BEIJING, April 29, 2019 /PRNewswire/ -- Sogou Inc. (NYSE:
SOGO) ("Sogou" or "the Company"), an innovator in search and a
leader in China's internet
industry, today announced its unaudited financial results for the
first quarter ended March 31,
2019.
First Quarter 2019 Highlights
- Total revenues[1] were $252.7
million, a 2% increase year-over-year.
- Net loss attributable to Sogou Inc. was $3.9 million. Non-GAAP[2] net loss
attributable to Sogou Inc. was $2.7
million.
- Sogou Mobile Keyboard had 443 million DAUs (daily average
users), up 23% year-over-year. As China's largest voice app, it processed up to
600 million daily voice requests.
"Our core search business recorded steady growth in the first
quarter of 2019, with revenue growth outpacing the industry
average," said Xiaochuan Wang, CEO
of Sogou. "During the quarter, we delivered a more efficient search
experience to users by leveraging high-quality content and
intelligent Q&A capabilities. Building on increasing synergies
with search, we also improved the mobile keyboard's content and
service distribution capabilities."
Mr. Wang added, "Advancing language-centric AI enables us to
build on our leadership position in voice, computer vision, machine
translation and Q&A technologies. During the quarter, we
launched a new generation of Vocational Avatars and enhanced our AI
News Anchor. We also accelerated the product development process
for our AI-enabled hardware business and launched a new smart
recorder. We look forward to driving AI innovation through the
course of 2019."
Joe Zhou, CFO of Sogou, said,
"Better-than-expected performance of our core search business
enabled us to exceed the top end of our revenue guidance in the
first quarter of 2019. During the quarter, we continued to
accelerate the growth of our organic traffic and implemented
initiatives that improved the monetization of our search platform.
We believe that these trends, combined with a greater focus on
execution and efficiency, will position us for solid results in the
quarters ahead."
First Quarter 2019 Financial Results
Total revenues were $252.7
million, a 2% increase year-over-year.
- Search and search-related revenues were
$234.2 million, a 6% increase
year-over-year. The increase was primarily due to growth in
auction-based pay-for-click services. Auction-based
pay-for-click services accounted for 87.2% of search and
search-related revenues, compared to 82.6% in the corresponding
period in 2018.
- Other revenues were $18.5
million, a 34% decrease year-over-year. The decrease was
primarily due to lower sales of smart hardware products as a result
of the Company's continued efforts to upgrade its smart hardware
strategy.
Cost of revenues was $184.7
million, a 20% increase year-over-year. Traffic
acquisition cost, a primary driver of cost of revenues, was
$143.1 million, a 28% increase
year-over-year, representing 56.6% of total revenues, compared to
45.1% in the corresponding period in 2018. The increase was driven
by price inflation.
Gross profit and non-GAAP gross
profit were $68.1 million, a
28% decrease year-over-year.
Total operating expenses were $80.0 million, largely flat year-over-year.
- Research and development expenses were
$41.0 million, a 12% decrease
year-over-year, representing 16.2% of total revenues, compared to
18.8% in the corresponding period in 2018. The decrease was
primarily due to a decrease in personnel-related expenses.
- Sales and marketing expenses were
$29.2 million, an 8% increase
year-over-year, representing 11.6% of total revenues, compared to
10.9% in the corresponding period in 2018. The increase was
primarily attributable to an increase in personnel-related
expenses.
- General and administrative expenses were
$9.8 million, a 53% increase
year-over-year, representing 3.9% of total revenues, compared to
2.6% in the corresponding period in 2018. The increase was
primarily due to an increase in expenses related to the Company's
non-core businesses.
Operating loss was $12.0
million, compared to operating income of $14.3 million in the corresponding period in
2018. Non-GAAP operating loss was $10.8 million, compared to non-GAAP operating
income of $18.5 million in the
corresponding period in 2018.
Other income, net was $8.7
million, compared to $4.4
million in the corresponding period in 2018. The increase
was primarily due to an increase in gain from short-term
investments.
Income tax benefit was $0.2 million, compared to income tax expense of
$2.1 million in the corresponding
period of 2018.
Net loss attributable to Sogou Inc. was $3.9 million, compared to net income of
$15.3 million in the corresponding
period in 2018. Non-GAAP net loss attributable to Sogou Inc.
was $2.7 million, compared to net
income of $19.6 million in the
corresponding period in 2018.
Basic and diluted loss per ADS were $0.01. Non-GAAP basic and diluted loss per
ADS were $0.01.
As of March 31, 2019, the Company
had cash and cash equivalents and short-term investments of
$1.1 billion, compared with
$1.0 billion as of December 31, 2018. Net operating cash
inflow for the first quarter of 2019 was $91.7million. Capital expenditures for the
first quarter of 2019 were $9.1million.
[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 RMB
6.36=$1.00, total revenues in the first quarter of 2019 would
have been 267.8 million, or $15.1 million more than GAAP total
revenues, and up 8% year-over-year.
|
[2]
Non-GAAP results exclude share-based compensation expense.
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."
|
Business Outlook
For the second quarter of 2019, Sogou expects total revenues to
be in the range $303 million to
$313 million, representing a 1% to 4%
increase year-over-year, or a 7 % to 11% increase
year-over-year in RMB terms.
For the second quarter 2019 guidance, the Company has adopted a
presumed exchange rate of RMB6.80 =
$1.00, as compared with the actual
exchange rate of approximately RMB6.38 = $1.00 for
the second quarter of 2018, and RMB6.74 = $1.00 for
the first quarter of 2019.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial information
prepared in accordance with generally accepted accounting
principles in the United States of
America ("GAAP"), Sogou's management uses non-GAAP measures
of gross profit, gross margin, and net income that are adjusted
from results based on GAAP to exclude the impact of 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.
Sogou's management believes that excluding share-based
compensation expense is useful for management's internal operating
purposes and for investors. The amount of share-based compensation
expense cannot be anticipated by management, and this is not built
into the Company's annual budgets and quarterly forecasts, which
generally will be the basis for information Sogou provides to
analysts and investors as guidance for future operating
performance. As share-based compensation expense does not involve
subsequent cash outflow, Sogou does not factor in this expense when
evaluating and approving expenditures or when determining the
allocation of its resources to its business operations. As a
result, in general, the Company's monthly financial results for
internal reporting and any performance measures for commissions and
bonuses are based on these non-GAAP financial measures that exclude
share-based compensation expense.
The non-GAAP financial measures are provided to enhance
investors' overall understanding of Sogou's current financial
performance and prospects for the future. A limitation of using
non-GAAP gross profit, gross margin, and net income measures that
exclude share-based compensation expense is that share-based
compensation expense has been and is likely to continue to be a
significant recurring expense in the Company's business. In order
to mitigate these limitations, the Company has provided specific
information regarding the GAAP amounts excluded from each non-GAAP
measure. The accompanying tables include details on the
reconciliation between GAAP financial measures that are most
directly comparable to the non-GAAP financial measures the Company
has presented.
Safe Harbor Statement
This announcement contains forward-looking statements. It is
currently expected that the Business Outlook will not be updated
until release of Sogou's next quarterly earnings announcement.
However, Sogou reserves the right to update its Business Outlook at
any time for any reason. Statements that are not historical facts,
including statements about Sogou's and Sogou management's beliefs
and expectations, are forward-looking statements. These statements
are based on current plans, estimates, and projections, which
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,
intense competition in the market for search and search-related
services; our need to continually innovate and adapt in order to
grow our business; our reliance on Tencent platforms for a significant portion of
our user traffic; and uncertainty regarding the extent and reach of
PRC governmental regulation of sponsored search. Further
information regarding these and other risks is included in Sogou's
Annual Report on Form 20-F for the year ended December 31, 2018 filed with the Securities and
Exchange Commission on March 28,
2019, and other documents Sogou files with or submits to the
Securities and Exchange Commission.
Conference Call and Webcast
Sogou's management team will host a conference call at
7:30 am U.S. Eastern Time,
(7:30 pm Beijing/Hong
Kong time) on April 29, 2019,
following this announcement of quarterly results.
The dial-in details for the live conference call are:
U.S. Toll
Free:
|
+1-888-317-6003
|
Mainland China Toll
Free:
|
4001-206115
|
Hong Kong Toll
Free:
|
800-963976
|
Hong Kong Local
Toll:
|
+852-580-81995
|
International:
|
+1-412-317-6061
|
Passcode:
|
9791296
|
Please dial in 10 minutes before the call is scheduled to begin.
When prompted, ask to be connected to the Sogou Inc. call
and provide the passcode.
A replay of the conference call may be accessed by phone at the
following number until May 6,
2019:
International:
|
+1-412-317-0088
|
Passcode:
|
10130428
|
A live webcast and archive of the conference call will be
available on the Investor Relations section of Sogou's website at
http://ir.sogou.com.
About Sogou
Sogou Inc. (NYSE: SOGO) is an innovator in search and a leader
in China's internet industry. With
a mission to make it easy to communicate and get information, Sogou
has grown to become the second largest search engine by mobile
queries and the fourth largest internet company by MAU in
China. Sogou has a wide range of
innovative products and services including the Sogou Input Method,
which is the largest Chinese language input software for both
mobile and PC. Sogou is also at the forefront of AI development and
has made significant breakthroughs in voice and image technologies,
machine translation, and Q&A, which have been successfully
integrated into our products and services.
For investor enquiries, please contact:
Jessie Zheng
Sogou
Investor Relations
Tel: +86 10 5689 8068
Email: ir@sogou-inc.com
For media enquiries, please contact:
Rachael
Layfield
Brunswick Group
Tel: +86 10 5960-8600
Email: sogou@brunswickgroup.com
SOGOU
INC.
|
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:
|
|
|
|
|
|
|
Search and
search‑related advertising
revenues
|
$
|
234,177
|
$
|
276,824
|
$
|
220,374
|
Other
revenues
|
|
18,545
|
|
20,967
|
|
28,010
|
Total
revenues
|
|
252,722
|
|
297,791
|
|
248,384
|
Cost of revenues
(1)
|
|
184,654
|
|
186,076
|
|
154,023
|
Gross
profit
|
|
68,068
|
|
111,715
|
|
94,361
|
Operating
expenses:
|
|
|
|
|
|
|
Research and
development (1)
|
|
41,037
|
|
48,284
|
|
46,634
|
Sales and marketing
(1)
|
|
29,196
|
|
41,677
|
|
27,060
|
General and
administrative (1)
|
|
9,816
|
|
9,376
|
|
6,400
|
Total operating
expenses
|
|
80,049
|
|
99,337
|
|
80,094
|
Operating
(loss)/income
|
|
(11,981)
|
|
12,378
|
|
14,267
|
Interest
income
|
|
1,371
|
|
1,075
|
|
3,467
|
Foreign currency
exchange loss(2)
|
|
(2,196)
|
|
(266)
|
|
(4,666)
|
Other income,
net
|
|
8,735
|
|
9,627
|
|
4,386
|
(Loss)/income
before income tax
expenses
|
|
(4,071)
|
|
22,814
|
|
17,454
|
Income tax
(benefit)/expenses
|
|
(213)
|
|
(3,579)
|
|
2,144
|
Net
(loss)/income
|
|
(3,858)
|
|
26,393
|
|
15,310
|
Net (loss)/income
attributable to Sogou
Inc.
|
$
|
(3,858)
|
$
|
26,393
|
$
|
15,310
|
Net (loss)/income
attributable to ordinary
shareholders
|
$
|
(3,858)
|
$
|
26,393
|
$
|
15,310
|
Weighted average
number of ordinary shares
outstanding—basic
|
|
391,379
|
|
390,065
|
|
386,840
|
Weighted average
number of ordinary shares
outstanding—diluted
|
|
391,379
|
|
395,074
|
|
395,698
|
Net (loss)/income per
ordinary share—basic
|
$
|
(0.01)
|
$
|
0.07
|
$
|
0.04
|
Net (loss)/income per
ordinary share—diluted
|
$
|
(0.01)
|
$
|
0.07
|
$
|
0.04
|
Net (loss)/income per
ADS—basic
|
$
|
(0.01)
|
$
|
0.07
|
$
|
0.04
|
Net (loss)/income per
ADS—diluted
|
$
|
(0.01)
|
$
|
0.07
|
$
|
0.04
|
|
|
|
|
|
|
|
(1)
Share‑based compensation expense
included in:
|
|
|
|
|
|
|
Cost of
revenues
|
$
|
27
|
$
|
(47)
|
$
|
219
|
Research and
development
|
|
858
|
|
482
|
|
3,186
|
Sales and
marketing
|
|
168
|
|
174
|
|
353
|
General and
administrative
|
|
141
|
|
140
|
|
521
|
|
$
|
1,194
|
$
|
749
|
$
|
4,279
|
|
|
|
|
|
|
|
(2)
Foreign currency exchange loss, mainly arising from our
cross-border RMB-denominated intragroup loans,
is a result of appreciation of the RMB.
|
SOGOU
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED, IN
THOUSANDS)
|
|
|
|
As of Mar.
31, 2019
|
|
As of Dec.
31, 2018
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
263,017
|
$
|
185,175
|
Short-term
investments
|
|
849,447
|
|
851,327
|
Account and financing
receivables, net
|
|
100,089
|
|
142,886
|
Prepaid and other
current assets
|
|
33,500
|
|
40,122
|
Due from related
parties
|
|
2,652
|
|
2,608
|
Total current
assets
|
|
1,248,705
|
|
1,222,118
|
Long‑term
investments, net
|
|
63,809
|
|
63,305
|
Fixed assets,
net
|
|
149,325
|
|
147,495
|
Goodwill
|
|
5,733
|
|
5,625
|
Intangible assets,
net
|
|
1,421
|
|
1,349
|
Deferred tax assets,
net
|
|
14,058
|
|
13,793
|
Other assets
(1)
|
|
32,094
|
|
9,159
|
Total
assets
|
$
|
1,515,145
|
$
|
1,462,844
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
175,862
|
$
|
108,679
|
Accrued and other
short term liabilities (1)
|
|
151,458
|
|
151,399
|
Receipts in
advance
|
|
66,349
|
|
65,324
|
Accrued salary and
benefits
|
|
21,424
|
|
32,079
|
Taxes
payable
|
|
55,087
|
|
60,433
|
Due to related
parties (1)
|
|
25,299
|
|
38,425
|
Total current
liabilities
|
|
495,479
|
|
456,339
|
Long-term liabilities
(1)
|
|
9,174
|
|
-
|
Total
liabilities
|
$
|
504,653
|
$
|
456,339
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Sogou Inc.
shareholders' equity
|
|
1,010,492
|
|
1,006,505
|
Total
shareholders' equity
|
|
1,010,492
|
|
1,006,505
|
Total liabilities
and shareholders' equity
|
$
|
1,515,145
|
$
|
1,462,844
|
|
|
|
|
|
(1) We have adopted
ASU No. 2016-02, ''Leases" beginning January 1, 2019. We
implemented
the new accounting policies for our leased office space with terms
of more than 12 months. As of
March 31, 2019, we recognized a total of $23.3 million for
right-of-use asset, a total of $11.8
million for current lease liabilities and a total of $9.2 million
for long-term lease liabilities on our
consolidated balance sheets.
|
SOGOU
INC.
|
RECONCILIATIONS OF
NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
Mar. 31, 2019
|
Three Months Ended
Dec. 31, 2018
|
Three Months Ended
Mar. 31, 2018
|
|
GAAP
|
Non-GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
Non-GAAP
|
GAAP
|
Non-GAAP
|
Non-GAAP
|
Adjustments
(1)
|
Adjustments
(1)
|
Adjustments
(1)
|
Gross
profit
|
$
|
68,068
|
$
|
27
|
$
|
68,095
|
$
|
111,715
|
$
|
(47)
|
$
|
111,668
|
$
|
94,361
|
$
|
219
|
$
|
94,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
27%
|
|
|
|
27%
|
|
38%
|
|
|
|
37%
|
|
38%
|
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
80,049
|
$
|
(1,167)
|
$
|
78,882
|
$
|
99,337
|
$
|
(796)
|
$
|
98,541
|
$
|
80,094
|
$
|
(4,060)
|
$
|
76,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(loss)/income
|
$
|
(11,981)
|
$
|
1,194
|
$
|
(10,787)
|
$
|
12,378
|
$
|
749
|
$
|
13,127
|
$
|
14,267
|
$
|
4,279
|
$
|
18,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
-5%
|
|
|
|
-4%
|
|
4%
|
|
|
|
4%
|
|
6%
|
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/expenses
|
$
|
(213)
|
|
|
$
|
(213)
|
$
|
(3,579)
|
|
|
$
|
(3,579)
|
$
|
2,144
|
|
|
$
|
2,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)/income
|
$
|
(3,858)
|
$
|
1,194
|
$
|
(2,664)
|
$
|
26,393
|
$
|
749
|
$
|
27,142
|
$
|
15,310
|
$
|
4,279
|
$
|
19,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
attributable to
Sogou Inc.
|
$
|
(3,858)
|
$
|
1,194
|
$
|
(2,664)
|
$
|
26,393
|
$
|
749
|
$
|
27,142
|
$
|
15,310
|
$
|
4,279
|
$
|
19,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net margin
attributable to Sogou Inc.
|
|
-2%
|
|
|
|
-1%
|
|
9%
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9%
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6%
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8%
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(1) To
exclude share-based compensation expense. This non-GAAP adjustment
does not have an impact on income tax expense.
|
View original
content:http://www.prnewswire.com/news-releases/sogou-announces-first-quarter-2019-results-300839562.html
SOURCE Sogou Inc.