BEIJING, April 29, 2019 /PRNewswire/ -- Sohu.com Limited
(NASDAQ: SOHU), China's leading
online media, video, search and gaming business group, today
reported unaudited financial results for the first quarter
ended March 31, 2019.
First Quarter Highlights
- Total revenues were US$431
million[1], down 5% year-over-year and 11%
quarter-over-quarter.
- Brand advertising revenues were US$43
million, down 24% year-over-year and 25%
quarter-over-quarter.
- Search and search related
advertising revenues[2] were US$234 million, up 6% year-over-year and down 15%
quarter-over-quarter.
- Online game revenues were US$99
million, down 6% year-over-year and up 5%
quarter-over-quarter.
- Excluding a US$6 million
impairment of intangibles via acquisitions of businesses (net of
tax effects) recognized in this quarter, operating loss for Sohu
Video was US$27 million, compared
with a loss of US$48 million in the
first quarter 2018.
- GAAP net loss attributable to Sohu.com Limited was US$57 million, compared with a net loss of
US$93 million in the first quarter of
2018.
- Non-GAAP net loss attributable to Sohu.com Limited was
US$55 million. Excluding the effect
of the aforementioned impairment of intangibles via acquisitions of
businesses, net of tax effects, Non-GAAP net loss attributable to
Sohu.com Limited was US$48 million,
compared with a net loss of US$97
million in the first quarter of 2018.
- Further excluding the profit/loss generated by Sogou and
Changyou, the Non-GAAP net loss attributable to Sohu.com Limited
was US$72 million, compared with a
net loss of US$93 million in the
first quarter of 2018.
|
[1] On a
constant currency (non-GAAP) basis, if the exchange rate in the
first quarter of 2019 had been the same as it was in the first
quarter of 2018, or RMB6.36=US$1.00, US$ total revenues in the
first quarter of 2019 would have been US$457 million, or US$26
million more than GAAP total revenues, and up 1%
year-over-year.
|
|
[2] Search
and Search related advertising revenues exclude intra-Group
transactions.
|
Dr. Charles Zhang, Chairman and
CEO of Sohu.com Limited, commented, "In the first quarter, we
delivered better-than-expected revenue, mainly driven by the solid
performance of our search and game businesses. Sohu Media continued
to make progress upgrading its products and content on our platform
and we explored new ways to diversify revenue sources. Sohu Video
consistently offered appealing self-developed dramas and its
financial loss continued to narrow due to strict cost controls. For
Sogou, the user base of its mobile search and keyboard products
further expanded while its core search revenue grew faster than the
industry. In the first quarter, Changyou's revenue and profit
exceeded guidance as the TLBB PC game performed very well during
the Chinese New Year holidays."
First Quarter Financial Results
Revenues
Total revenues for the first quarter of 2019 were US$431 million, down 5% year-over-year and 11%
quarter-over-quarter.
Total online advertising revenues, which include revenues from
the brand advertising and search and search-related
advertising businesses, for the first quarter of 2019 were
US$277 million, flat year-over-year
and down 17% quarter-over-quarter.
Brand advertising revenues for the first quarter of 2019 totaled
US$43 million, down 24%
year-over-year and 25% quarter-over-quarter. The decrease was
mainly due to decreases in portal and video advertising
revenues.
Search and search-related advertising revenues for the first
quarter of 2019 were US$234 million,
up 6% year-over-year and down 15% quarter-over-quarter.
Online game revenues for the first quarter of 2019 were
US$99 million, down 6% year-over-year
and up 5% quarter-over-quarter. The year-over-year decrease was due
to the natural decline in revenue of Changyou's older games,
including Legacy TLBB Mobile. The quarter-over-quarter increase was
mainly due to the better-than-expected performance of TLBB PC,
which resulted primarily from in-game promotional events around the
Chinese Spring Festival in the first quarter of 2019.
Gross Margin
Both GAAP and non-GAAP[3] gross margin
was 40% for the first quarter of 2019, compared with
43% in the first quarter of 2018 and 43% in the fourth quarter of
2018.
Both GAAP and non-GAAP gross margin for the online
advertising business for the first quarter of 2019 was 23%,
compared with 29% in the first quarter of 2018 and 32% in
the fourth quarter of 2018.
GAAP gross margin for the brand advertising business in the
first quarter of 2019 was 20%, compared with 10% in
the first quarter of 2018 and 26% in the fourth quarter
of 2018. Non-GAAP gross margin for the brand advertising
business was 20%, compared with 9% in the first quarter
of 2018 and 26% in the fourth quarter of 2018. The
year-over-year margin improvement was mainly due to decreased video
content cost. The quarter-over-quarter decrease was mainly due to
decreased brand advertising revenue.
Both GAAP and non-GAAP gross margin for the search and
search-related advertising business in the first quarter of
2019 was 24%, compared with 34% in the first quarter of 2018 and
34% in the fourth quarter of 2018. The year-over-year and
quarter-over-quarter decrease primarily resulted from increases in
traffic acquisition costs outpacing revenue growth.
Both GAAP and non-GAAP gross margin for online games in the
first quarter of 2019 was 86%, compared with 84% in the first
quarter of 2018 and 85% in the fourth quarter of 2018.
|
[3]
Non-GAAP results exclude share-based compensation expense; non-cash
tax benefits from excess tax deductions related to share-based
awards; changes in fair value recognized in the Company's
consolidated statements of operations with respect to equity
investments with readily determinable fair values; income/expense
from the adjustment of contingent consideration previously recorded
for acquisitions; dividends and deemed dividends to non-controlling
preferred shareholders of Sogou; a one-time income tax expense
recognized in the fourth quarter of 2017 as a result of the
one-time transition tax (the "Toll Charge") imposed by the U.S. Tax
Cuts and Jobs Act signed into law on December 22, 2017 (the
"TCJA"); the subsequent re-evaluation for the fourth quarter of
2018 and adjustment of the tax expense previously recognized for
the Toll Charge; the resulting recognition of a previously
unrecognized tax benefit and recording of an uncertain tax position
related to the balance of the Toll Charge; and interest accrued in
relation to the previously unrecognized tax benefit. 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."
|
Operating Expenses
For the first quarter of 2019, GAAP operating expenses
totaled US$217 million, down 4%
year-over-year and 15% quarter-over-quarter. Non-GAAP operating
expenses were US$215 million, down 6%
year-over-year and 15% quarter-over-quarter. The
year-over-year decrease in operating expenses was mainly due
to decreases in salary and benefit expenses. The
quarter-over-quarter decrease was mainly due to decreased product
development and marketing expenses at Sogou, and an impairment
charge recognized by Changyou in the fourth quarter of 2018 related
to its 17173.com website business.
Operating Loss
GAAP operating loss for the first quarter of 2019 was
US$46 million, compared with an
operating loss of US$31 million in the first quarter of 2018
and an operating loss of US$48
million in the fourth quarter of 2018.
Non-GAAP operating loss for the first quarter of 2019
was US$44 million, compared with an operating loss
of US$34 million in the first quarter of 2018 and an
operating loss of US$46
million in the fourth quarter of 2018.
Income Tax Expense
GAAP income tax expense was US$11
million for the first quarter of 2019, compared with income
tax expense of US$63 million in the
first quarter of 2018 and income tax benefit of US$70 million in the fourth quarter of 2018.
Non-GAAP income tax expense was US$9
million for the first quarter of 2019, compared with income
tax expense of US$63 million in the
first quarter of 2018 and income tax expense of US$5 million in the fourth quarter of 2018.
The income tax expense for the first quarter of 2018 included
Changyou's accrual of additional withholding income taxes of
US$47 million for the period before
December 31, 2017 recognized in
relation to a change in policy for Changyou's PRC subsidiaries with
respect to their distribution of cash dividends.
The income tax benefit recognized in the fourth quarter of 2018
resulted from management's re-evaluation and adjustment of the tax
expense previously recognized in the fourth quarter of 2017 for the
one-time transition tax (the "Toll Charge") imposed by the U.S. Tax
Cuts and Jobs Act (the "TCJA"), and interest accrued in relation to
the unrecognized tax benefit[4].
|
[4] The
tax benefit recognized and the unrecognized tax benefit in relation
to the Toll Charge may be subject to further adjustment in
subsequent periods based on future facts and circumstances and on
management's further judgment and estimates.
|
Net Income/(Loss)
GAAP net loss attributable to Sohu.com Limited for the
first quarter of 2019 was US$57 million, or US$1.44 loss per fully-diluted ADS,
compared with a net loss of US$93
million in the first quarter of 2018 and a net
income of US$15 million in the
fourth quarter of 2018. Non-GAAP net loss attributable to
Sohu.com Limited for the first quarter of 2019 was
US$55 million, or US$1.39 loss per fully-diluted ADS, compared
with a net loss of US$97 million in the first
quarter of 2018 and a net loss of US$59 million in the fourth quarter of
2018.
Liquidity
As of March 31, 2019, cash and
cash equivalents and short-term investments held by the Sohu Group,
minus short-term bank loans, were US$1.75
billion, compared with US$1.73
billion as of December 31,
2018.
Business Outlook
For the second quarter of 2019, Sohu estimates:
- Total revenues to be between US$469
million and US$494
million.
- Brand advertising revenues to be between US$47 million and US$52
million; this implies an annual decrease of 15% to 24% and a
sequential increase of 9% to 21%.
- Sogou revenues to be between US$303
million and US$313 million;
this implies an annual increase of 1% to 4% and a sequential
increase of 20% to 24%.
- Online game revenues to be between US$90
million and US$100 million;
this implies an annual decrease of 5% to an annual increase of
6% and a sequential decrease of 9% to a sequential increase of
1%.
- Non-GAAP net loss attributable to Sohu.com
Limited. to be between US$38 million and US$48 million, and non-GAAP loss per
fully-diluted ADS to be between US$0.95 and US$1.20. GAAP net loss attributable
to Sohu.com Limited to be between US$40 million and
US$50 million, and GAAP loss per
fully-diluted ADS to be between US$1.00 and US$1.25.
- Excluding the profit/loss generated by Sogou and Changyou,
Non-GAAP net loss attributable to Sohu.com Limited. to be between
US$65 million and US$70 million, GAAP net loss attributable to
Sohu.com Limited to be between US$67million and US$72
million.
For the second quarter 2019 guidance, the Company has
adopted a presumed exchange rate of RMB6.80=US$1.00, as
compared with the actual exchange rate of approximately
RMB6.38=US$1.00 for the second quarter of 2018, and
RMB6.74=US$1.00 for the first quarter of
2019.
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 Limited and diluted net income
attributable to Sohu.com Limited 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; changes in fair value recognized in the
Company's consolidated statements of operations with respect to
equity investments with readily determinable fair values;
income/expense from the adjustment of contingent consideration
previously recorded for acquisitions; dividend and deemed dividend
to non-controlling preferred shareholders; the one-time income tax
expense recognized in the fourth quarter of 2017 as a result of the
Toll Charge imposed by the TCJA and the subsequent re-evaluation
for the fourth quarter of 2018 and adjustment of the tax expense
previously recognized for the Toll Charge; the resulting
recognition of a previously unrecognized tax benefit and recording
of an uncertain tax position related to the balance of the Toll
Charge; and interest expense recognize in connection with the Toll
Charge. 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 share-based compensation
expense, changes in fair value recognized in the Company's
consolidated statements of operations with respect to equity
investments with readily determinable fair values; 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; dividend and deemed dividend
to non-controlling preferred shareholders; and income tax expense,
income tax benefit, uncertain tax position, and interest recognized
in relation to the Toll Charge from its non-GAAP financial measure
is useful for itself and investors. Further, the impact of
share-based compensation expense and changes in fair value
recognized in the Company's consolidated statements of operations
with respect to equity investments with readily determinable fair
values; 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;
dividend and deemed dividend to non-controlling preferred
shareholders; the one-time income tax expense recognized in the
fourth quarter of 2017 as a result of the Toll Charge imposed by
the TCJA and the subsequent re-evaluation for the fourth quarter of
2018 and adjustment of the tax expense previously recognized for
the Toll Charge; the resulting recognition of a previously
unrecognized tax benefit and recording of an uncertain tax position
related to the balance of the Toll Charge; and interest expense
recognized in connection with the Toll Charge cannot be anticipated
by management and business line leaders and these expenses were not
built into the annual budgets and quarterly forecasts that 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 and changes in fair
value recognized in the Company's consolidated statements of
operations with respect to equity investments with readily
determinable fair values, 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 share-based compensation expense
and changes in fair value recognized in the Company's
consolidated statements of operations with respect to equity
investments with readily determinable fair values, 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, and also
excluded the one-time income tax expense recognized in the fourth
quarter of 2017 as a result of the Toll Charge imposed by the TCJA
and the subsequent re-evaluation for the fourth quarter of 2018 and
adjustment of the tax expense previously recognized for the Toll
Charge, the resulting recognition of a previously unrecognized tax
benefit and recording of an uncertain tax position related to the
balance of the Toll Charge, and interest expense recognized in
connection with the Toll Charge.
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 Limited and diluted net income
attributable to Sohu.com Limited 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, 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; Sohu's reliance on online advertising sales, online
games and mobile services for its revenues; and the impact of the
U.S. TCJA. Further information regarding these and other risks is
included in Sohu's annual report on Form 20-F for the year ended
December 31, 2018, 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,
April 29, 2019 (8:30 p.m. Beijing/Hong
Kong time, April 29, 2019)
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 April 29 through
May 6, 2019. The dial-in details for the telephone replay
are:
|
International:
|
+1-646-254-3697
|
|
Passcode:
|
8449498
|
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 Limited (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; developer and operator of online
games www.changyou.com/en/ and leading online video
website tv.sohu.com.
Sohu's corporate services consist of online brand advertising on
Sohu's 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 services on mobile
platforms, including Sohu News App and the mobile news portal
m.sohu.com. Sohu's online game subsidiary, Changyou.com (NASDAQ:
CYOU) develops and operates a diverse portfolio of PC and mobile
games, such as Tian Long Ba Bu
("TLBB"), one of the most popular PC games in China. Changyou also owns and operates the
17173.com Website, a leading game information portal in
China. Sohu's online search
subsidiary Sogou (NYSE: SOGO) has grown to become the second
largest search engine by mobile queries in China. It also owns and operates Sogou Input
Method, the largest Chinese language input software. Sohu.com,
established by Dr. Charles Zhang,
one of China's internet pioneers,
is in its twenty-third year of operation.
For investor and media inquiries, please contact:
In China:
|
Ms. Pu
Huang
|
|
Sohu.com
Limited
|
|
Tel:
|
+86 (10)
6272-6645
|
|
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
LIMITED
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
Three Months
Ended
|
|
|
|
Mar. 31,
2019
|
|
Dec. 31,
2018
|
|
Mar. 31,
2018
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Online
advertising
|
|
|
|
|
|
|
|
|
Brand
advertising
|
$
|
42,981
|
$
|
57,222
|
$
|
56,254
|
|
|
Search and
search-related advertising
|
|
234,130
|
|
276,666
|
|
220,301
|
|
|
Subtotal
|
|
277,111
|
|
333,888
|
|
276,555
|
|
|
Online
games
|
|
99,054
|
|
94,106
|
|
105,461
|
|
|
Others
|
|
55,215
|
|
54,204
|
|
72,979
|
|
|
Total revenues
|
|
431,380
|
|
482,198
|
|
454,995
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Online
advertising
|
|
|
|
|
|
|
|
|
Brand
advertising (includes stock-based
compensation expense of $38, $-34, and $-657,
respectively)
|
|
34,305
|
|
42,485
|
|
50,611
|
|
|
Search and
search-related (includes stock-based
compensation expense of $27, $$-48, and $219
respectively)
|
|
178,824
|
|
183,678
|
|
144,696
|
|
|
Subtotal
|
|
213,129
|
|
226,163
|
|
195,307
|
|
|
Online games (includes
stock-based compensation
expense of $0, $7, and $-12, respectively)
|
|
14,362
|
|
14,499
|
|
17,119
|
|
|
Others
|
|
32,734
|
|
35,633
|
|
48,407
|
|
|
Total cost of
revenues
|
|
260,225
|
|
276,295
|
|
260,833
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
171,155
|
|
205,903
|
|
194,162
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Product development
(includes stock-based
compensation expense of $1,019, $919, and $715,
respectively)
|
|
100,434
|
|
108,611
|
|
111,543
|
|
|
Sales and marketing
(includes stock-based
compensation expense of $120, $216, and $-89,
respectively)
|
|
85,454
|
|
102,112
|
|
90,273
|
|
|
General and
administrative (includes stock-based
compensation expense of $911, $470, and $-2,520,
respectively)
|
|
23,833
|
|
26,828
|
|
23,836
|
|
|
Goodwill impairment
and impairment of intangibles via
acquisitions of businesses
|
|
7,245
|
|
16,369[5]
|
|
-
|
|
|
Total operating expenses
|
|
216,966
|
|
253,920
|
|
225,652
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(45,811)
|
|
(48,017)
|
|
(31,490)
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
14,215
|
|
13,073
|
|
12,281
|
|
|
Interest
income
|
|
3,795
|
|
6,457
|
|
7,808
|
|
|
Interest
expense
|
|
(5,501)
|
|
(5,279)
|
|
(3,081)
|
|
|
Exchange
difference
|
|
(2,662)
|
|
(378)
|
|
(9,340)
|
|
|
Loss before income
tax expense
|
|
(35,964)
|
|
(34,144)
|
|
(23,822)
|
|
|
Income tax
expense/(benefit)
|
|
11,208
|
|
(69,557)
|
|
63,379
|
|
|
Net
income/(loss)
|
|
(47,172)
|
|
35,413
|
|
(87,201)
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to the noncontrolling
interest shareholders
|
|
9,257
|
|
20,773
|
|
5,617
|
|
|
Net income/(loss)
attributable to Sohu.com Limited
|
|
(56,429)
|
|
14,640
|
|
(92,818)
|
|
|
|
|
|
|
|
|
|
|
Basic net
income/(loss) per ADS attributable to Sohu.com
Limited
|
$
|
(1.44)
|
$
|
0.37
|
$
|
(2.39)
|
|
|
ADS used in computing
basic net loss per ADS attributable
to Sohu.com Limited
|
|
39,236
|
|
39,069
|
|
38,904
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income/(loss) per ADS attributable to Sohu.com
Limited
|
$
|
(1.44)
|
$
|
0.37
|
$
|
(2.39)
|
|
|
ADS used in computing
diluted net loss per ADS
attributable to Sohu.com Limited
|
|
39,236
|
|
39,234
|
|
38,904
|
|
|
[5] The impairment was mainly related
to Changyou's 17173.com website business. The launch of new
initiatives for the 17173.com website fell behind schedule in the
fourth quarter of 2018, and the profit outlook of the business
remained uncertain. In addition, due to more stringent regulations,
there was a significant decline in the number of new game launches
in the market, so the number of games marketed on 17173.com also
fell. As a result, Changyou determined that the future performance
of 17173.com would likely fall short of expectations, and that
impairment charges were required.
|
|
SOHU.COM
LIMITED
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(UNAUDITED, IN
THOUSANDS)
|
|
|
|
As of Mar. 31,
2019
|
|
As of Dec. 31,
2018
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
838,582
|
$
|
819,713
|
|
Restricted
cash
|
|
6,096
|
|
5,974
|
|
Short-term
investments
|
|
1,043,372
|
|
1,041,395
|
|
Accounts receivable, net
|
|
186,112
|
|
242,361
|
|
Prepaid and other current assets
|
|
203,960
|
|
207,117
|
|
Total current assets
|
|
2,278,122
|
|
2,316,560
|
|
Long-term
investments
|
|
110,433
|
|
108,356
|
|
Fixed assets,
net
|
|
511,235
|
|
504,998
|
|
Goodwill
|
|
53,666
|
|
53,263
|
|
Intangible assets,
net
|
|
14,954
|
|
24,118
|
|
Restricted time
deposits
|
|
178,483
|
|
244,179
|
|
Prepaid non-current
assets
|
|
2,850
|
|
3,107
|
|
Other
assets[6]
|
|
70,269
|
|
43,928
|
|
Total assets
|
$
|
3,220,012
|
$
|
3,298,509
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable
|
$
|
337,962
|
$
|
295,954
|
|
Accrued liabilities
|
|
288,273
|
|
301,915
|
|
Receipts in advance and deferred revenue
|
|
120,168
|
|
124,782
|
|
Accrued salary and benefits
|
|
92,488
|
|
112,898
|
|
Taxes payable
|
|
89,119
|
|
93,569
|
|
Short-term bank loans
|
|
132,175
|
|
129,677
|
|
Other short-term liabilities[6]
|
|
135,530
|
|
124,085
|
|
Total current liabilities
|
$
|
1,195,715
|
$
|
1,182,880
|
|
|
|
|
|
|
Long-term accounts
payable
|
|
766
|
|
752
|
|
Long-term Bank
Loans
|
|
223,889
|
|
302,323
|
|
Long-term tax
liabilities
|
|
263,432
|
|
259,603
|
|
Other long-term
liabilities[6]
|
|
12,395
|
|
-
|
|
Total long-term
liabilities
|
$
|
500,482
|
$
|
562,678
|
|
Total liabilities
|
$
|
1,696,197
|
$
|
1,745,558
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
Sohu.com Limited shareholders' equity
|
|
535,285
|
|
588,840
|
|
Noncontrolling Interest
|
|
988,530
|
|
964,111
|
|
Total shareholders' equity
|
$
|
1,523,815
|
$
|
1,552,951
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
|
3,220,012
|
$
|
3,298,509
|
|
[6] We
have adopted ASU No. 2016-02, "Leases," beginning January 1, 2019.
As a result of adoption of the standard, we recognized a
right-of-use asset of approximately $25 million in other assets,
and a lease liability of approximately $10 million and $12 million
in other short-term liabilities and other long-term liabilities,
respectively, on our consolidated balance sheet as of March 31,
2019.
|
|
SOHU.COM
LIMITED
|
|
RECONCILIATIONS OF
NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES
|
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
Three Months Ended
Mar. 31, 2019
|
|
Three Months
Ended Dec. 31, 2018
|
|
Three Months Ended
Mar. 31, 2018
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
(a)
|
|
|
|
|
(34)
|
(a)
|
|
|
|
|
(657)
|
(a)
|
|
|
Brand advertising
gross profit
|
$
|
8,676
|
$
|
38
|
$
|
8,714
|
$
|
14,737
|
$
|
(34)
|
$
|
14,703
|
$
|
5,643
|
$
|
(657)
|
$
|
4,986
|
|
Brand advertising
gross
margin
|
|
20%
|
|
|
|
20%
|
|
26%
|
|
|
|
26%
|
|
10%
|
|
|
|
9%
|
|
|
|
|
27
|
(a)
|
|
|
|
|
(48)
|
(a)
|
|
|
|
|
219
|
(a)
|
|
|
Search and
search-related
advertising gross profit
|
$
|
55,306
|
$
|
27
|
$
|
55,333
|
$
|
92,988
|
$
|
(48)
|
$
|
92,940
|
$
|
75,605
|
$
|
219
|
$
|
75,824
|
|
Search and
search-related
advertising gross margin
|
|
24%
|
|
|
|
24%
|
|
34%
|
|
|
|
34%
|
|
34%
|
|
|
|
34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
|
(a)
|
|
|
|
|
(82)
|
(a)
|
|
|
|
|
(438)
|
(a)
|
|
|
Online advertising
gross profit
|
$
|
63,982
|
$
|
65
|
$
|
64,047
|
$
|
107,725
|
$
|
(82)
|
$
|
107,643
|
$
|
81,248
|
$
|
(438)
|
$
|
80,810
|
|
Online advertising
gross
margin
|
|
23%
|
|
|
|
23%
|
|
32%
|
|
|
|
32%
|
|
29%
|
|
|
|
29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
(a)
|
|
|
|
|
7
|
(a)
|
|
|
|
|
(12)
|
(a)
|
|
|
Online games gross
profit
|
$
|
84,692
|
$
|
-
|
$
|
84,692
|
$
|
79,607
|
$
|
7
|
$
|
79,614
|
$
|
88,342
|
$
|
(12)
|
$
|
88,330
|
|
Online games gross
margin
|
|
86%
|
|
|
|
86%
|
|
85%
|
|
|
|
85%
|
|
84%
|
|
|
|
84%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others gross
profit
|
$
|
22,481
|
$
|
-
|
(a) $
|
22,481
|
$
|
18,571
|
$
|
-
|
(a) $
|
18,571
|
$
|
24,572
|
$
|
-
|
(a) $
|
24,572
|
|
Others gross
margin
|
|
41%
|
|
|
|
41%
|
|
34%
|
|
|
|
34%
|
|
34%
|
|
|
|
34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
|
(a)
|
|
|
|
|
(75)
|
(a)
|
|
|
|
|
(450)
|
(a)
|
|
|
Gross
profit
|
$
|
171,155
|
$
|
65
|
$
|
171,220
|
$
|
205,903
|
$
|
(75)
|
$
|
205,828
|
$
|
194,162
|
$
|
(450)
|
$
|
193,712
|
|
Gross
margin
|
|
40%
|
|
|
|
40%
|
|
43%
|
|
|
|
43%
|
|
43%
|
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
216,966
|
$
|
(2,050)
|
(a) $
|
214,916
|
$
|
253,920
|
$
|
(1,605)
|
(a) $
|
252,315
|
$
|
225,652
|
$
|
1,894
|
(a) $
|
227,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,115
|
(a)
|
|
|
|
|
1,530
|
(a)
|
|
|
|
|
(2,344)
|
(a)
|
|
|
Operating
loss
|
$
|
(45,811)
|
$
|
2,115
|
$
|
(43,696)
|
$
|
(48,017)
|
$
|
1,530
|
$
|
(46,487)
|
$
|
(31,490)
|
$
|
(2,344)
|
$
|
(33,834)
|
|
Operating
margin
|
|
-11%
|
|
|
|
-10%
|
|
-10%
|
|
|
|
-10%
|
|
-7%
|
|
|
|
-7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
benefit/(expense)
|
$
|
(11,208)
|
$
|
1,778
|
(c,d)$
|
(9,430)
|
$
|
69,557
|
$
|
(74,160)
|
(c,d)$
|
(4,603)
|
$
|
(63,379)
|
$
|
-
|
$
|
(63,379)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,115
|
(a)
|
|
|
|
|
1,530
|
(a)
|
|
|
|
|
(2,344)
|
(a)
|
|
|
|
|
|
(744)
|
(c)
|
|
|
|
|
267
|
(c)
|
|
|
|
|
-
|
|
|
|
|
|
|
1,531
|
(d)
|
|
|
|
|
(74,071)
|
(d)
|
|
|
|
|
-
|
|
|
|
Net income/(loss)
before non-
controlling interest
|
$
|
(47,172)
|
|
2,902
|
|
(44,270)
|
$
|
35,413
|
|
(72,274)
|
|
(36,861)
|
$
|
(87,201)
|
$
|
(2,344)
|
$
|
(89,545)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,115
|
(a)
|
|
|
|
|
1,530
|
(a)
|
|
|
|
|
(2,344)
|
(a)
|
|
|
|
|
|
(798)
|
(b)
|
|
|
|
|
(976)
|
(b)
|
|
|
|
|
(2,102)
|
(b)
|
|
|
|
|
|
(744)
|
(c)
|
|
|
|
|
267
|
(c)
|
|
|
|
|
-
|
|
|
|
|
|
|
1,531
|
(d)
|
|
|
|
|
(74,071)
|
(d)
|
|
|
|
|
-
|
(d)
|
|
|
Net income/(loss)
attributable
to Sohu.com Limited for
diluted net loss per ADS
|
$
|
(56,650)
|
|
2,104
|
|
(54,546)
|
$
|
14,511
|
|
(73,250)
|
|
(58,739)
|
$
|
(92,925)
|
$
|
(4,446)
|
|
(97,371)
|
|
|
Diluted net income/(loss) per
ADS attributable to Sohu.com
Limited
|
$
|
(1.44)
|
|
|
|
(1.39)
|
$
|
0.37
|
|
|
|
(1.50)
|
$
|
(2.39)
|
|
|
|
(2.50)
|
|
Shares used in
computing
diluted net loss per ADS
attributable to Sohu.com
Limited
|
|
39,236
|
|
|
|
39,236
|
|
39,234
|
|
|
|
39,069
|
|
38,904
|
|
|
|
38,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
(a) To eliminate the impact of share-based
awards as measured using the fair value method. This adjustment
does not have an impact on income tax expense.
(b) To adjust Sohu's economic interests in Changyou
and Sogou attributable to the above non-GAAP adjustments. This
adjustment does not have an impact on income tax expense.
(c) To adjust for a change in the fair value
of the Company's investment in Hylink and the income tax
effect.
(d) To adjust for the effect of the U.S. TCJA.
View original content to download
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SOURCE Sohu.com Ltd.