February 21, 2017

Sohu.com Reports Fourth Quarter and Fiscal Year 2016 Unaudited Financial Results

BEIJING, Feb. 21, 2017 /PRNewswire/ -- Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, video, search and gaming business group, today reported unaudited financial results for the fourth quarter and fiscal year ended December 31, 2016.

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Fourth Quarter Highlights

  • Total revenues were US$412 million[1], down 12% year-over-year and flat quarter-over-quarter.
  • Brand advertising revenues were US$99 million, down 30% year-over-year and 11% quarter-over-quarter.
  • Sogou[2] revenues were US$172 million, up 4% year-over-year and 3% quarter-over-quarter.
  • Online game revenues were US$95 million, down 25% year-over-year and 3% quarter-over-quarter.
  • GAAP net loss attributable to Sohu.com Inc. was US$66 million, or US$1.71 loss per fully-diluted share.
  • Non-GAAP[3] net loss attributable to Sohu.com Inc. was US$69 million, or US$1.79 loss per fully-diluted share.

[1] For the fourth quarter of 2016, on a yearly basis, depreciation of the RMB against the U.S. dollar impacted our reported financial results. If the exchange rate in the fourth quarter of 2016 had been the same as it was in the fourth quarter of 2015, or RMB6.39=US$1.00, total revenues in the fourth quarter of 2016 would have been US$440 million, or US$28 million higher than GAAP total revenues, and down 6% year-over-year.

[2] Sogou operates the search and search-related business and offers Internet value-added services ("IVAS") with respect to Web games developed by third-party developers. In the statements of operations, revenues from search and search-related services are recorded as "Search and search-related" revenue, and revenues from IVAS are recorded as "Others" revenue. 

[3] Non-GAAP results exclude 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 and dividend and deemed dividend to non-controlling preferred shareholders of Sogou. 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."

Fiscal Year 2016 Highlights

  • Total revenues were US$1.65 billion, down 15% compared with 2015.
  • Brand advertising revenues were US$448 million, down 22% compared with 2015. 
  • Sogou revenues were US$660 million, up 12% compared with 2015.
  • Online game revenues were US$396 million, down 38% compared with 2015.
  • GAAP net loss attributable to Sohu.com Inc. was US$226 million, or US$5.83 loss per fully-diluted share.
  • Non-GAAP net loss attributable to Sohu.com Inc. was US$219 million, or US$5.65 loss per fully-diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc., commented, "Looking back at 2016, we faced a challenging operating environment. The sluggish economy, intensified competition and tightening regulatory rules on search industry impacted Sohu Group's financial performance. However, these challenges didn't stop us from pursuing innovation across our key products and exploring new business opportunities. We saw encouraging progress in each of our major business lines. For Sohu Media Portal, through improved content and product design, the Sohu News App gained solid user traction. For Sohu Video, we made original production one of our top priorities as we released several hit shows and the exclusive content helped us rapidly expand our subscriber base. For Sogou, mobile search traffic and revenues continued to outgrow the industry, and we have made artificial intelligence, or AI, a major cornerstone of our long-term strategic direction. And lastly, Changyou focused their efforts on building a pipeline of high quality mobile games. It now prepares to roll out a few promising titles, including the Legacy TLBB mobile game, in 2017. "

Mr. Xiaochuan Wang, CEO of Sogou, commented, "In 2016, Sogou strengthened its competitive position through product differentiation and AI-powered technology innovation. We launched and upgraded a series of vertical channels, including English, Academic and Healthcare. We also rolled out the first cross-language search engine globally that uses our proprietary machine translation technology. Sogou's traffic and revenue share trended higher. Compared to a year ago, mobile search traffic grew 70%. As the No. 1 mobile app for voice input in China, Sogou Mobile Keyboard's daily voice input more than doubled to over 200 million times. For 2016, our total revenues reach RMB4.4 billion, up 19% from 2015. Excluding the impact of certain one-time items, non-GAAP net income reached RMB640 million."

Fourth Quarter Financial Results 

Revenues

Total revenues for the fourth quarter of 2016 were US$412 million, down 12% year-over-year and flat quarter-over-quarter.

Total online advertising revenues, which include revenues from the brand advertising and search and search-related businesses, for the fourth quarter of 2016 were US$251 million, down 14% year-over-year and 4% quarter-over-quarter.

Brand advertising revenues for the fourth quarter of 2016 totaled US$99 million, down 30% year-over-year and 11% quarter-over-quarter. The year-over-year decrease was mainly attributable to a decrease in the video advertising business. The quarter-over-quarter decrease was mainly attributable to decreases in revenues from the media portal and 17173 advertising businesses.  

Search and search-related revenues for the fourth quarter of 2016 were US$153 million, up 1% year-over-year and quarter-over-quarter.

Online game revenues for the fourth quarter of 2016 were US$95 million, down 25% year-over-year and 3% quarter-over-quarter.

Gross Margin

Both GAAP and non-GAAP gross margin was 44% for the fourth quarter of 2016, compared with 57% in the fourth quarter of 2015 and 46% in the third quarter of 2016.

Both GAAP and non-GAAP gross margin for the online advertising business for the fourth quarter of 2016 was 33%, compared with 47% in the fourth quarter of 2015 and 32% in the third quarter of 2016.

Both GAAP and non-GAAP gross margin for the brand advertising business in the fourth quarter of 2016 was 9%, compared with 38% in the fourth quarter of 2015 and 8% in the third quarter of 2016. The year-over-year decrease was mainly due to decreased video revenues and increased video content cost.

Both GAAP and non-GAAP gross margin for the search and search-related business in the fourth quarter of 2016 was 48%, compared with 55% in the fourth quarter of 2015 and 49% in the third quarter of 2016. The year-over-year decrease was mainly due to higher traffic acquisition cost as a percentage of search and search-related revenues.

Both GAAP and non-GAAP gross margin for online games in the fourth quarter of 2016 was 78%, compared with 78% in the fourth quarter of 2015 and 76% in the third quarter of 2016.

Operating Expenses

For the fourth quarter of 2016, GAAP operating expenses totaled US$232 million, down 6% year-over-year and 3% quarter-over-quarter. Non-GAAP operating expenses were US$229 million, up 3% year-over-year and 1% quarter-over-quarter.

Operating Profit /(Loss)

GAAP operating loss for the fourth quarter of 2016 was US$52 million, compared with an operating profit of US$19 million in the fourth quarter of 2015 and an operating loss of US$52 million in the third quarter of 2016. The year-over-year change in profitability was mainly attributable to the decrease in brand advertising and online games revenues, coupled with the increase in video content cost.

Non-GAAP operating loss for the fourth quarter of 2016 was US$49 million, compared with an operating profit of US$44 million in the fourth quarter of 2015 and an operating loss of US$38 million in the third quarter of 2016.

Other Income

Other income for the fourth quarter of 2016 was US$6 million, compared with other income of US$2 million in the fourth quarter of 2015 and other income of US$4 million in the third quarter of 2016.

Income Tax Expense

Both GAAP and non-GAAP income tax expense was US$6 million for the fourth quarter of 2016, compared with income tax expense of US$20 million in the fourth quarter of 2015 and income tax expense of US$1 million in the third quarter of 2016.

Net Income /(Loss)

Before deducting the share of net income pertaining to non-controlling interest, GAAP net loss for the fourth quarter of 2016 was US$37 million, compared with a net income of US$9 million in the fourth quarter of 2015 and net loss of US$42 million in the third quarter of 2016. Before deducting the share of net income pertaining to non-controlling interest, non-GAAP net loss for the fourth quarter of 2016 was US$34 million, compared with a net income of US$34 million in the fourth quarter of 2015 and net loss of US$29 million in the third quarter of 2016.

GAAP net loss attributable to Sohu.com Inc. for the fourth quarter of 2016 was US$66 million, or US$1.71 loss per fully-diluted share, compared with a net loss of US$31 million in the fourth quarter of 2015 and net loss of US$75 million in the third quarter of 2016. Non-GAAP net loss attributable to Sohu.com Inc. for the fourth quarter of 2016 was US$69 million, or US$1.79 loss per fully-diluted share, compared with a net loss of US$13 million in the fourth quarter of 2015 and net loss of US$65 million in the third quarter of 2016.

Liquidity

As of December 31, 2016, the Sohu Group had cash and cash equivalents and short-term investments of US$1.30 billion compared with US$1.42 billion as of December 31, 2015.

Fiscal Year 2016 Financial Results

Revenues

Total revenues for 2016 were US$1.65 billion, down 15% compared with 2015.

Total online advertising revenues, which include revenues from the brand advertising and search and search-related businesses, for 2016 were US$1.05 billion, down 6% compared with 2015.

Brand advertising revenues for 2016 were US$448 million, down 22% compared with 2015, mainly due to the drag of the video businesses.

Search and search-related revenues for 2016 were US$597 million, up 11% compared with 2015. The increase was mainly driven by continued growth in mobile traffic.

Online game revenues for 2016 were US$396 million, down 38% compared with 2015. The year-over-year decrease was mainly due to the natural decline in revenues of Changyou's older games, and a decrease in Web game revenues upon the completion of the sale of the 7Road business in 2015.

Gross Margin

Both GAAP and non-GAAP gross margin was 48% for 2016, compared with 56% in 2015.

Both GAAP and non-GAAP gross margin for the online advertising business for 2016 was 37%, compared with 44% in 2015.

Both GAAP and non-GAAP gross margin for the brand advertising business for 2016 was 17%, compared with 34% in 2015. The decrease mainly reflected a decrease in advertising revenues and increasing video content cost.

Both GAAP and non-GAAP gross margin for the search and search-related business for 2016 was 51%, compared with 56% in 2015. The decrease in gross margin was mainly due to higher traffic acquisition costs as a percentage of search and search-related revenues.

Both GAAP and non-GAAP gross margin for online games for 2016 was 76%, compared with 75% in 2015.

Operating Expenses

For 2016, GAAP operating expenses totaled US$908 million, down 9% compared with 2015. Non-GAAP operating expenses were US$889 million, down 6% compared with 2015. The decreases were primarily due to decreases in salary and compensation expenses.

Operating Profit /(Loss)

GAAP operating loss for 2016 was US$117 million, compared with an operating profit of US$82 million in 2015.

Non-GAAP operating loss for 2016 was US$98 million, compared with an operating profit of US$136 million in 2015.

Other Income /(Expense)

Other expense for 2016 was US$11 million, mainly related to a donation of US$27.8 million made by Sogou to Tsinghua University in the second quarter of 2016, compared with other income of US$75 million in 2015, which included gain recognized from the divestment of 7Road in the third quarter of 2015.

Income Tax Expense

Both GAAP and non-GAAP income tax expense for 2016 was US$21 million, compared with income tax expense of US$77 million in 2015.

Net Income /(Loss)

Before deducting the share of net income pertaining to non-controlling interest, GAAP net loss for 2016 was US$115 million, compared with net income of US$109 million in 2015. Before deducting the share of net income pertaining to non-controlling interest, non-GAAP net loss for 2016 was US$96 million, compared with net income of US$162 million in 2015.

GAAP net loss attributable to Sohu.com Inc. for 2016 was US$226 million, or US$5.83 loss per fully-diluted share, compared with a net loss of US$51 million in 2015. Non-GAAP net loss attributable to Sohu.com Inc. for 2016 was US$219 million, or US$5.65 loss per fully-diluted share, compared with a net loss of US$4 million in 2015.

Business Outlook

For the first quarter of 2017, Sohu estimates:

  • Total revenues to be between US$345 million and US$375 million.
  • Brand advertising revenues to be between US$75 million and US$85 million; this implies an annual decrease of 32% to 40% and a sequential decrease of 14% to 24%.
  • Sogou revenues to be between US$145 million and US$155 million; this implies an annual decrease of 2% to an annual increase of 5% and a sequential decrease of 10% to 15%.
  • Online game revenues to be between US$80 million and US$90 million; this implies an annual decrease of 12% to 22% and a sequential decrease of 6% to 16%.
  • Before deducting the share of non-GAAP net income pertaining to non-controlling interest, non-GAAP net loss to be between US$45 million and US$55 million. Assuming no new grants of share-based awards and that the market price of our shares is unchanged; we estimate that compensation expense relating to share-based awards will be around US$5 million. Including the impact of these share-based awards, GAAP net loss before non-controlling interest to be between US$50 million and US$60 million.
  • Non-GAAP net loss attributable to Sohu.com Inc. to be between US$60 million and US$70 million, and non-GAAP loss per fully-diluted share to be between US$1.55 and US$1.80. Including the impact of the aforementioned share-based awards, and netting off approximately US$1 million of Sohu's economic interests in Changyou and Sogou, GAAP net loss attributable to Sohu.com Inc. to be between US$64 million and US$74 million, and GAAP loss per fully-diluted share to be between US$1.65 and US$1.90.

For the first quarter 2017 guidance, the Company has adopted a presumed exchange rate of RMB7.00=US$1.00, as compared with the actual exchange rate of approximately RMB6.53=US$1.00 for the first quarter of 2016, and RMB6.83=US$1.00 for the fourth quarter of 2016.

Non-GAAP Disclosure

To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"), Sohu's management uses non-GAAP measures of gross profit, operating profit, net income, net income attributable to Sohu.com Inc. and diluted net income attributable to Sohu.com Inc. per share, which are adjusted from results based on GAAP to exclude the impact of the share-based awards, which consist mainly of share-based compensation expenses and 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. 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.

Sohu's management believes excluding the 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 and dividend and deemed dividend to non-controlling preferred shareholders from its non-GAAP financial measure is useful for itself and investors. Further, the impact of 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, and dividend and deemed dividend to non-controlling preferred shareholders cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts, which 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, 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 the 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, and dividend and deemed dividend to non-controlling preferred shareholders.

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 Inc. and diluted net income attributable to Sohu.com Inc. 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, and 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 the People's Republic of China; fluctuations in Sohu's quarterly operating results; Sohu's current and projected future losses due to increased spending by Sohu for video content; the possibilities that Sohu will be unable to recoup its investment in video content and that Changyou will be unable to develop a series of successful games for mobile platforms or successfully monetize mobile games it develops or acquires; and Sohu's reliance on online advertising sales, online games and mobile services for its revenues. Further information regarding these and other risks is included in Sohu's annual report on Form 10-K for the year ended December 31, 2015, and other filings with the Securities and Exchange Commission.

Conference Call and Webcast 

Sohu's management team will host a conference call at 8:30 a.m. U.S. Eastern Time, February 21, 2017 (9:30 p.m. Beijing/Hong Kong time, February 21, 2017) following the quarterly results announcement.

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 11:30 a.m. Eastern Time on February 21 through February 28, 2017. The dial-in details for the telephone replay are:

International:

+1-646-254-3697

Passcode:

60086018

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

Sohu.com Inc. (NASDAQ: SOHU) is China's premier online brand and indispensable to the daily life of millions of Chinese, providing a network of Web properties and community based/Web 2.0 products which offer the vast Sohu user community a broad array of choices regarding information, entertainment and communication. Sohu has built one of the most comprehensive matrices of Chinese language web properties and proprietary search engines, consisting of the mass portal and leading online media destination www.sohu.com; the interactive search engine www.sogou.com; the developer and operator of online games www.changyou.com/en/ and the leading online video Website tv.sohu.com.

Sohu corporate services consist of online brand advertising on its 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 service on mobile platforms, including Sohu News App and mobile news portal m.sohu.com. Sohu's online game subsidiary, Changyou.com (NASDAQ: CYOU) has a diverse portfolio of popular online games, such as Tian Long Ba Bu ("TLBB"), one of the most popular PC games in China, as well as a number of mobile games. Changyou also owns and operates the 17173.com Website, a leading game information portal in China. Sohu.com, established by Dr. Charles Zhang, one of China's internet pioneers, is in its twenty-first year of operation.

For investor and media inquiries, please contact:

In China:

Mr. Eric Yuan

Sohu.com Inc.

Tel:

+86 (10) 6272-6593

E-mail:

ir@contact.sohu.com

In the United States:


Ms. Linda Bergkamp

Christensen

Tel:

+1 (480) 614-3004

E-mail:

lbergkamp@christensenir.com

 

 

SOHU.COM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)




Three Months Ended


Twelve Months Ended



Dec. 31, 2016


Sep. 30, 2016


Dec. 31, 2015


Dec. 31, 2016


Dec. 31, 2015

Revenues:











Online advertising











        Brand advertising

$

98,695

$

110,871

$

140,927

$

447,956

$

577,114

        Search and search-related


152,500


150,667


151,251


597,133


539,521

             Subtotal


251,195


261,538


292,178


1,045,089


1,116,635

Online games


95,400


98,553


127,001


395,709


636,846

Others


65,164


50,491


46,924


209,633


183,610

                   Total revenues


411,759


410,582


466,103


1,650,431


1,937,091












Cost of revenues:











Online advertising











       Brand advertising (includes stock-based
compensation expense of $-91, $265, $534, $163 and
$1,381, respectively)


89,658


102,137


87,625


371,085


383,187

Search and search-related (includes stock-based
compensation expense of $168, $4, $211, $172 and
$330, respectively)


79,611


76,457


68,108


290,158


238,944

Subtotal


169,269


178,594


155,733


661,243


622,131

Online games (includes stock-based compensation
expense of $-5, $26, $45, $31 and $37, respectively)


20,936


23,719


28,266


96,168


156,315

Others


41,606


20,571


17,552


102,389


80,618

        Total cost of revenues


231,811


222,884


201,551


859,800


859,064












Gross profit


179,948


187,698


264,552


790,631


1,078,027












Operating expenses:











     Product development (includes stock-based
compensation expense of $3,383, $4,105, $9,665, $9,184
and $19,343,  respectively)


91,499


90,007


102,402


353,144


398,143

     Sales and marketing (includes stock-based
compensation expense of $1,467, $752, $1,482, $2,394 and
$3,055, respectively)


116,183


110,584


98,230


434,780


383,931

     General and administrative (includes stock-based
compensation expense of $-1,949, $8,018, $13,042, $7,176
and $29,297, respectively)


23,914


38,670


44,946


119,841


173,160

     Goodwill impairment and impairment of intangibles via
acquisitions of businesses


-


-


-


-


40,324

       Total operating expenses


231,596


239,261


245,578


907,765


995,558












Operating (loss) /profit


(51,648)


(51,563)


18,974


(117,134)


82,469












Other  income /(expense)


6,258


3,678


1,590


(10,713)


74,526

Interest income


5,051


6,327


7,748


22,499


30,643

Interest expense


(205)


(209)


(1,744)


(1,356)


(7,184)

Exchange difference


9,257


702


1,885


12,803


5,337

 (Loss) /income before income tax expense


(31,287)


(41,065)


28,453


(93,901)


185,791

 

Income tax expense


5,800


974


19,656


21,072


76,936

Net (loss) /income


(37,087)


(42,039)


8,797


(114,973)


108,855












     Less: Net income attributable to the noncontrolling
interest shareholders


28,810


32,775


39,197


109,048


146,542

     Deemed dividend to non-controlling Sogou
series A preferred shareholders


-


-


-


-


11,911

Net loss attributable to Sohu.com Inc.


(65,897)


(74,814)


(30,400)


(224,021)


(49,598)












Basic net loss per share attributable to Sohu.com Inc.

$

(1.70)

$

(1.93)

$

(0.79)

$

(5.79)

$

(1.28)

Shares used in computing basic net loss per share
attributable to Sohu.com Inc.


38,739


38,728


38,646


38,706


38,598












Diluted net loss per share attributable to Sohu.com Inc.

$

(1.71)

$

(1.94)

$

(0.80)

$

(5.83)

$

(1.32)

Shares used in computing diluted net loss  per share
attributable to Sohu.com Inc.


38,739


38,728


38,646


38,706


38,598

 

 

SOHU.COM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)




As of Dec. 31, 2016


As of Dec. 31, 2015

ASSETS





Current assets:





           Cash and cash equivalents

$

1,050,957

$

1,245,205

Restricted time deposits (a)


-


227,285

Short-term investments


247,926


174,515

           Accounts receivable, net


189,167


273,617

           Prepaid and other current assets (b)


260,133


154,217

Assets held for sale (c)


103,079


-

                     Total current assets


1,851,262


2,074,839

Long-term investments


74,273


62,093

Fixed assets, net


503,631


508,692

Goodwill (c)


68,290


154,219

Intangible assets, net


32,131


55,415

Restricted time deposits (a)


269


136,694

Prepaid non-current assets


4,734


6,254

Other assets (b)


29,100


43,988

                         Total assets

$

2,563,690

$

3,042,194






LIABILITIES





Current liabilities:





           Accounts payable

$

193,209

$

129,025

           Accrued liabilities


324,876


309,657

           Receipts in advance and deferred revenue


118,951


135,385

           Accrued salary and benefits


92,475


99,631

           Taxes payable


40,014


67,480

           Short-term bank loans (a)


-


344,500

           Other short-term liabilities


159,315


154,017

Liabilities held for sale (c)


3,902


-

                     Total current liabilities

$

932,742

$

1,239,695






Long-term accounts payable


744


4,600

Long-term tax payable


32,625


24,732

Deferred tax liabilities (b)


39,784


42,415

Total long-term liabilities

$

73,153

$

71,747

                         Total liabilities

$

1,005,895

$

1,311,442






SHAREHOLDERS' EQUITY:





          Sohu.com Inc. shareholders' equity


993,580


1,241,022

          Noncontrolling Interest


564,215


489,730

                     Total shareholders' equity

$

1,557,795

$

1,730,752






Total liabilities and shareholders' equity 

$

2,563,690

$

3,042,194

 

Note:

(a)

Changyou had repaid all of the remaining bank loans of $345 million, and restricted time deposits of $355 million that secured these loans were released during the first quarter of 2016.

(b)

The Company early adopted the Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes, retrospectively from the fourth quarter of 2016. The guidance requires current deferred income tax assets and liabilities to be classified as non-current assets and liabilities in balance sheet. As a result of the adoption of this guidance, $4.7 million of current deferred tax assets recorded in prepaid and other current assets, and $24.9 million of deferred tax liabilities were reclassified to non-current as of December 31, 2015.

(c)

Changyou's management had an intention to divest its interest in MoboTap in the third quarter of 2016. Therefore, the assets and liabilities of MoboTap were recognized as "Assets held for sale" and "Liabilities held for sale," respectively, since the third quarter of 2016.

 

 

SOHU.COM 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 Dec. 31, 2016


Three Months Ended Sep. 30, 2016


Three Months Ended Dec. 31, 2015



GAAP


Non-GAAP
Adjustments


Non-GAAP


GAAP


Non-GAAP
Adjustments


Non-GAAP


GAAP


Non-GAAP
Adjustments


Non-GAAP
























(91)

(a)





265

(a)





534

(a)


Brand advertising gross profit

$

9,037

$

(91)

$

8,946

$

8,734

$

265

$

8,999

$

53,302

$

534

$

53,836

Brand advertising gross
margin


9%




9%


8%




8%


38%




38%





168

(a)





4

(a)





211

(a)


Search and search-related
gross profit

$

72,889

$

168

$

73,057

$

74,210

$

4

$

74,214

$

83,143

$

211

$

83,354

Search and search-related
gross margin


48%




48%


49%




49%


55%




55%
























77

(a)





269

(a)





745

(a)


Online advertising gross profit

$

81,926

$

77

$

82,003

$

82,944

$

269

$

83,213

$

136,445

$

745

$

137,190

Online advertising gross
margin


33%




33%


32%




32%


47%




47%
























(5)

(a)





26

(a)





45

(a)


Online games gross profit

$

74,464

$

(5)

$

74,459

$

74,834

$

26

$

74,860

$

98,735

$

45

$

98,780

Online games gross margin


78%




78%


76%




76%


78%




78%







































Others gross profit

$

23,558

$

-

(a) $

23,558

$

29,920

$

-

(a) $

29,920

$

29,372

$

-

(a)$

29,372

Others gross margin


36%




36%


59%




59%


63%




63%











































72

(a)





295

(a)





790

(a)


Gross profit

$

179,948

$

72

$

180,020

$

187,698

$

295

$

187,993

$

264,552

$

790

$

265,342

Gross margin


44%




44%


46%




46%


57%




57%







































Operating expenses

$

231,596

$

(2,901)

(a) $

228,695

$

239,261

$

(12,875)

(a)$

226,386

$

245,578

$

(24,189)

(a)$

221,389











































2,973

(a)





13,170

(a)





24,979

(a)


Operating (loss) /profit

$

(51,648)

$

2,973

$

(48,675)

$

(51,563)

$

13,170

$

(38,393)

$

18,974

$

24,979

$

43,953

Operating margin


-13%




-12%


-13%




-9%


4%




9%


























































Income tax expense

$

5,800

$

-

(a)$

5,800

$

974

$

-

(a)$

974

$

19,656

$

-

(a)$

19,656
























2,973

(a)





13,147

(a)





25,047

(a)


Net (loss) /income
before non-controlling interest

$

(37,087)

$

2,973

$

(34,114)

$

(42,039)

$

13,147

$

(28,892)

$

8,797

$

25,047

$

33,844
























2,973

(a)





13,147

(a)





25,047

(a)






(6,051)

(b)





(2,806)

(b)





(7,352)

(b)


Net  loss attributable to
Sohu.com Inc. for diluted net 
loss per share

$

(66,411)

$

(3,078)

$

(69,489)

$

(75,286)

$

10,341

$

(64,945)

$

(30,746)

$

17,695

$

(13,051)

Diluted net loss per share
attributable to Sohu.com Inc.

$

(1.71)



$

(1.79)

$

(1.94)



$

(1.68)

$

(0.80)



$

(0.34)

 

Shares used in computing
diluted net loss per share
attributable to Sohu.com Inc.


38,739




38,739


38,728




38,728


38,646




38,646

 

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 under the treasury stock method.

 

 

SOHU.COM INC.

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, 2016


Twelve Months Ended Dec. 31, 2015



GAAP


Non-GAAP
Adjustments


Non-GAAP


GAAP


Non-GAAP
Adjustments


Non-GAAP


















163

(a)





1,381

(a)


Brand advertising gross profit

$

76,871

$

163

$

77,034

$

193,927

$

1,381

$

195,308

Brand advertising gross
margin


17%




17%


34%




34%


















172

(a)





330

(a)


Search and search-related
gross profit

$

306,975

$

172

$

307,147

$

300,577

$

330

$

300,907

Search and search-related
gross margin


51%




51%


56%




56%


















335

(a)





1,711

(a)


Online advertising gross profit

$

383,846

$

335

$

384,181

$

494,504

$

1,711

$

496,215

Online advertising gross
margin


37%




37%


44%




44%


















31

(a)





37

(a)


Online games gross profit

$

299,541

$

31

$

299,572

$

480,531

$

37

$

480,568

Online games gross margin


76%




76%


75%




75%








































Others gross profit

$

107,244

$

-

(a)$

107,244

$

102,992

$

-

(a)$

102,992

Others gross margin


51%




51%


56%




56%































366

(a)





1,748

(a)


Gross profit

$

790,631

$

366

$

790,997

$

1,078,027

$

1,748

$

1,079,775

Gross margin


48%




48%


56%




56%



























Operating expenses

$

907,765

$

(18,754)

(a)$

889,011

$

995,558

$

(51,695)

(a)$

943,863































19,120

(a)





53,443

(a)


Operating (loss) /profit

$

(117,134)

$

19,120

$

(98,014)

$

82,469

$

53,443

$

135,912

Operating margin


-7%




-6%


4%




7%



























Income tax expense

$

21,072

$

-

(a)$

21,072

$

76,936

$

-

(a)$

76,936































19,118

(a)





53,511

(a)


Net (loss) /profit before non-
controlling interest

$

(114,973)

$

19,118

$

(95,855)

$

108,855

$

53,511

$

162,366
























53,511

 (a)






19,118

(a)





(18,230)

(b)






(12,260)

(b)





11,911

(c)


Net loss attributable to
Sohu.com Inc for diluted net
loss per share

$

(225,660)

$

6,858

$

(218,802)

$

(50,829)

$

47,192

$

(3,637)














Diluted net loss per share
attributable to Sohu.com Inc.

 

$

(5.83)



$

(5.65)

 

$

(1.32)



$

(0.09)

Shares used in computing
diluted net loss per share
attributable to Sohu.com Inc.


38,706




38,706


38,598




38,693

 

Note:

(a)

To eliminate the impact of share-based awards measured using the fair value method.

(b)

To adjust Sohu's economic interests in Changyou and Sogou under the treasury stock method.

(c)

Dividend or deemed dividend to non-controlling Sogou series A preferred shareholders.

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sohucom-reports-fourth-quarter-and-fiscal-year-2016-unaudited-financial-results-300410497.html

SOURCE Sohu.com

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