
|
|
Gross
profit
|
$
|
452,470
|
$
|
5,000
|
$
|
457,470
|
$
|
391,844
|
$
|
1,149
|
$
|
392,993
|
|
Gross
margin
|
|
74%
|
|
|
|
75%
|
|
76%
|
|
|
|
76%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
$
|
221,939
|
$
|
(22,491)
|
$
|
199,448
|
$
|
187,453
|
$
|
(16,170)
|
$
|
171,283
|
|
Operating profit
|
|
230,531
|
|
27,491
|
|
258,022
|
|
204,391
|
|
17,319
|
|
221,710
|
|
Operating margin
|
|
38%
|
|
|
|
42%
|
|
40%
|
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense/(benefit)
|
$
|
36,031
|
$
|
(1,170)
|
$
|
34,861
|
$
|
33,745
|
$
|
(3,927)
|
$
|
29,818
|
|
Net income before
Noncontrolling Interest
|
$
|
198,184
|
$
|
28,661
|
$
|
226,845
|
$
|
176,435
|
$
|
21,246
|
$
|
197,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Sohu.com Inc. for basic net income per share
|
$
|
148,629
|
$
|
26,214
|
$
|
174,843
|
$
|
147,833
|
$
|
18,012
|
$
|
165,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
Sohu.com Inc for diluted net income per share (b)
|
$
|
139,335
|
$
|
24,931
|
$
|
164,266
|
$
|
139,272
|
$
|
16,058
|
$
|
155,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share attributable to Sohu.com
Inc.
|
$
|
3.62
|
|
|
$
|
4.21
|
$
|
3.57
|
|
|
$
|
3.98
|
|
Shares used in
computing diluted net income
per share attributable to Sohu.com
Inc.
|
|
38,445
|
|
|
|
39,054
|
|
38,969
|
|
|
|
39,051
|
|
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 and Sogou under the treasury stock method and
if-converted method, respectively.
(c)
Certain amounts from prior
periods have been reclassified to conform with current period
presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Sohu.com Inc.