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Sohu.com Reports Fourth Quarter and Fiscal Year 2019 Unaudited Financial Results
Fourth Quarter Highlights[1]
- Total revenues were
US$490 million [2], up 5% year-over-year and 2% quarter-over-quarter. - Brand advertising revenues were
US$42 million , down 27% year-over-year and 10% quarter-over-quarter. - Search and search related advertising revenues[3] were
US$275 million , down 1% year-over-year and 5% quarter-over-quarter. - Online game revenues were
US$132 million , up 40% year-over-year and 22% quarter-over-quarter. - Including an impairment charge of approximately
US$23 million recognized for the quarter for an investment unrelated to the Company' core businesses, GAAP net loss attributable toSohu.com Limited wasUS$18 million , compared with net income ofUS$23 million in the fourth quarter of 2018. - Excluding the impairment charge, non-GAAP net income attributable to
Sohu.com Limited wasUS$7 million , compared with a net loss ofUS$51 million in the fourth quarter of 2018 and a net loss ofUS$17 million in the third quarter of 2019. - Excluding the profit/loss generated by Sogou and Changyou, and further excluding the impairment charge, non-GAAP net loss attributable to
Sohu.com Limited wasUS$46 million , compared with a net loss ofUS$75 million in the fourth quarter of 2018 and a net loss ofUS$53 million in the third quarter of 2019.
[1] As Changyou's cinema advertising business ceased operations during the third quarter of 2019, its results of operations have been excluded from the Company's results from continuing operations in the condensed consolidated statements of operations and are presented in separate line items as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Unless indicated otherwise, results presented in this release are related to continuing operations only, and exclude results from the cinema advertising business. |
[2] On a constant currency (non-GAAP) basis, if the exchange rate in the fourth quarter of 2019 had been the same as it was in the fourth quarter of 2018, or |
[3] Search and Search related advertising revenues exclude intra-Group transactions. |
Fiscal Year 2019 Highlights
- Total revenues were
US$1.85 billion , up 2% compared with 2018. - Brand advertising revenues were
US$175 million , down 25% compared with 2018. - Search and search related advertising revenues were
US$1.07 billion , up 5% compared with 2018. - Online game revenues were
US$441 million , up 13% compared with 2018. - GAAP net loss attributable to
Sohu.com Limited wasUS$128 million , compared with a net loss ofUS$131 million in 2018. - Non-GAAP net loss attributable to
Sohu.com Limited wasUS$93 million , compared with a net loss ofUS$207 million in 2018. - Excluding the profit/loss generated by Sogou and Changyou, the Non-GAAP net loss attributable to
Sohu.com Limited wasUS$246 million , compared with a net loss ofUS$326 million in 2018.
Dr.
Fourth Quarter Financial Results
Revenues
Total revenues for the fourth quarter of 2019 were
Total online advertising revenues, which include revenues from the brand advertising and search and search-related advertising businesses, for the fourth quarter of 2019 were
Brand advertising revenues for the fourth quarter of 2019 totaled
Search and search-related advertising revenues for the fourth quarter of 2019 were
Online game revenues for the fourth quarter of 2019 were
Gross Margin
Both GAAP and non-GAAP[4] gross margin was 52% for the fourth quarter of 2019, compared with 46% in the fourth quarter of 2018 and 48% in the third quarter of 2019.
Both GAAP and non-GAAP gross margin for the online advertising business for the fourth quarter of 2019 was 39%, compared with 32% in the fourth quarter of 2018 and 37% in the third quarter of 2019.
Both GAAP and non-GAAP gross margin for the brand advertising business in the fourth quarter of 2019 was 31%, compared with 26% in the fourth quarter of 2018 and 31% in the third quarter of 2019. The year-over-year margin improvement was mainly due to decreased video content cost.
GAAP gross margin for the search and search-related advertising business in the fourth quarter of 2019 was 40%, compared with 34% in the fourth quarter of 2018 and 38% in the third quarter of 2019. Non-GAAP gross margin for the search and search-related advertising business in the fourth quarter of 2019 was 41%, compared with 34% in the fourth quarter of 2018 and 38% in the third quarter of 2019. The year-over-year and quarter-over-quarter increases primarily resulted from decreases in traffic acquisition cost as a percentage of search and search related advertising revenues.
Both GAAP and non-GAAP gross margin for online games in the fourth quarter of 2019 was 75%, compared with 85% in the fourth quarter of 2018 and 78% in the third quarter of 2019. The decreases in gross margins were mainly a result of an increase in the revenue contribution from new mobile games, primarily TLBB Honor, which typically require larger revenue-sharing payments compared with PC games and Legacy TLBB Mobile, and as a result drive down gross margin.
[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; a one-time impairment charge recognized for an investment unrelated to the Company's core businesses; 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 |
Operating Expenses
For the fourth quarter of 2019, GAAP operating expenses totaled
Operating Profit/(Loss)
GAAP operating profit for the fourth quarter of 2019 was
Non-GAAP operating profit for the fourth quarter of 2019 was US$49 million, compared with an operating loss of US$34 million in the fourth quarter of 2018 and an operating profit of
Income Tax Expense
GAAP income tax benefit was
The income tax benefit in the fourth quarter of 2019 included a one-time tax benefit of
[5] The tax benefit recognized and the unrecognized tax benefit in relation to the Toll Charge may be subject to further adjustment in subsequent periods based on future circumstances and on management's further judgment and estimates. |
Net Income/(Loss)
GAAP net loss attributable to
Liquidity
As of
Fiscal Year 2019 Financial Results
Revenues
Total revenues for 2019 were
Total online advertising revenues, which include revenues from the brand advertising and search and search-related advertising businesses, for 2019 were
Brand advertising revenues for 2019 were
Search and search-related advertising revenues for 2019 were
Online game revenues for 2019 were
Gross Margin
Both GAAP and non-GAAP gross margin was 47% for 2019, compared with 46% in 2018.
Both GAAP and non-GAAP gross margin for the online advertising business for 2019 was 34%, compared with 32% in 2018.
Both GAAP and non-GAAP gross margin for the brand advertising business for 2019 was 28%, compared with 20% in 2018. The increase was mainly attributable to a decrease in video content cost.
GAAP gross margin for the search and search-related advertising business for 2019 was 34%, compared with 35% in 2018. Non-GAAP gross margin for the search and search-related advertising business for 2019 was 35%, compared with 35% in 2018.
Both GAAP and non-GAAP gross margin for online games for 2019 was 80%, compared with 84% in 2018.
Operating Expenses
For 2019, GAAP operating expenses totaled US$863 million, down 9% compared with 2018. Non-GAAP operating expenses were US$845 million, down 10% compared with 2018. The decrease was mainly due to decreased marketing and promotional expenses.
Operating Profit/(Loss)
GAAP operating profit for 2019 was
Non-GAAP operating profit for 2019 was US$19 million, compared with an operating loss of US$114 million in 2018.
Income Tax Expense
GAAP income tax expense for 2019 was
Net Loss
GAAP net loss attributable to
Business Outlook
For the first quarter of 2020, Sohu estimates:
- Total revenues to be between US$400 million and
US$435 million . - Brand advertising revenues to be between US$25 million and
US$30 million ; this implies an annual decrease of 30% to 42% and a sequential decrease of 28% to 40%. - Sogou revenues to be between
US$240 million andUS$260 million ; this implies an annual decrease of 5% to an annual increase of 3% and a sequential decrease of 14 to 20%. - Online game revenues to be between
US$120 million andUS$130 million ; this implies an annual increase of 21% to 31% and a sequential decrease of 1% to 9%. - Non-GAAP net loss attributable to Sohu.com Limited. to be between US$25 million and
US$35 million , and non-GAAP loss per fully-diluted ADS to be betweenUS$0.65 andUS$0.90 . GAAP net loss attributable to Sohu.com Limited to be between US$28 million andUS$38 million , and GAAP loss per fully-diluted ADS to be between US$0.70 andUS$0.95 . - Excluding the profit/loss generated by Sogou and Changyou, Non-GAAP net loss attributable to
Sohu.com Limited . to be betweenUS$43 million andUS$48 million , GAAP net loss attributable toSohu.com Limited to be betweenUS$45 million andUS$50 million .
For the first quarter 2020 guidance, the Company has adopted a presumed exchange rate of
This forecast reflects Sohu's management's current and preliminary view, which at present is subject to substantial uncertainty, particularly in view of the potential impact of the COVID-19 virus, the effects of which are difficult to analyze and predict.
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; the one-time impairment charge recognized for an investment unrelated to the Company's core businesses; 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; the one-time impairment charge recognized for an investment unrelated to the Company's core businesses; 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, the one-time impairment charge recognized for an investment unrelated to the Company's core businesses, 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, the one-time impairment charge recognized for an investment unrelated to the Company's core businesses, 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
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 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 |
|
+852-3018-6771 |
|
+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: |
4797261 |
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'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
Ms. |
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Tel: |
+86 (10) 6272-6645 |
E-mail: |
In
Ms. |
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Christensen |
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Tel: |
+1 (480) 614-3004 |
E-mail: |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
|||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||
|
|
|
Dec. 31, 2019 |
Dec. 31, 2018 |
|||||||
Revenues: |
|||||||||||
Online advertising |
|||||||||||
Brand advertising |
$ |
41,599 |
$ |
46,323 |
$ |
57,222 |
$ |
174,861 |
$ |
231,945 |
|
Search and search-related advertising |
274,590 |
288,198 |
276,666 |
1,072,860 |
1,022,456 |
||||||
Subtotal |
316,189 |
334,521 |
333,888 |
1,247,721 |
1,254,401 |
||||||
Online games |
131,689 |
108,012 |
94,106 |
440,902 |
389,788 |
||||||
Others |
41,769 |
39,750 |
36,287 |
156,824 |
168,638 |
||||||
Total revenues |
489,647 |
482,283 |
464,281 |
1,845,447 |
1,812,827 |
||||||
Cost of revenues: |
|||||||||||
Online advertising |
|||||||||||
Brand advertising (includes stock-based |
28,677 |
31,992 |
42,485 |
126,406 |
184,473 |
||||||
Search and search-related (includes stock-based |
163,384 |
178,343 |
183,678 |
703,144 |
664,164 |
||||||
Subtotal |
192,061 |
210,335 |
226,163 |
829,550 |
848,637 |
||||||
Online games (includes stock-based compensation |
33,181 |
23,286 |
14,499 |
88,992 |
60,981 |
||||||
Others |
12,198 |
17,680 |
12,113 |
63,553 |
72,868 |
||||||
Total cost of revenues |
237,440 |
251,301 |
252,775 |
982,095 |
982,486 |
||||||
Gross profit |
252,207 |
230,982 |
211,506 |
863,352 |
830,341 |
||||||
Operating expenses: |
|||||||||||
Product development (includes stock-based |
105,425 |
104,207 |
108,611 |
419,114 |
441,161 |
||||||
Sales and marketing (includes stock-based |
78,375 |
91,335 |
97,422 |
340,840 |
380,290 |
||||||
General and administrative (includes stock-based |
26,901 |
23,797 |
25,119 |
95,773 |
108,764 |
||||||
|
- |
- |
16,369[6] |
7,245 |
16,369 |
||||||
Total operating expenses |
210,701 |
219,339 |
247,521 |
862,972 |
946,584 |
||||||
Operating profit/(loss) |
41,506 |
11,643 |
(36,015) |
380 |
(116,243) |
||||||
Other income/(expense) |
(13,787)[7] |
15,832 |
13,073 |
21,948 |
64,724 |
||||||
Interest income |
1,508 |
1,959 |
6,455 |
10,546 |
24,074 |
||||||
Interest expense |
(2,501) |
(2,631) |
(5,279) |
(14,370) |
(17,538) |
||||||
Exchange difference |
(2,324) |
4,714 |
(378) |
3,279 |
9,026 |
||||||
Income/(Loss) before income tax expense |
24,402 |
31,517 |
(22,144) |
21,783 |
(35,957) |
||||||
Income tax expense/(benefit) |
(954) |
17,011 |
(69,557) |
31,176 |
(13,433) |
||||||
Income/(loss) from continuing operations |
25,356 |
14,506 |
47,413 |
(9,393) |
(22,524) |
||||||
Net loss from discontinued operations |
- |
(2,706) |
(12,000) |
(33,998) |
(44,835) |
||||||
Net income/(loss) |
25,356 |
11,800 |
35,413 |
(43,391) |
(67,359) |
||||||
Less: Net income from continuing operations |
42,451 |
35,615 |
24,685 |
117,177 |
107,318 |
||||||
Less: Net loss from discontinued operations |
- |
(896) |
(3,912) |
(11,232) |
(14,595) |
||||||
Net income/(loss) from continuing operations attributable to |
(17,095) |
(21,109) |
22,728 |
(126,570) |
(129,842) |
||||||
Net loss from discontinued operations attributable to |
- |
(1,810) |
(8,088) |
(22,766) |
(30,240) |
||||||
Net income/(loss) attributable to |
(17,095) |
(22,919) |
14,640 |
(149,336) |
(160,082) |
||||||
Basic net income/(loss) from continuing operations per |
(0.44) |
(0.54) |
0.58 |
(3.22) |
(3.33) |
||||||
Basic net loss from discontinued operations per ADS |
- |
(0.04) |
(0.21) |
(0.58) |
(0.78) |
||||||
Basic net income/(loss) per ADS attributable to |
$ |
(0.44) |
$ |
(0.58) |
$ |
0.37 |
$ |
(3.80) |
$ |
(4.11) |
|
ADS used in computing basic net loss per ADS attributable |
39,263 |
39,254 |
39,069 |
39,249 |
38,959 |
||||||
Diluted net income/(loss) from continuing operations per |
(0.45) |
(0.55) |
0.57 |
(3.25) |
(3.36) |
||||||
Diluted net loss from discontinued operations per ADS |
- |
(0.04) |
(0.20) |
(0.58) |
(0.77) |
||||||
Diluted net income/(loss) per ADS attributable to |
$ |
(0.45) |
$ |
(0.59) |
$ |
0.37 |
$ |
(3.83) |
$ |
(4.13) |
|
ADS used in computing diluted net loss per ADS attributable |
39,263 |
39,254 |
39,234 |
39,249 |
38,959 |
||||||
[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
[7] Other expenses in the fourth quarter of 2019 mainly included an impairment charge of approximately |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS) |
||||
As of |
As of |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ |
305,126 |
$ |
819,485 |
Restricted cash |
8,661 |
3,539 |
||
Short-term investments |
1,316,833 |
1,041,395 |
||
Account and financing receivable, net |
260,716 |
264,411 |
||
Prepaid and other current assets |
124,332 |
225,744 |
||
Current assets associated with discontinued operations |
- |
34,324 |
||
Total current assets |
2,015,668 |
2,388,898 |
||
Long-term investments |
94,332 |
108,356 |
||
Fixed assets, net |
447,688 |
504,647 |
||
|
52,923 |
53,263 |
||
Intangible assets, net |
11,437 |
24,071 |
||
Restricted time deposits |
240 |
244,179 |
||
Prepaid non-current assets |
1,882 |
3,107 |
||
Other assets[8] |
65,620 |
43,928 |
||
Non-current assets associated with discontinued operations |
- |
398 |
||
Total assets |
$ |
2,689,790 |
$ |
3,370,847 |
LIABILITIES |
||||
Current liabilities: |
||||
Accounts payable |
$ |
253,403 |
$ |
286,745 |
Accrued liabilities |
249,810 |
292,282 |
||
Receipts in advance and deferred revenue |
118,222 |
120,404 |
||
Accrued salary and benefits |
110,833 |
108,011 |
||
Taxes payable |
102,686 |
93,073 |
||
Short-term bank loans |
114,528 |
129,677 |
||
Other short-term liabilities[8] |
149,311 |
123,921 |
||
Current liabilities associated with discontinued operations |
- |
101,105 |
||
Total current liabilities |
$ |
1,098,793 |
$ |
1,255,218 |
Long-term accounts payable |
767 |
752 |
||
Long-term Bank Loans |
- |
302,323 |
||
Long-term tax liabilities |
277,544 |
259,603 |
||
Other long-term liabilities[8] |
5,769 |
- |
||
Total long-term liabilities |
$ |
284,080 |
$ |
562,678 |
Total liabilities |
$ |
1,382,873 |
$ |
1,817,896 |
SHAREHOLDERS' EQUITY: |
||||
|
428,454 |
588,840 |
||
Noncontrolling Interest |
878,463 |
964,111 |
||
Total shareholders' equity |
$ |
1,306,917 |
$ |
1,552,951 |
Total liabilities and shareholders' equity |
$ |
2,689,790 |
$ |
3,370,847 |
[8] We have adopted ASU No. 2016-02, "Leases," beginning |
RECONCILIATIONS OF NON-GAAP RESULTS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
||||||||||||||||||
Three Months Ended Dec. 31, 2019 |
Three Months Ended Sep. 30, 2019 |
Three Months Ended |
||||||||||||||||
GAAP |
Non-GAAP Adjustments |
Non-GAAP |
GAAP |
Non-GAAP Adjustments |
Non-GAAP |
GAAP |
Non-GAAP Adjustments |
Non-GAAP |
||||||||||
2 |
(a) |
4 |
(a) |
(34) |
(a) |
|||||||||||||
Brand advertising gross profit |
$ |
12,922 |
$ |
2 |
$ |
12,924 |
$ |
14,331 |
$ |
4 |
$ |
14,335 |
$ |
14,737 |
$ |
(34) |
$ |
14,703 |
Brand advertising gross margin |
31% |
31% |
31% |
31% |
26% |
26% |
||||||||||||
256 |
(a) |
64 |
(a) |
(48) |
(a) |
|||||||||||||
Search and search-related |
$ |
111,206 |
$ |
256 |
$ |
111,462 |
$ |
109,855 |
$ |
64 |
$ |
109,919 |
$ |
92,988 |
$ |
(48) |
$ |
92,940 |
Search and search-related |
40% |
41% |
38% |
38% |
34% |
34% |
||||||||||||
258 |
(a) |
68 |
(a) |
(82) |
(a) |
|||||||||||||
Online advertising gross profit |
$ |
124,128 |
$ |
258 |
$ |
124,386 |
$ |
124,186 |
$ |
68 |
$ |
124,254 |
$ |
107,725 |
$ |
(82) |
$ |
107,643 |
Online advertising gross margin |
39% |
39% |
37% |
37% |
32% |
32% |
||||||||||||
137 |
(a) |
- |
(a) |
7 |
(a) |
|||||||||||||
Online games gross profit |
$ |
98,508 |
$ |
137 |
$ |
98,645 |
$ |
84,726 |
$ |
- |
$ |
84,726 |
$ |
79,607 |
$ |
7 |
$ |
79,614 |
Online games gross margin |
75% |
75% |
78% |
78% |
85% |
85% |
||||||||||||
Others gross profit |
$ |
29,571 |
$ |
- |
(a) $ |
29,571 |
$ |
22,070 |
$ |
- |
(a) $ |
22,070 |
$ |
24,174 |
$ |
- |
(a) $ |
24,174 |
Others gross margin |
71% |
71% |
56% |
56% |
67% |
67% |
||||||||||||
395 |
(a) |
68 |
(a) |
(75) |
(a) |
|||||||||||||
Gross profit |
$ |
252,207 |
$ |
395 |
$ |
252,602 |
$ |
230,982 |
$ |
68 |
$ |
231,050 |
$ |
211,506 |
$ |
(75) |
$ |
211,431 |
Gross margin |
52% |
52% |
48% |
48% |
46% |
46% |
||||||||||||
Operating expenses |
$ |
210,701 |
$ |
(6,909) |
(a) $ |
203,792 |
$ |
219,339 |
$ |
(4,306) |
(a) $ |
215,033 |
$ |
247,521 |
$ |
(1,605) |
(a) $ |
245,916 |
7,304 |
(a) |
4,374 |
(a) |
1,530 |
(a) |
|||||||||||||
Operating profit/(loss) |
$ |
41,506 |
$ |
7,304 |
$ |
48,810 |
$ |
11,643 |
$ |
4,374 |
$ |
16,017 |
$ |
(36,015) |
$ |
1,530 |
$ |
(34,485) |
Operating margin |
8% |
10% |
2% |
3% |
-8% |
-7% |
||||||||||||
Income tax expense |
$ |
954 |
$ |
2,737 |
(c,d)$ |
3,691 |
$ |
(17,011) |
$ |
2,468 |
(c,d)$ |
(14,543) |
$ |
69,557 |
$ |
(74,160) |
$ |
(4,603) |
7,304 |
(a) |
4,374 |
(a) |
1,530 |
(a) |
|||||||||||||
(2,490) |
(c) |
448 |
(c) |
267 |
(c) |
|||||||||||||
1,907 |
(d) |
2,618 |
(d) |
(74,071) |
(d) |
|||||||||||||
23,154 |
(e) |
- |
- |
|||||||||||||||
Net income/(loss) before |
$ |
25,356 |
29,875 |
55,231 |
$ |
14,506 |
7,440 |
21,946 |
$ |
47,413 |
$ |
(72,274) |
$ |
(24,861) |
||||
7,304 |
(a) |
4,374 |
(a) |
1,530 |
(a) |
|||||||||||||
(5,416) |
(b) |
(2,863) |
(b) |
(988) |
(b) |
|||||||||||||
(2,490) |
(c) |
448 |
(c) |
267 |
(c) |
|||||||||||||
1,907 |
(d) |
2,618 |
(d) |
(74,071) |
(d) |
|||||||||||||
23,154 |
(e) |
- |
- |
|||||||||||||||
Net income/(loss) from |
$ |
(17,613) |
24,459 |
6,846 |
$ |
(21,400) |
4,577 |
(16,823) |
$ |
22,539 |
$ |
(73,262) |
(50,723) |
|||||
Net loss from discontinued |
- |
- |
- |
(1,807) |
- |
(1,807) |
(8,028) |
12 |
(8,016) |
|||||||||
Net income/(loss) attributable |
(17,613) |
24,459 |
6,846 |
(23,207) |
4,577 |
(18,630) |
14,511 |
(73,250) |
(58,739) |
|||||||||
Diluted net income/(loss) from continuing operations per |
$ |
(0.45) |
0.17 |
$ |
(0.55) |
(0.43) |
$ |
0.57 |
(1.30) |
|||||||||
Diluted net loss from |
- |
- |
(0.04) |
(0.04) |
(0.20) |
(0.20) |
||||||||||||
Diluted net income/(loss) per |
(0.45) |
0.17 |
(0.59) |
(0.47) |
0.37 |
(1.50) |
||||||||||||
Shares used in computing diluted |
39,263 |
39,396 |
39,254 |
39,254 |
39,234 |
39,069 |
||||||||||||
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 (e) To adjust for a one-time impairment charge recognized for an investment unrelated to the Company's core businesses |
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) |
||||||||||||
Twelve Months Ended |
Twelve Months Ended |
|||||||||||
GAAP |
Non-GAAP Adjustments |
Non-GAAP |
GAAP |
Non-GAAP Adjustments |
Non-GAAP |
|||||||
22 |
(a) |
(707) |
(a) |
|||||||||
Brand advertising gross profit |
$ |
48,455 |
$ |
22 |
$ |
48,477 |
$ |
47,472 |
$ |
(707) |
$ |
46,765 |
Brand advertising gross margin |
28% |
28% |
20% |
20% |
||||||||
474 |
(a) |
669 |
(a) |
|||||||||
Search and search-related |
$ |
369,716 |
$ |
474 |
$ |
370,190 |
$ |
358,292 |
$ |
669 |
$ |
358,961 |
Search and search-related |
34% |
35% |
35% |
35% |
||||||||
496 |
(a) |
(38) |
(a) |
|||||||||
Online advertising gross profit |
$ |
418,171 |
$ |
496 |
$ |
418,667 |
$ |
405,764 |
$ |
(38) |
$ |
405,726 |
Online advertising gross margin |
34% |
34% |
32% |
32% |
||||||||
120 |
(a) |
(31) |
(a) |
|||||||||
Online games gross profit |
$ |
351,910 |
$ |
120 |
$ |
352,030 |
$ |
328,807 |
$ |
(31) |
$ |
328,776 |
Online games gross margin |
80% |
80% |
84% |
84% |
||||||||
Others gross profit |
$ |
93,271 |
$ |
- |
(a)$ |
93,271 |
$ |
95,770 |
$ |
- |
(a)$ |
95,770 |
Others gross margin |
59% |
59% |
57% |
57% |
||||||||
616 |
(a) |
(69) |
(a) |
|||||||||
Gross profit |
$ |
863,352 |
$ |
616 |
$ |
863,968 |
$ |
830,341 |
$ |
(69) |
$ |
830,272 |
Gross margin |
47% |
47% |
46% |
46% |
||||||||
Operating expenses |
$ |
862,972 |
$ |
(17,635) |
(a)$ |
845,337 |
$ |
946,584 |
$ |
(2,165) |
(a)$ |
944,419 |
18,251 |
(a) |
2,096 |
(a) |
|||||||||
Operating loss |
$ |
380 |
$ |
18,251 |
$ |
18,631 |
$ |
(116,243) |
$ |
2,096 |
$ |
(114,147) |
Operating margin |
0% |
1% |
-6% |
-6% |
||||||||
Income tax benefit/(expense) |
$ |
(31,176) |
$ |
8,549 |
(c,d)$ |
(22,627) |
$ |
13,433 |
$ |
(75,281) |
(c,d)$ |
(61,848) |
18,251 |
(a) |
2,096 |
(a) |
|||||||||
(1,992) |
(c) |
3,634 |
(c) |
|||||||||
7,887 |
(d) |
(74,071) |
(d) |
|||||||||
23,154 |
(e) |
- |
||||||||||
Net loss before |
$ |
(9,393) |
$ |
47,300 |
$ |
37,907 |
$ |
(22,524) |
$ |
(68,341) |
$ |
(90,865) |
18,251 |
(a) |
2,096 |
(a) |
|||||||||
(12,811) |
(b) |
(7,624) |
(b) |
|||||||||
(1,992) |
(c) |
3,634 |
(c) |
|||||||||
7,887 |
(d) |
(74,071) |
(d) |
|||||||||
23,154 |
(e) |
- |
||||||||||
Net loss from continuing |
(127,738) |
34,489 |
(93,249) |
(130,960) |
(75,965) |
(206,925) |
||||||
Net loss from discontinued |
(22,711) |
- |
(22,711) |
(29,999) |
50 |
(b) |
(29,949) |
|||||
Net loss attributable to |
$ |
(150,449) |
34,489 |
(115,960) |
$ |
(160,959) |
(75,915) |
(236,874) |
||||
Diluted net loss from continuing |
(3.25) |
(2.37) |
(3.36) |
(5.31) |
||||||||
Diluted net loss from discontinued |
(0.58) |
(0.58) |
(0.77) |
(0.77) |
||||||||
Diluted net loss per ADS |
$ |
(3.83) |
$ |
(2.95) |
$ |
(4.13) |
$ |
(6.08) |
||||
ADS used in computing diluted |
39,249 |
39,249 |
38,959 |
38,959 |
||||||||
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 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 (e) To adjust for the one-time impairment charge recognized for an investment unrelated to the Company's core businesses. |
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