SOHU.com's Q3 2024 Results: Navigating Market Challenges

SOHU.com Limited (NASDAQ: SOHU), a leading Chinese online media, video, and game business group, reported its unaudited financial results for the third quarter ended September 30, 2024. The company's results reveal a mixed picture, with both opportunities and challenges in the face of a dynamic market landscape.

**Revenue Performance and Market Trends**

SOHU.com's total revenues reached US$152 million in Q3 2024, marking a 5% year-over-year increase but a 12% decline from the previous quarter. Brand advertising revenues fell to US$19 million, down 15% year-over-year and 6% sequentially. In contrast, online game revenues stood at US$128 million, up 9% year-over-year but down 13% from Q2 2024. These fluctuations highlight the volatility in SOHU.com's revenue streams, driven by market trends and competitive dynamics.



**Gross Margins and Operating Expenses**

Both GAAP and non-GAAP gross margins for SOHU.com were 74% in Q3 2024, down from 76% in Q3 2023 but up from 67% in Q2 2024. Gross margins for the brand advertising business were 9%, down from 15% in Q3 2023 and 20% in Q2 2024. Online games' gross margins improved to 84% from 76% in Q2 2024, mainly due to a lower percentage revenue contribution from mobile games. Operating expenses decreased to US$125 million, down 5% year-over-year and 22% quarter-over-quarter, primarily due to reduced marketing for online games.



**Strategic Initiatives and Future Outlook**

SOHU.com's strategic focus on enhancing user experiences and creating unique marketing campaigns has bolstered brand influence and monetization opportunities. Despite market challenges, the company's online games business delivered better-than-expected performance. To mitigate potential revenue challenges in Q4 2024, SOHU.com is focusing on strategic initiatives such as integrating resources across Sohu Media and Sohu Video, reducing marketing expenses for online games, and maintaining a strong cash reserve position.

In conclusion, SOHU.com's Q3 2024 results reflect a complex market environment, with both opportunities and challenges in the company's revenue streams. Despite fluctuations in gross margins and operating expenses, SOHU.com's strategic initiatives and strong cash position enable it to navigate market challenges and maintain its competitive edge. As the company continues to adapt to market dynamics and invest in growth opportunities, investors should monitor its progress closely.