Sohu.com Limited (SOHU) Q3 Earnings call transcript Nov 12, 2024

Sohu, a leading online media and gaming company, reported strong financial results for the third quarter of 2024, with brand advertising revenue meeting the high end of guidance and online game revenues surpassing expectations. Chairman and CEO, Dr. Charles Zhang, led the earnings call, highlighting the company's strategic initiatives, financial performance, and outlook for the future.

Financial Performance and Business Highlights

Total revenues for the third quarter reached $152 million, marking a 5% year-over-year increase and a 12% quarter-over-quarter decline. The company's brand advertising revenue saw a 15% year-over-year decrease, while online game revenues grew by 9% year-over-year. The GAAP net loss for the quarter was $16 million, an improvement from the previous quarter's net loss of $38 million.

Sohu Media and Sohu Video were the main drivers of the company's growth, with a focus on product refinements, user experience improvements, and the hosting of influential events and marketing campaigns. The successful execution of events like the Sohu Video influencer convention and the 2024 Dream Concert in South Korea has strengthened the platform's position as a leading destination for K-pop fans and enthusiasts in China.

Online Gaming Performance and Strategy

The online game business also demonstrated robust performance, with Changyou's online game revenues exceeding expectations. This success can be attributed to high-quality content updates, skill set enhancements, and user-centric strategies. Sohu also highlighted its plans to expand its game pipeline, maintaining a focus on MMORPGs while exploring new possibilities in card-based RPGs, sports games, and casual games.

Share Purchase Program and Outlook for the Future

Sohu also announced an extension of its share purchase program, with the Board of Directors authorizing an additional year to November 10, 2026. As of November 7, 2024, Sohu had repurchased 3.4 million ADS for an aggregate cost of approximately $42 million, with a total buyback program of $150 million.

Looking ahead, Sohu remains committed to a user-centric philosophy, optimizing its R&D process, and expanding its international presence. Despite the current macroeconomic challenges, the company is confident in its ability to bring high-quality games to the market and maintain its core competitiveness.

Analyst Questions and Management Responses

During the Q&A session, analysts probed into the advertising outlook, game performance, and the buyback program. Management's responses provided insight into the company's strategic initiatives and future prospects. The company's cautious guidance for the fourth quarter underscores its commitment to user stability and maintaining the growth of older games.

In conclusion, Sohu's third quarter earnings call underscores the company's strategic expansion and financial performance. With a focus on user experience, innovative content, and strategic events, Sohu is well-positioned to capitalize on market opportunities and navigate the challenges ahead. As the company continues to invest in its pipeline and execute its strategic initiatives, investors and stakeholders will be closely watching its progress in the coming quarters.