SEC Filing | SOHU.com Limited

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Form 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

20-F

(Mark One)

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:

001-38511

SOHU.COM LIMITED

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

Level 18, Sohu.com Media Plaza

Block 3, No. 2 Kexueyuan South Road, Haidian District

Beijing 100190

People’s Republic of China

(Address of principal executive offices)

Joanna Lv

Chief Financial Officer

Level 18, Sohu.com Media Plaza

Block 3, No. 2 Kexueyuan South Road, Haidian District

Beijing 100190

Telephone: (011)

8610-

6272

6666

Email:

IR@sohu-inc.com

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


(Title of each class)	(Trading Symbol(s))	(Name of each exchange on which registered)
American Depositary Shares, each representing one ordinary share, par value US$0.001 per share	SOHU	The Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 33,737,336 ordinary shares, par value $0.001 per share, as of December 31, 2022.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☒		Non-accelerated filer ☐		Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.


U.S. GAAP ☒		International Financial Reporting Standards as issued by the International Accounting Standards Board ☐		Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). ☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐ Yes ☐ No

TABLE OF CONTENTS


INTRODUCTION		1

FORWARD-LOOKING INFORMATION		2

PART I

Item 1.	Identity of Directors, Senior Management and Advisers	3
Item 2.	Offer Statistics and Expected Timetable	3
Item 3.	Key Information	3
Item 4.	Information on the Company	63
Item 4A.	Unresolved Staff Comments	105
Item 5.	Operating and Financial Review and Prospects	105
Item 6.	Directors, Senior Management and Employees	120
Item 7.	Major Shareholders and Related Party Transactions	127
Item 8.	Financial Information	132
Item 9.	The Offer and Listing	132
Item 10.	Additional Information	132
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	143
Item 12.	Description of Securities Other than Equity Securities	144

PART II

Item 13.	Defaults, Dividend Arrearages and Delinquencies	145
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	145
Item 15.	Controls and Procedures	146
Item 16A.	Audit Committee Financial Expert	146
Item 16B.	Code of Ethics	146
Item 16C.	Principal Accountant Fees and Services	146
Item 16D.	Exemptions from the Listing Standards for Audit Committees	147
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	147
Item 16F.	Change in Registrant’s Certifying Accountant	148
Item 16G.	Corporate Governance	148
Item 16H.	Mine Safety Disclosure	148
Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	148
Item 16J.	Insider Trading Policies	148

PART III

Item 17.	Financial Statements	148
Item 18.	Financial Statements	149
Item 19.	Exhibits	150

SIGNATURES		154

Introduction

In this annual report, except where the context otherwise requires and for purposes of this annual report only:

•

“we,” “us,” “our,” “our company,” “our Group,” the “Sohu Group,” the “Group,” and “Sohu” refer to Sohu.com Limited (or our predecessor Sohu.com Inc., as applicable) and, unless the context requires otherwise, include its subsidiaries and variable interest entities (“VIEs”) that it consolidates. For a list of the principal VIEs we consolidate, see “Information on the Company - Organizational Structure” in Item 4 of this annual report. As described elsewhere in this annual report, we do not own the VIEs, and the results of the VIEs’ operations only accrue to us through contractual arrangements between the VIEs, and the VIEs’ nominee shareholders, and certain of our subsidiaries. Accordingly, in appropriate contexts we will describe the VIEs’ activities separately from those of our direct and indirect owned subsidiaries and our use of the terms “we,” “us,” and “our” may not include the VIEs in those contexts. Sohu.com Inc., a Delaware corporation, was dissolved on May 31, 2018 and Sohu.com Limited, which before then was a direct wholly-owned subsidiary of Sohu.com Inc., replaced Sohu.com Inc. as the top-tier, publicly-traded holding company of the Sohu Group. See “Information on the Company-History and Development of the Company” in Item 4 of this annual report.

•

“ADSs” refers to our American depositary shares, each of which represents one ordinary share, par value $0.001 per share;

•

“Cayman Islands Companies Act” refers to the Companies Act (2023 Revision) (as amended or revised from time to time) of the Cayman Islands;

•

“Changyou” refers to Changyou.com Limited, a Cayman Islands exempted company, and unless the context requires otherwise, includes its subsidiaries and the consolidated VIEs, but excludes Fox Information Technology (Tianjin) Limited (“Video Tianjin”) and its subsidiaries;

•

“China” or the “PRC” refers to the People’s Republic of China; and “Chinese mainland” refers to the People’s Republic of China excluding Hong Kong, Macau, and Taiwan;

•

“HNTE” refers to high and new technology enterprises;

•

“IPO” refers to an initial public offering;

•

“KNSE” refers to key national software enterprises;

•

“Legacy TLBB Mobile” refers to a mobile game that Changyou developed based on the title and characters of Tian Long Ba Bu, which is operated by Tencent under license from Changyou and was launched in May 2017;

•

“Memorandum and Articles of Association” refers to our Amended and Restated Memorandum of Association and our Amended and Restated Articles of Association;

•

“MMORPGs” refers to massively multiplayer online role-playing games;

•

“Offshore” refers to nations and territories outside of the Chinese mainland, and for this purpose includes Hong Kong, Macau, and Taiwan;

•

“PC games” refers to interactive online games that may be accessed and played simultaneously by hundreds of thousands of game players through personal computers with local game client-end access software installation requirements. In previous annual reports, we have sometimes used the terms “MMOGs” and “MMORPGs” when referring to these client-end installed games played through personal computers;

•

“RMB” refers to the Renminbi, which is the legal currency of the Chinese mainland;

•

“Sogou” refers to Sogou Inc., a Cayman Islands exempted company, and unless the context requires otherwise, includes its subsidiaries and the VIEs it consolidates;

•

“Tencent” refers to Tencent Holdings Limited and its subsidiaries under International Financial Reporting Standards;

•

“Tian Long Ba Bu,” refers to the popular novel of that name by the famous Chinese writer Louis Cha;

•

“TLBB” or “TLBB PC” refers to the PC game developed based on the title and characters of Tian Long Ba Bu;

•

“TLBB 3D” refers to a mobile game that was developed based on the title and characters of Tian Long Ba Bu;

•

“TLBB Honor” refers to another mobile game that was developed based on the title and characters of Tian Long Ba Bu, which adopts an innovative portrait interface;

•

“U.S. GAAP” refers to generally accepted accounting principles in the United States;

•

“U.S. TCJA” refers to the U.S. Tax Cuts and Jobs Act signed into law on December 22, 2017; and

•

“VIE” refers to an entity that is a variable interest entity under U.S. GAAP, including a subsidiary of an entity that is a variable interest entity under U.S. GAAP.

This annual report on Form 20-F includes our audited consolidated statements of comprehensive income/(loss) for the years ended December 31, 2020, 2021, and 2022 and audited consolidated balance sheets as of December 31, 2021 and 2022.

Our predecessor Sohu.com Inc. completed an IPO of shares of its common stock on Nasdaq on July 17, 2000. Following the dissolution of Sohu.com Inc. on May 31, 2018, our ADSs began trading on Nasdaq in place of the shares of common stock of Sohu.com Inc. under the same “SOHU” symbol under which Sohu.com Inc.’s shares had previously traded.

Changyou completed its IPO on Nasdaq in April 2009, trading under the symbol “CYOU.” On April 17, 2020, we acquired all outstanding shares of Changyou that we did not already beneficially own pursuant to the merger (the “Changyou Merger”) of an indirect newly-formed wholly-owned subsidiary (“Changyou Merger Co.”) with and into Changyou, with Changyou being the company surviving the Changyou Merger, and resulting in Changyou being delisted from Nasdaq and continuing as a privately-held company wholly-owned directly and indirectly by us.

Sogou completed its IPO on the New York Stock Exchange (the “NYSE”) in November 2017, trading under the symbol “SOGO.” On September 23, 2021, we completed the transactions contemplated by a Share Purchase Agreement, dated September 29, 2020 and amended on December 1, 2020 and further amended on July 19, 2021, among us, our indirect wholly-owned subsidiary Sohu.com (Search) Limited (“Sohu Search”), and TitanSupernova Limited (“Tencent Merger Sub”), an indirect wholly-owned subsidiary of Tencent (as so amended, the “Tencent/Sohu Sogou Share Purchase Agreement”), in which Sohu Search sold all of the Class A ordinary shares of Sogou and Class B ordinary shares of Sogou owned by Sohu Search to Tencent Merger Sub at a purchase price of $9.00 per share (the “Tencent/Sohu Sogou Share Purchase”). We received gross consideration of approximately $1.18 billion in cash from the Tencent/Sohu Sogou Share Purchase. As a result of the completion of the Tencent/Sohu Sogou Share Purchase, we no longer have any beneficial ownership interest in Sogou. See “Item 4. Information on the Company - History and Development of the Company” for a more detailed description of the transactions contemplated by the Tencent/Sohu Sogou Share Purchase Agreement.

FORWARD-LOOKING INFORMATION

This annual report on Form 20-F contains “forward looking statements.” These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terms such as “may,” “will,” “expects,” “anticipates,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” and similar expressions. The forward-looking statements made in this annual report relate only to events as of the date on which the statements are made. We undertake no obligation, beyond any that is required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, even though our situation will change in the future.

These forward-looking statements include, but are not limited to, the following:

•

our ability to maintain and strengthen our position as a leading Chinese online media, video, and game business group in the Chinese mainland;

•

our expected development, launch and market acceptance of our products and services;

•

our various initiatives to implement our business strategies to expand our business;

•

our future business development, results of operations and financial condition;

•

the expected growth of and change in the online media, video, and game industries in the Chinese mainland;

•

regulatory policies in the Chinese mainland relating to the Internet and Internet content providers, including online media, video, and game developers and operators; and

•

the effect that Chinese mainland laws and regulations; regulatory policies in the Chinese mainland; and the views of courts, arbitral tribunals, and other regulatory authorities in the Chinese mainland may have on our ability to rely on contractual rights to effect control and management of the VIEs that are consolidated with us and our ability to consolidate such VIEs’ results of operations, assets, and liabilities in our consolidated financial statements and/or to transfer the revenues of such VIEs to our corresponding Chinese mainland subsidiaries.

Whether actual results will conform with our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control, and reflect future business decisions that are subject to change. Some of the assumptions, future results, and levels of performance expressed or implied in the forward-looking statements we make inevitably will not materialize, and unanticipated events may occur which will affect our results.

We would like to caution you not to place undue reliance on forward-looking statements and you should read these statements in conjunction with all other parts of this annual report, including the risk factors set forth in Item 3. See “Key Information-Risk Factors.”

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3.

KEY INFORMATION

Financial Information Related to VIEs and Sohu.com Limited

We do not own the VIEs that we consolidate in our financial statements. Chinese mainland law currently restricts foreign ownership of value-added telecommunication services, Internet publishing, online news information services, online audiovisual transmission, online games, and certain other business activities in the Chinese mainland. To comply with Chinese mainland law, we conduct a significant part of our value-added telecommunications, online game, and other business activities through contractual arrangements between our principal Chinese mainland subsidiaries and the corresponding VIEs and their respective shareholders. See “Information on the Company - Organizational Structure” in Item 4 of this annual report for a description of the ownership information of the principal VIEs through which we conduct a significant portion of our operations. See Item 7 “Major Shareholders and Related Party Transactions – Contractual Arrangements with VIEs and their Shareholders” of this annual report for a more detailed discussion of the contractual arrangements with the VIEs. For a discussion of risks related to these contractual arrangements, please see “Item 3. Key Information - Risk Factors - Risks Related to Our Corporate Structure- We depend upon contractual arrangements with the VIEs and/or their shareholders for the success of our business, these contractual arrangements, which provide the basis for us to consolidate such VIEs under U.S. GAAP (ASC 810), may not be as effective in providing us with a controlling financial interest (as defined under U.S. GAAP (ASC 810)) as would ownership of these businesses, and the contracts may be difficult to enforce” and “- A failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them could have an adverse effect on our business and financial condition.”

The table below presents our condensed consolidating schedule of financial position for our top-tier publicly-traded holding company Sohu.com Limited (the “Company”), our wholly-owned subsidiaries that are the primary beneficiaries of the VIEs under U.S. GAAP (the “Primary Beneficiaries of VIEs”), our other subsidiaries that are not the Primary Beneficiaries of VIEs (the “Other Subsidiaries”), and the VIEs and their subsidiaries that we consolidate as of the dates presented (in thousands).

Between our entry into the Tencent/Sohu Sogou Share Purchase Agreement on September 29, 2020 and the completion of the Tencent/Sohu Sogou Share Purchase on September 23, 2021, Sogou met the criteria for discontinued operations. Accordingly, the results of operations of Sogou and the gain of approximately $855 million, net of transaction and other costs, from its disposal are presented in separate line items in the table below as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Accordingly, the financial position, results of operations, and cash flows related to the discontinued Sogou operations have not been disaggregated in the table below, because they do not constitute any part of our consolidated financial statements following the completion of the Tencent/Sohu Sogou Share Purchase.


	As of December 31, 2021
	Sohu.com Limited		Other Subsidiaries		Primary Beneficiaries of VIEs		VIEs and their subsidiaries		Eliminating adjustments			Consolidated totals
ASSETS
Current assets:
Cash and cash equivalents	$	13,564		606,306		346,566		32,513		0			998,949
Restricted cash		0		0		1,969		0		0			1,969
Short-term investments		0		147,598		251,747		0		0			399,345
Accounts receivable, net		0		25,552		20,971		36,027		0			82,550
Prepaid and other current assets		723		13,224		74,528		18,836		0			107,311
Intra-Group receivables due from subsidiaries (1)		539,677		670,362		837,566		647,330		(2,694,935	)		0

Total current assets		553,964		1,463,042		1,533,347		734,706		(2,694,935	)		1,590,124

Fixed assets, net		0		55,358		274,212		427		0			329,997
Investment in subsidiaries (2)		918,243		779,717		349,208		0		(2,047,168	)		0
Controlling financial interests in VIEs (3)		0		0		213,763		0		(213,763	)		0
Long-term time deposits		0		0		189,007		0		0			189,007
Other non-current assets		22,036		9,469		19,976		86,744		(1,568	)		136,657

Total assets	$	1,494,243		2,307,586		2,579,513		821,877		(4,957,434	)		2,245,785

LIABILITIES
Current liabilities:
Accounts payable	$	0		21,301		53,821		12,325		0			87,447
Accrued liabilities		1,678		11,257		81,566		43,695		0			138,196
Receipts in advance and deferred revenue		0		4,938		6,259		45,844		0			57,041
Accrued salary and benefits		83		25,637		57,372		8,393		0			91,485
Tax payables		9		7,925		7,241		1,539		0			16,714
Intra-Group payables due to subsidiaries (1)		36,912		1,011,224		1,184,312		462,487		(2,694,935	)		0
Other short-term liabilities		1,358		58,866		38,250		14,094		0			112,568

Total current liabilities		40,040		1,141,148		1,428,821		588,377		(2,694,935	)		503,451

Long-term other payables		0		0		3,922		0		0			3,922
Long-term tax liabilities		163,334		16,119		0		14,465		0			193,918
Deferred tax liabilities		0		237,116		8,726		3,323		0			249,165
Other non-current liabilities		0		0		2,960		1,750		(1,568	)		3,142

Total long-term liabilities		163,334		253,235		15,608		19,538		(1,568	)		450,147

Total liabilities	$	203,374		1,394,383		1,444,429		607,915		(2,696,503	)		953,598

Commitments and contingencies
SHAREHOLDERS’ EQUITY
Total Sohu.com Limited shareholders’ equity		1,290,869		911,936		1,135,084		213,962		(2,260,982	)		1,290,869
Noncontrolling interest		0		1,267		0		0		51			1,318

Total shareholders’ equity (2)(3)		1,290,869		913,203		1,135,084		213,962		(2,260,931	)		1,292,187

Total liabilities and shareholders’ equity	$	1,494,243		2,307,586		2,579,513		821,877		(4,957,434	)		2,245,785


	As of December 31, 2022
	Sohu.com Limited		Other Subsidiaries			Primary Beneficiaries of VIEs		VIEs and their subsidiaries		Eliminating adjustments			Consolidated totals
ASSETS
Current assets:
Cash and cash equivalents	$	1,308		648,981			25,800		21,732		0			697,821
Restricted cash		0		0			1,803		1,838		0			3,641
Short-term investments		0		467,294			1,726		4,604		0			473,624
Accounts receivable, net		0		28,913			6		38,622		0			67,541
Prepaid and other current assets		700		22,201			46,258		13,934		0			83,093
Intra-Group receivables due from subsidiaries (1)		512,936		353,286			666,291		594,099		(2,126,612	)		0

Total current assets		514,944		1,520,675			741,884		674,829		(2,126,612	)		1,325,720

Fixed assets, net		0		51,087			236,787		352		0			288,226
Investment in subsidiaries (2)		834,714		1,735,970			455,149		0		(3,025,833	)		0
Controlling financial interests in VIEs (3)		0		0			198,476		0		(198,476	)		0
Long-term time deposits		0		0			265,802		0		0			265,802
Other non-current assets		22,036		8,284			15,694		53,450		(1,436	)		98,028

Total assets	$	1,371,694		3,316,016			1,913,792		728,631		(5,352,357	)		1,977,776

LIABILITIES
Current liabilities:
Accounts payable	$	0		26,751			18,789		10,909		0			56,449
Accrued liabilities		1,129		57,224			30,162		37,946		0			126,461
Receipts in advance and deferred revenue		0		7,055			77		40,948		0			48,080
Accrued salary and benefits		83		19,288			35,154		6,229		0			60,754
Tax payables		0		2,217			7,212		1,183		0			10,612
Intra-Group payables due to subsidiaries (1)		90,173		907,191			726,702		402,546		(2,126,612	)		0
Other short-term liabilities		0		56,356			43,074		15,102		0			114,532

Total current liabilities		91,385		1,076,082			861,170		514,863		(2,126,612	)		416,888

Long-term other payables		0		866			929		0		0			1,795
Long-term tax liabilities		170,867		16,120			0		13,242		0			200,229
Deferred tax liabilities		0		239,013			8,252		549		0			247,814
Other non-current liabilities		0		(80	)		420		1,436		(1,436	)		340

Total long-term liabilities		170,867		255,919			9,601		15,227		(1,436	)		450,178

Total liabilities	$	262,252		1,332,001			870,771		530,090		(2,128,048	)		867,066

Commitments and contingencies
SHAREHOLDERS’ EQUITY
Total Sohu.com Limited shareholders’ equity		1,109,442		1,982,747			1,043,021		198,541		(3,224,309	)		1,109,442
Noncontrolling interest		0		1,268			0		0		0			1,268

Total shareholders’ equity (2)(3)		1,109,442		1,984,015			1,043,021		198,541		(3,224,309	)		1,110,710

Total liabilities and shareholders’ equity	$	1,371,694		3,316,016			1,913,792		728,631		(5,352,357	)		1,977,776

The following table presents our condensed consolidating schedules of results of operations for the VIEs that we consolidate and other entities for the periods presented (in thousands):


	Year Ended December 31, 2020
	Sohu.com Limited			Other Subsidiaries			Primary Beneficiaries of VIEs		VIEs and their subsidiaries		Eliminating adjustments			Consolidated totals
Revenues:
Third-party revenues	$	0			119,098			77,812		552,980		0			749,890
Intra-Group revenues (4)		0			19,598			390,062		30,207		(439,867	)		0

Total revenues		0			138,696			467,874		583,187		(439,867	)		749,890
Cost of revenues:
Third-party cost of revenues		0			24,674			99,430		93,333		0			217,437
Intra-Group cost of revenues (4)		0			4,376			34,280		141,717		(180,373	)		0

Total cost of revenues		0			29,050			133,710		235,050		(180,373	)		217,437

Gross profit		0			109,646			334,164		348,137		(259,494	)		532,453
Operating expenses:
Third-party operating expenses		1,613			95,727			310,759		50,983		0			459,082
Intra-Group operating expenses (4)		0			3,957			741		254,796		(259,494	)		0

Total operating expenses		1,613			99,684			311,500		305,779		(259,494	)		459,082

Operating profit/(loss)		(1,613	)		9,962			22,664		42,358		0			73,371
Income/(loss) from subsidiaries (2)		(46,084	)		69,099			37,195		0		(60,210	)		0
Income/(loss) from VIEs (3)		0			0			41,743		0		(41,743	)		0
Non-operating income/(expense)		(1,071	)		(3,948	)		24,679		3,668		0			23,328

Income/(loss) before income tax expense		(48,768	)		75,113			126,281		46,026		(101,953	)		96,699
Income tax expense		6,207			102,749			20,000		4,270		0			133,226

Net income/(loss) from continuing operations		(54,975	)		(27,636	)		106,281		41,756		(101,953	)		(36,527	)
Less: Net income from continuing operations attributable to the noncontrolling interest shareholders		0			18,448			0		0		0			18,448

Net income/(loss) from continuing operations attributable to Sohu.com Limited		(54,975	)		(46,084	)		106,281		41,756		(101,953	)		(54,975	)
Net loss from discontinued operations, net of tax															(31,137	)

Net loss	$														(86,112	)


	Year Ended December 31, 2021
	Sohu.com Limited			Other Subsidiaries			Primary Beneficiaries of VIEs			VIEs and their subsidiaries		Eliminating adjustments			Consolidated totals
Revenues:
Third-party revenues	$	0			90,830			79,923			664,823		0			835,576
Intra-Group revenues (4)		0			275,774			256,801			21,488		(554,063	)		0

Total revenues		0			366,604			336,724			686,311		(554,063	)		835,576
Cost of revenues:
Third-party cost of revenues		0			26,055			96,891			81,725		0			204,671
Intra-Group cost of revenues (4)		0			4,957			37,732			136,221		(178,910	)		0

Total cost of revenues		0			31,012			134,623			217,946		(178,910	)		204,671

Gross profit		0			335,592			202,101			468,365		(375,153	)		630,905
Operating expenses:
Third-party operating expenses		1,768			123,963			335,576			72,126		0			533,433
Intra-Group operating expenses (4)		0			11,325			2,831			366,762		(380,918	)		0

Total operating expenses		1,768			135,288			338,407			438,888		(380,918	)		533,433

Operating profit/(loss)		(1,768	)		200,304			(136,306	)		29,477		5,765			97,472
Income/(loss) from subsidiaries (2)		75,343			(71,989	)		182,818			0		(186,172	)		0
Income/(loss) from VIEs (3)		0			0			35,805			0		(35,805	)		0
Non-operating income/(expense)		526			(3,017	)		32,843			9,508		(5,765	)		34,095

Income before income tax expense		74,101			125,298			115,160			38,985		(221,977	)		131,567
Income tax expense		4,827			49,958			4,331			3,180		0			62,296

Net income from continuing operations		69,274			75,340			110,829			35,805		(221,977	)		69,271
Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders		0			(3	)		0			0		0			(3	)

Net income from continuing operations attributable to Sohu.com Limited		69,274			75,343			110,829			35,805		(221,977	)		69,274
Net income from discontinued operations, net of tax																858,451

Net income	$															927,725


	Year Ended December 31, 2022
	Sohu.com Limited			Other Subsidiaries			Primary Beneficiaries of VIEs			VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
Revenues:
Third-party revenues	$	0			141,118			1,274			591,480			0			733,872
Intra-Group revenues (4)		0			202,250			257,442			27,914			(487,606	)		0

Total revenues		0			343,368			258,716			619,394			(487,606	)		733,872
Cost of revenues:
Third-party cost of revenues		0			34,125			60,845			96,603			0			191,573
Intra-Group cost of revenues (4)		0			24,232			17,499			104,883			(146,614	)		0

Total cost of revenues		0			58,357			78,344			201,486			(146,614	)		191,573

Gross profit		0			285,011			180,372			417,908			(340,992	)		542,299
Operating expenses:
Third-party operating expenses		2,206			187,875			280,180			72,911			0			543,172
Intra-Group operating expenses (4)		0			9,104			2,662			329,226			(340,992	)		0

Total operating expenses		2,206			196,979			282,842			402,137			(340,992	)		543,172

Operating profit/(loss)		(2,206	)		88,032			(102,470	)		15,771			0			(873	)
Income/(loss) from subsidiaries (2)		(213	)		(71,405	)		74,897			0			(3,279	)		0
Income/(loss) from VIEs (3)		0			0			2,691			0			(2,691	)		0
Non-operating income/(expense)		(7,390	)		24,159			37,107			(12,398	)		0			41,478

Income before income tax expense		(9,809	)		40,786			12,225			3,373			(5,970	)		40,605
Income tax expense		7,534			40,997			8,733			682			0			57,946

Net income/(loss) from continuing operations		(17,343	)		(211	)		3,492			2,691			(5,970	)		(17,341	)
Less: Net loss from continuing operations attributable to the noncontrolling interest shareholders		0			2			0			0			0			2

Net income/(loss) from continuing operations attributable to Sohu.com Limited		(17,343	)		(213	)		3,492			2,691			(5,970	)		(17,343	)

Net loss	$																(17,343	)

The following table presents our condensed consolidating schedules of cash flows for the VIEs that we consolidate and other entities for the periods presented (in thousands):


	Year Ended December 31, 2020
	Sohu.com Limited			Other Subsidiaries			Primary Beneficiaries of VIEs			VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
Cash flows from operating activities:
Net cash provided by/(used in) transactions with third parties	$	(5,371	)		(25,798	)		(264,700	)		459,263			0			163,394
Net cash provided by/(used in) transactions with intra-Group entities		0			18,721			360,928			(379,649	)		0			0

Net cash provided by/(used in) continuing operating activities (5)		(5,371	)		(7,077	)		96,228			79,614			0			163,394
Net cash provided used in discontinued operating activities																	(68,187	)

Net cash provided by operating activities																	95,207
Cash flows from investing activities:
Net cash provided by/(used in) transactions with third parties		0			167,702			17,464			(773	)		0			184,393
Net cash provided by/(used in) transactions with intra-Group entities		1,961			5,660			226,972			(106,321	)		(128,272	)		0

Net cash provided by/(used in) continuing investing activities (5)		1,961			173,362			244,436			(107,094	)		(128,272	)		184,393
Net cash provided by discontinued investing activities																	235,374

Net cash provided by investing activities																	419,767
Cash flows from financing activities:
Net cash provided by/(used in) transactions with third parties		0			204,941			(103,146	)		0			0			101,795
Net cash provided by/(used in) transactions with intra-Group entities		0			(254,216	)		93,193			32,751			128,272			0

Net cash provided by/(used in) continuing financing activities (5)		0			(49,275	)		(9,953	)		32,751			128,272			101,795
Net cash used in discontinued financing activities																	(8,209	)

Net cash provided by financing activities																	93,586


	Year Ended December 31, 2021
	Sohu.com Limited			Other Subsidiaries			Primary Beneficiaries of VIEs			VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
Cash flows from operating activities:
Net cash provided by/(used in) transactions with third parties	$	(517	)		(127,098	)		(299,947	)		541,172			0			113,610
Net cash provided by/(used in) transactions with intra-Group entities		0			288,308			217,245			(505,553	)		0			0

Net cash provided by/(used in) continuing operating activities		(517	)		161,210			(82,702	)		35,619			0			113,610
Net cash used in discontinued operating activities																	(175,888	)

Net cash used in operating activities																	(62,278	)
Cash flows from investing activities:
Net cash used in transactions with third parties		0			(112,599	)		(400,933	)		(23,887	)		0			(537,419	)
Net cash provided by/(used in) transactions with intra-Group entities		(5,999	)		(172,370	)		209,079			(140,671	)		109,961			0

Net cash used in continuing investing activities		(5,999	)		(284,969	)		(191,854	)		(164,558	)		109,961			(537,419	)
Net cash provided by discontinued investing activities																	1,054,148

Net cash provided by investing activities																	516,729
Cash flows from financing activities:
Net cash used in transactions with third parties		(17,418	)		(407,550	)		0			0			0			(424,968	)
Net cash provided by/(used in) transactions with intra-Group entities		36,912			(236,658	)		197,819			111,888			(109,961	)		0

Net cash provided by/(used in) continuing financing activities		19,494			(644,208	)		197,819			111,888			(109,961	)		(424,968	)
Net cash used in discontinued financing activities																	(9,132	)

Net cash used in financing activities																	(434,100	)


	Year Ended December 31, 2022
	Sohu.com Limited			Other Subsidiaries			Primary Beneficiaries of VIEs			VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
Cash flows from operating activities:
Net cash provided by/(used in) transactions with third parties	$	(10,122	)		(229,554	)		(177,018	)		448,936			0			32,242
Net cash provided by/(used in) transactions with intra-Group entities		0			186,468			259,192			(445,660	)		0			0

Net cash provided by/(used in) continuing operating activities		(10,122	)		(43,086	)		82,174			3,276			0			32,242

Net cash provided by operating activities																	32,242
Cash flows from investing activities:
Net cash provided by/(used in) transactions with third parties		0			(340,000	)		112,632			(5,421	)		0			(232,789	)
Net cash provided by/(used in) transactions with intra-Group entities		7,967			605,535			(208,182	)		72,497			(477,817	)		0

Net cash provided by/(used in) continuing investing activities		7,967			265,535			(95,550	)		67,076			(477,817	)		(232,789	)

Net cash used in investing activities																	(232,789	)
Cash flows from financing activities:
Net cash used in transactions with third parties		(82,136	)		0			0			0			0			(82,136	)
Net cash provided by/(used in) transactions with intra-Group entities		72,036			(171,590	)		(299,054	)		(79,209	)		477,817			0

Net cash provided by/(used in) continuing financing activities		(10,100	)		(171,590	)		(299,054	)		(79,209	)		477,817			(82,136	)

Net cash used in financing activities																	(82,136	)

Note (1): Represents the elimination of intercompany balances generated from intra-Group service charges among Sohu.com Limited, the Primary Beneficiaries of VIEs, the Other Subsidiaries, and the VIEs and their subsidiaries that we consolidate.

Note (2): Represents the elimination of investments among Sohu.com Limited, the Primary Beneficiaries of VIEs, and the Other Subsidiaries.

Note (3): Represents the elimination between the Primary Beneficiaries of VIEs and the VIEs and their subsidiaries that we consolidate under U.S. GAAP (ASC 810).

Note (4): Represents the elimination of intra-Group service charges at the consolidation level.

Note (5): The net cash provided by/(used in) operating activities and investing activities of Sohu.com Limited and the net cash provided by/(used in) operating activities, investing activities and financing activities of the VIEs and their subsidiaries that we consolidate have been revised for the year ended December 31, 2020 from amounts previously disclosed in the financial statements Notes.

Transfers of Cash Within the Sohu Group

The following is a summary of cash transfers that have occurred between our subsidiaries and the VIEs (in thousands):


	Year ended December 31,
	2020			2021			2022
Cash paid by the VIEs to our subsidiaries under service agreements	$	(411,668	)	$	(528,330	)	$	(478,098	)
Cash received by the VIEs from our subsidiaries under service agreements		32,019			22,777			32,438
Cash paid by the VIEs to our subsidiaries for intra-Group financing		(106,321	)		(140,671	)		(79,209	)
Cash received by the VIEs from our subsidiaries for intra-Group financing		32,751			111,888			72,497

Risk Factors

Risks Related to Our Business

We are subject to the risks associated with operating in an evolving market.

As a company operating in an evolving Internet market in the Chinese mainland, we face numerous risks and uncertainties. Some of these risks relate to our ability to:

•

continue to attract users to remain with us and use our products and services as the primary means of surfing the Internet switches from traditional PCs to mobile phones and other portable devices;

•

build our businesses such as Sohu Media Portal, Sohu Video, Focus, online games, and other businesses successfully;

•

continue to attract a large audience to our matrices of Chinese language content and services by expanding the type and technical sophistication of the content and services we offer;

•

maintain and develop a sufficiently large advertiser base for our brand advertising business;

•

maintain and attract online game users by periodically updating our existing online games and developing and launching new online games;

•

effectively control increases in our costs and expenses; and

•

attract and retain qualified personnel.

Our operating results are likely to fluctuate significantly and may differ from market expectations.

Our annual and quarterly operating results have varied significantly in the past, and may vary significantly in the future, due to a number of factors which could have an adverse impact on our business. Our online advertising revenues often fluctuate as our advertisers adjust their online marketing spending as their industries go through business and economic cycles. Our advertisers’ online marketing spending may also be negatively impacted by the COVID-19 pandemic and/or the general macroeconomic environment in the Chinese mainland, which in turn could negatively impact our online advertising revenues. Also see “- We depend on revenues from Changyou’s PC game TLBB and mobile game Legacy TLBB Mobile for a significant portion of our revenues, net income, and operating cash flow.”

We depend on revenues from Changyou’s PC game TLBB and mobile game Legacy TLBB Mobile for a significant portion of our revenues, net income, and operating cash flow.

For the year ended December 31, 2022, 61% of our total revenues and 77% of our online game revenues were derived from TLBB and Legacy TLBB Mobile. However, the popularity of PC games continues to decline as game players have switched to mobile devices to access online games. Despite Changyou’s efforts to improve TLBB, our game players may nevertheless lose interest in it over time and TLBB’s popularity, revenues, and profitability may decline accordingly. If Changyou fails to improve and update TLBB on a timely basis, or if Changyou’s competitors introduce more popular games, including mobile games, catering to Changyou’s game-player base, the decline in TLBB’s popularity can be expected to accelerate, which could cause a significant decrease in our revenues. If Changyou’s revenues from TLBB and Legacy TLBB Mobile continue to decline as they have in recent years, or if Changyou’s online game revenues from games other than TLBB and Legacy TLBB Mobile do not grow or if they decrease, our revenues, net income, and operating cash flow will be adversely affected. Furthermore, any interruptions in TLBB’s and Legacy TLBB Mobile’s operations could cause significant decreases in our revenues, net income, and operating cash flow.

We face intense competition, which could reduce our market share and adversely affect our financial performance.

There are many companies that distribute online content and services targeting Chinese Internet users. We compete with distributors of content and services over the Internet, including content sites, online games, Internet service providers and sites maintained by regulatory authorities, educational institutions and other institutions. These sites compete with us for user traffic, advertising dollars, online game players, potential partners and mobile services. The Internet market in the Chinese mainland continues to evolve. Competition is intense and can be expected to increase significantly in the future, because there are no substantial barriers to entry in our market.

We have many competitors in the Internet market in the Chinese mainland, including 58.com, Alibaba, Archosaur, Autohome, Baidu, Bilibili, BitAuto, Century Huatong (formerly known as Shanda), Douyin, Douyu, Fang, Giant, Huya, IGG, iQIYI, JOYY, Kuaishou, Leju, Lilith, Mango TV, miHoYo, Momo, NetDragon, NetEase, Perfect World, Phoenix, Qutoutiao, Sina, Tencent, TouTiao, and Youku. We compete with our peers and competitors in the Chinese mainland primarily on the following basis:

•

access to financial resources;

•

gateway to a host of Internet user activities;

•

technological advancements;

•

attractiveness of products;

•

brand recognition;

•

volume of traffic and users;

•

quality of Internet platforms and content;

•

strategic relationships;

•

quality of services;

•

effectiveness of sales and marketing efforts;

•

talent of staff; and

•

pricing;

Our competitors may have certain competitive advantages over us including:

•

greater brand recognition among Internet users and clients;

•

better products and services;

•

larger user and advertiser bases;

•

more extensive and well-developed marketing and sales networks; and

•

substantially greater financial and technical resources.

Our existing competitors may in the future achieve greater market acceptance and gain a greater market share through launching of new products, introducing new technologies, or forming alliances among themselves, or may enhance their ability to compete with us through mergers and acquisitions or financing activities. For example, in the past many of our competitors have successfully raised significant amounts of capital through IPOs, follow-on public equity offerings, and convertible bond offerings. Several of our competitors have also conducted private placements of equity or debt that included alliances with larger partners who are able to bring them strategic advantages in addition to financing. By enhancing their capital bases and forming strategic alliances, our competitors have strengthened their competitiveness and gained greater brand recognition. Recently some of our major competitors have actively invested or initiated transactions in the market sectors in which we operate or into which we wish to expand our business, which could make it more difficult for us to compete against them effectively.

In addition, in recent years the Internet industry in the Chinese mainland has been increasingly dominated by Alibaba, Baidu, and Tencent. These dominant companies may be able to further strengthen their influence in the industry by encouraging cooperation among the companies in which they invest or with which they establish strategic relationships. We may not be able to compete successfully and avoid marginalization in the industry if we are unable to develop our own comparable business ecosystem, which may be difficult for us to do in view of our relatively limited resources in comparison to these dominant companies.

Further, new competitors may emerge and acquire significant market share. For example, high-quality smaller Internet companies continue to emerge in the Internet industry with competitive advantages over us, including that many are led by young entrepreneurs who have a particular understanding of the needs and interests of younger users and that, in view of their relatively small size, they are able to adapt more easily than we are to rapid changes in the industry by adjusting their product strategies, market focus, and profit models. Such smaller competitors compete with us in such areas as vertical content production, video playback, and live broadcast.

In order to compete effectively in the primary markets in which we operate, we are likely to need additional financial and additional strategic resources, which may be hard to obtain. If our competitors are more successful than we are in obtaining necessary resources, in developing products or in attracting and retaining users and advertisers, our revenues and growth rates could decline.

If we fail to successfully develop and introduce new products, features and services, our ability to attract and retain users and generate revenues could be harmed.

We are continually developing new products, features and services for our users. The planned timing or introduction of new products, features and services is subject to risks and uncertainties. Actual timing may differ materially from original plans. Unexpected technical, operational, distribution or other problems could delay or prevent the introduction of one or more of our new products or services. Emerging start-ups may be able to innovate and provide new products, features and services faster than we can. Moreover, we cannot be sure that any of our new products, features and services will achieve widespread market acceptance or generate incremental revenue.

In addition, we may experience difficulties in promoting our new products, features and services as a result of the significant market power of our competitors or any anti-competitive practices they might engage in. As a result, despite considerable efforts in this regard, we may fail to attract and retain users.

As our products and services are currently accessed primarily through mobile phones, tablets and other internet-enabled mobile devices, we believe that we must develop products and applications for such devices if we are to maintain or increase our market share and revenues, and we may not be successful in doing so.

Devices other than personal computers, such as mobile phones, tablets, wearable devices and other internet-enabled mobile devices, are used increasingly in China and in overseas markets, and have surpassed personal computers as the primary means to access the Internet. We believe that, for our business to be successful when our content and services are delivered over mobile devices, we need to design, develop, promote and operate products and applications that are attractive to users of such devices, as well as enhance targeted delivery of our content and advertising services to our users and advertising customers. The design and development of new products and applications, and our efforts to enhance the effectiveness of such targeted delivery, may not be successful. We may encounter difficulties with the installation of such new products and applications for mobile devices, such products and applications may not function smoothly, and algorithms we develop for targeted delivery may not be effective in identifying the interests and needs of our users and advertising customers. As new devices are released or updated, we may encounter problems in developing and upgrading our products or applications for use on mobile devices and we may need to devote significant resources to the creation, support, and maintenance of such products or applications for mobile devices.

Our business depends on a strong brand; thus we will not be able to attract users, customers and clients of our products and offerings if we do not maintain and develop our brands.

It is critical for us to maintain and develop our brands so as to effectively expand our user base and our revenues. We believe that the importance of brand recognition will increase as the number of Internet users in China grows. In order to attract and retain Internet users, brand advertising, online game and mobile customers, we may need to substantially increase our expenditures for creating and maintaining brand loyalty. Our success in promoting and enhancing our brands, as well as our ability to remain competitive, will also depend on our success in offering high quality content, features and functionality. If we fail to promote our brands successfully or if our users or advertisers do not perceive our content and services to be of high quality, we may not be able to continue growing our business and attracting users, advertisers, online game players and mobile users.

Our failure to keep up with rapid technology changes may severely affect our future success.

The Internet industry is undergoing rapid technological changes. Our future success will depend on our ability to respond to evolving technologies, adapt our services to changing industry standards and improve the performance and reliability of our services. If we fail to adapt to such changes, our business may be adversely affected. For example, with the emergence of cloud computing technology, the primary Internet technology platform has been transformed from a traditional platform to a cloud computing platform. If we fail to adapt to the transformation, our products and services upgrade process will fall behind our competitors, and accordingly weaken our capacity to adapt our technology to the market. Furthermore, cloud computing itself is a significant business opportunity. If we fail to seize the opportunity, we will lose our ability to capture a share of that market. In addition, as mobile devices other than personal computers are increasingly used to access the Internet, we must develop products and services for such devices. To meet advertisers’ needs in targeting potential advertisers accurately, we need to develop and operate a more effective system for our advertising delivery, tracking and recording. Otherwise, we will not be able to maintain or increase our revenues and market share. In the meantime, the Ministry of Industry and Information Technology (the “MIIT”) and other regulatory authorities in the Chinese mainland can be expected to regularly promulgate standards and other regulations regarding Internet software and other Internet-based technologies. Adapting to any such standards and regulations could require us to make significant expenditures in the future.

Our strategy of acquiring complementary assets, technologies and businesses or making other strategic investments may fail and result in impairment losses.

As a component of our growth strategy, we have acquired and intend to actively identify and acquire assets, technologies and businesses that are complementary to our existing businesses. Our acquisitions could result in the use of substantial amounts of cash, issuance of potentially dilutive equity securities, significant impairment losses related to goodwill or amortization expenses related to intangible assets, and exposure to undisclosed or potential liabilities of acquired companies. Companies that we have invested in could be adversely affected by the COVID-19 pandemic, which may lead to impairment of the values of our investments and in turn adversely affect our financial condition and operating results. In 2022, Changyou recognized a $12.0 million impairment loss for an equity investment in a third-party online game developer.

We may be required to record a significant charge to earnings if we are required to reassess our goodwill or other amortizable intangible assets.

We are required under U.S. GAAP to test for goodwill impairment annually or more frequently if facts and circumstances warrant a review. Currently our brand advertising business is losing money, and goodwill will be impaired if the losses continue. We are also required to review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization and slower or declining growth rates in our industry. We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodw

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