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Sohu.com Reports Fourth Quarter and Fiscal Year 2018 Unaudited Financial Results
Fourth Quarter Highlights
- Total revenues[1] were
US$482 million [2], down 5% year-over-year and up 5% quarter-over-quarter. - Brand advertising revenues were
US$57 million , down 20% year-over-year and flat quarter-over-quarter. - Search and search related advertising revenues[3] were
US$277 million , up 12% year-over-year and 8% quarter-over-quarter. - Online game revenues were
US$94 million , down 14% year-over-year and 2% quarter-over-quarter. - Operating loss for Sohu Video was
US$30 million , compared with a loss ofUS$69 million in the fourth quarter 2017. - GAAP net income attributable to Sohu.com Limited was
US$15 million , compared with a net loss ofUS$295 million in the fourth quarter of 2017. - Non-GAAP net loss attributable to Sohu.com Limited was
US$59 million , compared with a net loss ofUS$78 million in the fourth quarter of 2017. - In the fourth quarter of 2018, Changyou recognized a
US$16 million charge for goodwill impairment. Excluding the effect of this goodwill impairment charge, non-GAAP net loss attributable to Sohu.com Limited would have beenUS$48 million .
[1] The Company has adopted ASU No. 2014-09, ''Revenue from Contracts with Customers" beginning January 1, 2018. The only significant impact of the standard is that revenues and expenses related to advertising barter transactions will be recognized beginning January 1, 2018. The impact for the fourth quarter of 2018 was approximately US$6 million for both revenues and cost of revenues and expenses, most of which were generated from SOGOU. |
[2] On a constant currency (non-GAAP) basis, if the exchange rate in the fourth quarter of 2018 had been the same as it was in the fourth quarter of 2017, or RMB6.61=US$1.00, US$ total revenues in the fourth quarter of 2018 would have been US$504 million, or US$22 million more than GAAP total revenues, and down 1% year-over-year. |
[3] Search and Search related advertising revenues exclude intra-Group transactions. |
Fiscal Year 2018 Highlights
- Total revenues were
US$1.88 billion , up 1% compared with 2017. - Brand advertising revenues were
US$232 million , down 26% compared with 2017. - Search and search related advertising revenues were
US$1.02 billion , up 28% compared with 2017. - Online game revenues were
US$390 million , down 13% compared with 2017. - Operating loss for Sohu Video was
US$140 million , compared with a loss ofUS$302 million in 2017. - GAAP net loss attributable to Sohu.com Limited was
US$161 million , compared with a net loss ofUS$556 million in 2017. Non-GAAP net loss attributable to Sohu.com Limited wasUS$237 million , compared with a net loss ofUS$310 million in 2017.
Dr.
Fourth Quarter Financial Results
Revenues
Total revenues for the fourth quarter of 2018 were
Total online advertising revenues, which include revenues from the brand advertising and search and search-related advertising businesses, for the fourth quarter of 2018 were
Brand advertising revenues for the fourth quarter of 2018 totaled
Search and search-related advertising revenues for the fourth quarter of 2018 were
Online game revenues for the fourth quarter of 2018 were
Gross Margin
Both GAAP and non-GAAP[4] gross margin was 43% for the fourth quarter of 2018, compared with 46% in the fourth quarter of 2017 and 43% in the third quarter of 2018.
Both GAAP and non-GAAP gross margin for the online advertising business for the fourth quarter of 2018 was 32%, compared with 37% in the fourth quarter of 2017 and 32% in the third quarter of 2018.
GAAP gross margin for the brand advertising business in the fourth quarter of 2018 was 26%, compared with negative 16% in the fourth quarter of 2017 and 23% in the third quarter of 2018. Non-GAAP gross margin for the brand advertising business was 26%, compared with negative 17% in the fourth quarter of 2017 and 23% in the third quarter of 2018. The year-over-year margin improvement was mainly due to decreased video content cost and impairment charges for video content cost recognized in the fourth quarter of 2017.
Both GAAP and non-GAAP gross margin for the search and search-related advertising business in the fourth quarter of 2018 was 34%, compared with 52% in the fourth quarter of 2017 and 34% in the third quarter of 2018. The year-over-year decrease primarily resulted from increases in traffic acquisition costs outpacing revenue growth.
Both GAAP and non-GAAP gross margin for online games in the fourth quarter of 2018 was 85%, compared with 84% in the fourth quarter of 2017 and 84% in the third quarter of 2018.
[4] 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 fourth quarter of 2018, GAAP operating expenses totaled
Operating Loss
GAAP operating loss for the fourth quarter of 2018 was
Non-GAAP operating loss for the fourth quarter of 2018 was US$46 million, compared with an operating loss of US$22 million in the fourth quarter of 2017 and an operating loss of
Other Income
Other income for the fourth quarter of 2018 was
Income Tax Expense
GAAP income tax benefit was
The change from GAAP income tax expense to income tax benefit for the fourth quarter of 2018 from the fourth quarter of 2017 and the increase in income tax benefit from the third quarter of 2018 mainly resulted from 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[5].
[5] The revised treatment of the Toll Charge is based on management's estimate of the tax benefit and related uncertain tax position as of December 31, 2018, which is management's estimate pursuant to SEC Staff Accounting Bulletin No. 118, and the uncertain tax position related to the Toll Charge may be subject to further adjustment in subsequent periods based on future circumstances, such as final IRS Toll Charge regulations published in January 2019, and on management's judgment and estimates. |
Net Income/(Loss)
GAAP net income attributable to Sohu.com Limited for the fourth quarter of 2018 was US$15 million, or US$0.37 income per fully-diluted ADS, compared with a net loss of
Liquidity
As of
Fiscal Year 2018 Financial Results
Revenues
Total revenues for 2018 were
Total online advertising revenues, which include revenues from the brand advertising and search and search-related advertising businesses, for 2018 were
Brand advertising revenues for 2018 were
Search and search-related advertising revenues for 2018 were
Online game revenues for 2018 were
Gross Margin
Both GAAP and non-GAAP gross margin was 43% for 2018, compared with 44% in 2017.
Both GAAP and non-GAAP gross margin for the online advertising business for 2018 was 32%, compared with 30% in 2017.
Both GAAP and non-GAAP gross margin for the brand advertising business for 2018 was 20%, compared with negative 16% in 2017. The increase was mainly attributable to a decrease in video content cost and impairment charges recognized in 2017.
GAAP gross margin for the search and search-related advertising business for 2018 was 35%, compared with 48% in 2017. Non-GAAP gross margin for the search and search-related advertising business for 2018 was 35%, compared with 49% in 2017. The year-over-year decrease primarily resulted from increases in traffic acquisition costs outpacing revenue growth.
Both GAAP and non-GAAP gross margin for online games for 2018 was 84%, compared with 86% in 2017.
Operating Expenses
For 2018, GAAP operating expenses totaled US$972 million, down 6% compared with 2017. Non-GAAP operating expenses were US$970 million, down 2% compared with 2017. The change was primarily attributable to impairment charges of approximately
Operating Loss
GAAP operating loss for 2018 was
Non-GAAP operating loss for 2018 was US$158 million, compared with an operating loss of US$164 million in 2017.
Income Tax Expense
GAAP income tax benefit for 2018 was
Net Loss
GAAP net loss attributable to Sohu.com Limited for 2018 was US$161 million, or
Business Outlook
For the first quarter of 2019, Sohu estimates:
- Total revenues to be between
US$390 million and US$415 million . - Brand advertising revenues to be between US$45 million and US$50 million; this implies an annual decrease of 11% to 20% and a sequential decrease of 13% to 21%.
Sogou revenues to be betweenUS$231 million and US$241 million ; this implies an annual decrease of 3% to 7% and a sequential decrease of 19% to 22%.- Online game revenues to be between
US$80 million and US$90 million; this implies an annual decrease of 15% to 24% and a sequential decrease of 4% to 15%. - Non-GAAP net loss attributable to Sohu.com Limited. to be between US$50 million and US$60 million, and non-GAAP loss per fully-diluted ADS to be between US$1.30 and
US$1.55 . GAAP net loss attributable to Sohu.com Limited to be between US$55 million andUS$65 million , and GAAP loss per fully-diluted ADS to be between US$1.40 andUS$1.65 .
For the first quarter 2019 guidance, the Company has adopted a presumed exchange rate of
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in
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
Conference Call and Webcast
Sohu's management team will host a conference call at
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
International: |
+1-646-254-3697 |
Passcode: |
9187839 |
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 Limited (NASDAQ: SOHU) is
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,
For investor and media inquiries, please contact:
In
Mr. Eric Yuan |
|
Sohu.com Limited |
|
Tel: |
+86 (10) 6272-6593 |
E-mail: |
In
Ms. Linda Bergkamp |
|
Christensen |
|
Tel: |
+1 (480) 614-3004 |
E-mail: |
SOHU.COM LIMITED |
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
|||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||||||
Revenues: |
|||||||||||
Online advertising |
|||||||||||
Brand advertising |
$ |
57,222 |
$ |
56,958 |
$ |
71,751 |
$ |
231,945 |
$ |
314,066 |
|
Search and search-related advertising |
276,666 |
255,130 |
247,054 |
1,022,456 |
801,199 |
||||||
Subtotal |
333,888 |
312,088 |
318,805 |
1,254,401 |
1,115,265 |
||||||
Online games |
94,106 |
95,971 |
109,383 |
389,788 |
449,533 |
||||||
Others |
54,204 |
51,763 |
81,442 |
238,840 |
296,164 |
||||||
Total revenues |
482,198 |
459,822 |
509,630 |
1,883,029 |
1,860,962 |
||||||
Cost of revenues: |
|||||||||||
Online advertising |
|||||||||||
Brand advertising (includes stock-based |
42,485 |
44,059 |
82,932 |
184,474 |
363,592 |
||||||
Search and search-related (includes stock-based |
183,678 |
167,664 |
118,683 |
664,164 |
412,904 |
||||||
Subtotal |
226,163 |
211,723 |
201,615 |
848,638 |
776,496 |
||||||
Online games (includes stock-based compensation |
14,499 |
14,902 |
17,097 |
60,981 |
62,775 |
||||||
Others |
35,633 |
33,716 |
56,987 |
162,102 |
195,895 |
||||||
Total cost of revenues |
276,295 |
260,341 |
275,699 |
1,071,721 |
1,035,166 |
||||||
Gross profit |
205,903 |
199,481 |
233,931 |
811,308 |
825,796 |
||||||
Operating expenses: |
|||||||||||
Product development (includes stock-based |
108,611 |
107,164 |
122,767 |
441,161 |
412,173 |
||||||
Sales and marketing (includes stock-based |
102,112 |
106,056 |
116,179 |
400,579 |
413,045 |
||||||
General and administrative (includes stock-based |
26,828 |
35,078 |
35,829 |
113,724 |
122,874 |
||||||
Goodwill impairment and impairment of intangibles via |
16,369[6] |
- |
- |
16,369 |
86,882 |
||||||
Total operating expenses |
253,920 |
248,298 |
274,775 |
971,833 |
1,034,974 |
||||||
Operating loss |
(48,017) |
(48,817) |
(40,844) |
(160,525) |
(209,178) |
||||||
Other income |
13,073 |
28,822 |
4,321 |
64,167 |
6,658 |
||||||
Interest income |
6,457 |
4,658 |
7,357 |
24,079 |
24,138 |
||||||
Interest expense |
(5,279) |
(6,174) |
(2,567) |
(17,538) |
(4,088) |
||||||
Exchange difference |
(378) |
7,970 |
(4,059) |
9,026 |
(14,385) |
||||||
Loss before income tax expense |
(34,144) |
(13,541) |
(35,792) |
(80,791) |
(196,855) |
||||||
Income tax expense/(benefit) |
(69,557) |
(13,145) |
233,785 |
(13,432) |
273,148 |
||||||
Net income/(loss) |
35,413 |
(396) |
(269,577) |
(67,359) |
(470,003) |
||||||
Less: Net income attributable to the noncontrolling interest shareholders |
20,773 |
33,870 |
24,558 |
92,723 |
84,523 |
||||||
Net loss attributable to Sohu.com Limited |
14,640 |
(34,266) |
(294,135) |
(160,082) |
(554,526) |
||||||
Basic net income/(loss) per ADS attributable to Sohu.com |
$ |
0.37 |
$ |
(0.88) |
$ |
(7.56) |
$ |
(4.11) |
$ |
(14.27) |
|
ADS used in computing basic net loss per ADS attributable |
39,069 |
38,936 |
38,888 |
38,959 |
38,858 |
||||||
Diluted net income/(loss) per ADS attributable to Sohu.com |
$ |
0.37 |
$ |
(0.89) |
$ |
(7.57) |
$ |
(4.13) |
$ |
(14.30) |
|
ADS used in computing diluted net loss per ADS attributable to Sohu.com Limited |
39,234 |
38,936 |
38,888 |
38,959 |
38,858 |
||||||
[6] 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 Dec. 31, 2018 |
As of Dec. 31, 2017 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ |
819,713 |
$ |
1,366,115 |
Restricted cash |
5,974 |
1,908 |
||
Short-term investments |
1,041,395 |
818,934 |
||
Accounts receivable, net |
242,361 |
250,468 |
||
Prepaid and other current assets |
207,117 |
192,676 |
||
Total current assets |
2,316,560 |
2,630,101 |
||
Long-term investments |
108,356 |
90,145 |
||
Fixed assets, net |
504,998 |
529,717 |
||
Goodwill |
53,263 |
71,565 |
||
Intangible assets, net |
24,118 |
23,060 |
||
Restricted time deposits[7] |
244,179 |
271 |
||
Prepaid non-current assets |
3,107 |
4,211 |
||
Other assets |
43,928 |
40,169 |
||
Total assets |
$ |
3,298,509 |
$ |
3,389,239 |
LIABILITIES |
||||
Current liabilities: |
||||
Accounts payable |
$ |
295,954 |
$ |
288,394 |
Accrued liabilities |
301,915 |
343,106 |
||
Receipts in advance and deferred revenue |
124,782 |
127,758 |
||
Accrued salary and benefits |
112,898 |
102,087 |
||
Taxes payable |
93,569 |
96,541 |
||
Short-term bank loans |
129,677 |
61,216 |
||
Other short-term liabilities |
124,085 |
136,300 |
||
Total current liabilities |
$ |
1,182,880 |
$ |
1,155,402 |
Long-term accounts payable |
752 |
1,157 |
||
Long-term Bank Loans |
302,323 |
122,433 |
||
Long-term tax liabilities |
259,603 |
293,010 |
||
Total long-term liabilities |
$ |
562,678 |
$ |
416,600 |
Total liabilities |
$ |
1,745,558 |
$ |
1,572,002 |
SHAREHOLDERS' EQUITY: |
||||
Sohu.com Limited shareholders' equity |
588,840 |
750,634 |
||
Noncontrolling Interest |
964,111 |
1,066,603 |
||
Total shareholders' equity |
$ |
1,552,951 |
$ |
1,817,237 |
Total liabilities and shareholders' equity |
$ |
3,298,509 |
$ |
3,389,239 |
[7] In October 2018, to roll over matured offshore financing facilities, Changyou entered into a bank loan agreement pursuant to which it has drawn down U.S. dollar-denominated loans in the aggregate amount of US$220 million that are secured by restricted time deposits of RMB1.7 billion (approximately US$244 million). All of the loans carry a floating rate of interest based on the LIBOR. All of the loans are due to be repaid, and accordingly the restricted time deposits released, in 2021. |
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 Dec. 31, 2018 |
Three Months Ended Sep. 30, 2018 |
Three Months Ended Dec. 31, 2017 |
||||||||||||||||
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non-GAAP |
||||||||||
(34) |
(a) |
(14) |
(a) |
(1,034) |
(a) |
|||||||||||||
Brand advertising gross profit |
$ |
14,737 |
$ |
(34) |
$ |
14,703 |
$ |
12,899 |
$ |
(14) |
$ |
12,885 |
$ |
(11,181) |
$ |
(1,034) |
$ |
(12,215) |
Brand advertising gross |
26% |
26% |
23% |
23% |
-16% |
-17% |
||||||||||||
(48) |
(a) |
235 |
(a) |
535 |
(a) |
|||||||||||||
Search and search-related |
$ |
92,988 |
$ |
(48) |
$ |
92,940 |
$ |
87,466 |
$ |
235 |
$ |
87,701 |
$ |
128,371 |
$ |
535 |
$ |
128,906 |
Search and search-related |
34% |
34% |
34% |
34% |
52% |
52% |
||||||||||||
(82) |
(a) |
221 |
(a) |
(499) |
(a) |
|||||||||||||
Online advertising gross profit |
$ |
107,725 |
$ |
(82) |
$ |
107,643 |
$ |
100,365 |
$ |
221 |
$ |
100,586 |
$ |
117,190 |
$ |
(499) |
$ |
116,691 |
Online advertising gross |
32% |
32% |
32% |
32% |
37% |
37% |
||||||||||||
7 |
(a) |
(3) |
(a) |
1 |
(a) |
|||||||||||||
Online games gross profit |
$ |
79,607 |
$ |
7 |
$ |
79,614 |
$ |
81,069 |
$ |
(3) |
$ |
81,066 |
$ |
92,286 |
$ |
1 |
$ |
92,287 |
Online games gross margin |
85% |
85% |
84% |
84% |
84% |
84% |
||||||||||||
Others gross profit |
$ |
18,571 |
$ |
- |
(a) $ |
18,571 |
$ |
18,047 |
$ |
- |
(a) $ |
18,047 |
$ |
24,455 |
$ |
- |
(a) $ |
24,455 |
Others gross margin |
34% |
34% |
35% |
35% |
30% |
30% |
||||||||||||
(75) |
(a) |
218 |
(a) |
(498) |
(a) |
|||||||||||||
Gross profit |
$ |
205,903 |
$ |
(75) |
$ |
205,828 |
$ |
199,481 |
$ |
218 |
$ |
199,699 |
$ |
233,931 |
$ |
(498) |
$ |
233,433 |
Gross margin |
43% |
43% |
43% |
43% |
46% |
46% |
||||||||||||
Operating expenses |
$ |
253,920 |
$ |
(1,605) |
(a) $ |
252,315 |
$ |
248,298 |
$ |
(1,501) |
(a) $ |
246,797 |
$ |
274,775 |
$ |
(19,510) |
(a) $ |
255,265 |
1,530 |
(a) |
1,719 |
(a) |
19,012 |
(a) |
|||||||||||||
Operating loss |
$ |
(48,017) |
$ |
1,530 |
$ |
(46,487) |
$ |
(48,817) |
$ |
1,719 |
$ |
(47,098) |
$ |
(40,844) |
$ |
19,012 |
$ |
(21,832) |
Operating margin |
-10% |
-10% |
-11% |
-10% |
-8% |
-4% |
||||||||||||
Income tax benefit/(expense) |
$ |
69,557 |
$ |
(74,160) |
(c,d)$ |
(4,603) |
$ |
13,145 |
$ |
(1,286) |
(c,d)$ |
11,859 |
$ |
(233,785) |
$ |
214,819 |
(d)$ |
(18,966) |
1,530 |
(a) |
1,719 |
(a) |
19,012 |
(a) |
|||||||||||||
267 |
(c) |
3,861 |
(c) |
- |
||||||||||||||
(74,071) |
(d) |
- |
214,819 |
(d) |
||||||||||||||
Net income/(loss) before non- |
$ |
35,413 |
(72,274) |
(36,861) |
$ |
(396) |
$ |
5,580 |
$ |
5,184 |
$ |
(269,577) |
$ |
233,831 |
$ |
(35,746) |
||
1,530 |
(a) |
1,719 |
(a) |
19,012 |
(a) |
|||||||||||||
(976) |
(b) |
(2,571) |
(b) |
(17,545) |
(b) |
|||||||||||||
267 |
(c) |
3,861 |
(c) |
- |
||||||||||||||
(74,071) |
(d) |
- |
214,819 |
(d) |
||||||||||||||
Net income/(loss) attributable |
$ |
14,511 |
(73,250) |
(58,739) |
$ |
(34,685) |
$ |
3,009 |
(31,676) |
$ |
(294,543) |
$ |
216,286 |
(78,257) |
||||
Diluted net income/(loss) per |
$ |
0.37 |
(1.50) |
$ |
(0.89) |
(0.81) |
$ |
(7.57) |
(2.01) |
|||||||||
Shares used in computing |
39,234 |
39,069 |
38,936 |
38,936 |
38,888 |
38,888 |
||||||||||||
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. |
SOHU.COM LIMITED |
||||||||||||
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
||||||||||||
Twelve Months Ended Dec. 31, 2018 |
Twelve Months Ended Dec. 31, 2017 |
|||||||||||
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non-GAAP |
|||||||
(707) |
(a) |
(415) |
(a) |
|||||||||
Brand advertising gross profit |
$ |
47,471 |
$ |
(707) |
$ |
46,764 |
$ |
(49,526) |
$ |
(415) |
$ |
(49,941) |
Brand advertising gross |
20% |
20% |
-16% |
-16% |
||||||||
669 |
(a) |
540 |
(a) |
|||||||||
Search and search-related |
$ |
358,292 |
$ |
669 |
$ |
358,961 |
$ |
388,295 |
$ |
540 |
$ |
388,835 |
Search and search-related |
35% |
35% |
48% |
49% |
||||||||
(38) |
(a) |
125 |
(a) |
|||||||||
Online advertising gross profit |
$ |
405,763 |
$ |
(38) |
$ |
405,725 |
$ |
338,769 |
$ |
125 |
$ |
338,894 |
Online advertising gross |
32% |
32% |
30% |
30% |
||||||||
(31) |
(a) |
73 |
(a) |
|||||||||
Online games gross profit |
$ |
328,807 |
$ |
(31) |
$ |
328,776 |
$ |
386,758 |
$ |
73 |
$ |
386,831 |
Online games gross margin |
84% |
84% |
86% |
86% |
||||||||
Others gross profit |
$ |
76,738 |
$ |
- |
(a)$ |
76,738 |
$ |
100,269 |
$ |
- |
(a)$ |
100,269 |
Others gross margin |
32% |
32% |
34% |
34% |
||||||||
(69) |
(a) |
198 |
(a) |
|||||||||
Gross profit |
$ |
811,308 |
$ |
(69) |
$ |
811,239 |
$ |
825,796 |
$ |
198 |
$ |
825,994 |
Gross margin |
43% |
43% |
44% |
44% |
||||||||
Operating expenses |
$ |
971,833 |
$ |
(2,165) |
(a)$ |
969,668 |
$ |
1,034,974 |
$ |
(45,278) |
(a)$ |
989,696 |
2,096 |
(a) |
45,476 |
(a) |
|||||||||
Operating loss |
$ |
(160,525) |
$ |
2,096 |
$ |
(158,429) |
$ |
(209,178) |
$ |
45,476 |
$ |
(163,702) |
Operating margin |
-9% |
-8% |
-11% |
-9% |
||||||||
Income tax benefit/(expense) |
$ |
13,432 |
$ |
(75,281) |
(d,e)$ |
(61,849) |
$ |
(273,148) |
$ |
214,819 |
(d)$ |
(58,329) |
2,096 |
(a) |
45,476 |
(a) |
|||||||||
- |
5,754 |
(c) |
||||||||||
(74,071) |
(d) |
214,819 |
(d) |
|||||||||
3,634 |
(e) |
- |
||||||||||
Net loss before non- |
$ |
(67,359) |
$ |
(68,341) |
$ |
(135,700) |
$ |
(470,003) |
$ |
266,049 |
$ |
(203,954) |
2,096 |
(a) |
45,476 |
(a) |
|||||||||
(7,574) |
(b) |
(20,624) |
(b) |
|||||||||
- |
5,754 |
(c) |
||||||||||
(74,071) |
(d) |
214,819 |
(d) |
|||||||||
3,634 |
(e) |
- |
||||||||||
Net loss attributable to |
$ |
(160,959) |
(75,915) |
(236,874) |
$ |
(555,791) |
$ |
245,425 |
$ |
(310,366) |
||
Diluted net loss per ADS |
$ |
(4.13) |
$ |
(6.08) |
$ |
(14.30) |
$ |
(7.99) |
||||
ADS used in computing |
38,959 |
38,959 |
38,858 |
38,858 |
||||||||
Note: |
||||||||||||
(a) To eliminate the impact of share-based awards as measured using the fair value method. |
||||||||||||
(b) To adjust Sohu's economic interests in Changyou and Sogou attributable to the above non-GAAP adjustments. |
||||||||||||
(c) To adjust impairment loss of available-for-sale securities of an investee that is unrelated to the Company's current business operations. |
||||||||||||
(d) To adjust for the effect of the U.S. TCJA. |
||||||||||||
(e) To adjust for a change in the fair value of the Company's investment in Hylink and the income tax effect. |
View original content:http://www.prnewswire.com/news-releases/sohucom-reports-fourth-quarter-and-fiscal-year-2018-unaudited-financial-results-300788058.html
SOURCE Sohu.com Ltd.