Sohu.com Limited's Q1 2025: Navigating Contradictions in Advertising Sentiment, AI Impact, and Revenue Growth

Advertising sentiment trends, AI integration and impact on gaming, advertising revenue growth expectations, AI integration in gaming operations, advertising market sentiment are the key contradictions discussed in Sohu.com Limited's latest 2025Q1 earnings call.



Revenue Trends and Online Game Performance:
- Sohu achieved total revenues of $136 million in Q1 2025, a slight 3% year-over-year decline but a 1% quarter-over-quarter increase.
- The decline was mainly attributed to a 15% year-over-year decrease in marketing services revenues, while online game revenues remained flat year-over-year but increased by 7% quarter-over-quarter.
- The online game business performed well due to high-quality content updates and improvements.

Non-GAAP Financial Performance and Tax Reversal:
- Excluding the tax reversal, non-GAAP net loss for Sohu.com Limited was $16 million in Q1 2025, improving from a net loss of $22 million in Q1 2024.
- The company reversed a tax expense of approximately $199 million, attributed to the resolution of an uncertain tax position.

Advertising Sentiment and AI Integration:
- In Q1 2025, advertising sentiment varied across sectors, with auto advertising up 26%, IT services stable, and FMCG stable, while luxury goods and alcohol experienced a slight decrease.
- Sohu's use of AI is primarily in art design and game production, rather than in advertising operations, which are more people-focused.