Q1 2021 Sohu.com Ltd Earnings Call
[music].
Ladies and gentlemen, and thank you for standing by and good evening. Thank you for joining shows first quarter 2021 earnings conference calls and this time.
And so listen only mode. After the management's prepared remarks there'll be a question and answer session. Today's conference call is being recorded if you have that.
And your objection you may disconnect at this time and all that.
And who tend to call on over to your host for today's conference call.
That's a relation flow back to him Sohu. Please go ahead.
And so when we do thank you for joining us today and to discuss so who's first quarter, putting it on the one who's out on a call on chairman and Chief Executive Officer, Thomas Chong Zhang.
And on the lead and he was president and Jim stuff goes without a day on Chile, and you'll see you'll do in children and Seattle.
Before management begins their prepared remarks, I would like to remind me on the company's safe Harbor statement and connection with today's conference call except for the historical information contained herein. The matters discussed on this call may contain forward looking statements. These statements are based on estimates.
And that's news on the projections and.
Therefore, you should not place undue reliance on them. So all of these statements involve risks and uncertainties and caution when he was on a number of important factors could cause actual results to differ materially from those contained and equal looking statements for more information about the potential risks and uncertainties. Please refer to the company's it hungry.
Please refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on forms and debt.
Please also be reminded and that's still go to route on hopefully Shelley. Please also be reminded about so go through results of operations have been excluded from our results from continuing operations.
Perspective.
Adjustments to the historical statements and made it in order to provide a consistent basis of comparison unless indicated otherwise. The result that there was talk about are related to continuing operations only.
I will now turn the call over to Dr. Charles Zhang Charles Please proceed.
Thanks, Paul.
Thank you.
Joining our call.
Hold on 'twenty.
We continued to execute and over.
The of last year and delivered better than expected.
On top line.
And we're happy to report positive non-GAAP net income of 37.
And in U S dollars.
Which greatly exceeded our previous guidance.
This was mainly attributable to our strict budget control and the solid performance of our online game businesses.
In summary.
And for social media, we kept focusing on improving our products and technology, while at the same time stimulating content generation and social distribution.
For Sohu video, we made continuous progress producing both long form original dramas and short form lapping and content.
Further we integrated advanced live broadcasting technologies and her.
On a product matrix and apply these technologies tour content marketing campaigns.
These campaigns not only effectively promoted the generation of premium premium content, but also attracted a lot of user attention as far as advertiser budgets.
For Changyou, our online game business remained solid during the first quarter of 2021 with its revenue greatly exceeding our prior guidance.
I will go through.
More details about each of these businesses in a moment, but first let's look at could review our financial performance.
For the first quarter of 2021.
Total revenue to.
222 million U S dollars.
Up 24% and at year over year, and Dong <unk> and quarter over quarter.
Brand advertising revenues.
$31 million up 20% year over year and down 26% quarter over quarter.
Hello, and game revenues, a 176 million U S dollars.
Up, 32% and year over year and down 10% quarter over quarter.
GAAP net income from continuing operations attributable to flow Dot Com and limited was $32 million.
Compared with a net loss of $10 million and the first quarter of 2020, and net income of $47 million.
And the fourth quarter of 2020.
Non-GAAP net income from continuing operations at <unk> Dot Com limited was 37 and USD 30.
And $37 million compared with a net loss of $8 million.
The first quarter of last year.
And net income of 53 million and U S dollars in the fourth quarter on 2020.
And.
Now let me go through.
Key businesses.
First of all media portal and Tokyo.
And.
And continue to upgrade our products and technology to stimulate high quality content generation and further enhance social network distribution and features.
Based on our advanced live streaming technology strong operating experience and extensive media resources, we further burnished our credentials as a mainstream media platform.
Distributing.
And our premium content to the social media and took a video platform, we're attracting more exposure from viewers and advertisers, which is helping us to further diversify our revenue streams and explore new monetization opportunities.
For example in March we successfully.
Aired live streaming broadcasting broadcasted, the 13th Sohu News Marathon, which is a well known event that we hosted with a variety of celebrities and pop stars and leveraging our live broadcasting technology, we conducted more than five hours nonstop low time live shows the premium content and generated by this cash.
<unk> successfully attracted a lot of attention and advertising dollars as well through this event will not only raised awareness.
Of fitness and health, but also motivated users to create their own interactive content and promoted on social product.
Product matrix.
For video we.
We continue to execute our 10.
And the strategy.
For the long form content in 2021, we released several audio drama.
Moving on the recent risk.
Curious love.
And you're going to call day, which has become and a big hit after the.
Of the well intended love and <unk> about two years ago.
And.
And so mysterious love combine that both Idaho rollout and the crime scene and was warmly welcomed by audiences.
Further broadened our leading position in these two categories and the greatly boosted our user base and revenue.
In terms of short form content, we kept working hard on developing valuable live streaming content, which is where we disseminate professional knowledge and LIBOR and provisions.
Growth.
For example, we launched a lot of us.
Revenue show called the new year celebration.
For the Chinese new year holidays.
And it is the more than 40 live broadcast.
Attract a lot of kols, who share their thoughts on multiple topics.
Now, let me turn to Concho.
First quarter of 2021, thanks to the latest update that our team made.
Sure.
In game content.
Well as a drop in travel as people were encouraged and curves stay in place for the free cash flow.
Payer engagements with better than Inc. <unk> than you expected.
Our <unk> franchise remained stable and online game revenue exceeded our prior guidance.
Our PC game revenue decreased on a sequential basis at <unk> vintage revenue experienced a natural decline.
And it peaked following the games initial launch.
During the quarter, we improved <unk> vintage and by making a variety of enhancements based on player feedback.
We also introduced some promotional events around the spring festival for the regular <unk>.
For mobile games, we also launched a variety of spring festival related events for legacy <unk> mobile, including gateways for playing player engagement.
These efforts help legacy <unk> mobile platform.
Better than anticipated.
Next quarter trying to release, new expansion packs and in game events.
Celebrate the anniversary.
Regular <unk>, PC and and legacy <unk> mobile.
While <unk> vintage and we plan to introduce a new downgrades and other special in game content.
In terms of the pipeline several key games are being developed and the fine tune.
And look forward to launching them later this year.
Looking ahead, we will continue to execute our top games strategies.
And then promote innovation and and roll out more high quality mobile games, including MMR for RPM on all RPG game.
And our debt.
And I'll, let me turn the call over to join our CFO, who will walk you through our financial results, China and Johan.
Hi.
I will now walk you through the key financials of our major segments.
First quarter of 2021 on.
All of the numbers, but I will mention opine on that.
GAAP basis.
You may find a reconciliation from non-GAAP to GAAP measures.
And our website.
First off on media portal quarterly revenues were 80 meeting.
Up 18% year over year and Dr percentage quarter over quarter.
Operating loss was $31 million.
There was an operating loss of $72 million and the C.
And quarter last year.
So simple videos.
Quarterly revenue now.
19 million.
And so on 17 percentage year over year, and 15% quarter over quarter.
The quarterly operating loss was $13 million.
Compared with operating loss of $11 million $11 million in the same quarter last year.
So channel.
Positive revenue, including both several 1300 $80 million.
Up 32% year over year, and down 10% quarter over quarter channel.
And Youll posted an operating profit of $101 million.
Compared with $56 million in the same quarter last year.
For the second quarter of 2020, what we expect.
Brand advertising revenue to be between $36 million and $40 million online game revenue to be between $134 million and $144 million.
Non-GAAP net income from continuing operations and should do.
And so without some limited.
To be between $8 million.
And on 18 meeting.
And GAAP net income from continuing operations.
And both will start we'll talk on limited.
Between $3 million and $30 million.
This forecast reflects our current and preliminary view, which.
And is subject to substantial uncertainty.
Lastly, please be reminded that and that Q&A session.
Two questions regarding any.
Simple business update all day.
Agreement with Tencent and silver privatization.
This concludes our prepared remarks.
Operator, we would now like to open and ask questions.
Yes.
Thank you.
David.
And ask a question.
Tier one on your telephone that.
Thank you withdraw your question. Please press the pound on cash.
And standby, while we compile the Q&A last day.
Once again it is Taiwan to ask a question.
And once again, please press star one.
Sure.
Our first question is from the line of Alicia Yap Citi.
And is open.
Hi, Thank you.
Taking my questions.
Reasoning Charles.
Guyana and other management team.
And so I have two questions. The first one on the gaming outperformed and I gave you mentioned that bad debt.
And.
It's driven by debt to see PPE and all that but I guess my question is more.
When you give out your guidance.
And I think the cost.
Asheville and gaming revenue came in much stronger and.
Guidance range. So just wondering what's the performance mainly.
Happen in March.
And that problem debt.
On a quarter of these out.
Strong growth Dan.
And what your guidance.
On the gaming revenue and then lease the two sequential declines.
Although we see that might be some drop off and all that but given these promotion that and.
<unk> mobile maybe at launch and the anniversary.
<unk> also aspect.
And it should be no day.
Rather than.
And sequentially.
And so any color you can keep on this gaming front and then I have a question on the advertising.
Well, let me come and visit.
And so first of all the I think the and the first quarter.
Yeah.
The decline of <unk> <unk> vintage <unk> and vantage is actually slower than we expected right because we started the <unk>.
<unk> <unk> vintage peaked in Q4 last year and then we expect these III declined faster, but actually happened.
Probably people reference that half a point.
For the vintage.
Oh game and so that's a zone.
And also because of the.
Spring Festival debt and people are advised to stay in their cities doing home zone.
And.
And that contributed to better than expected.
And on game revenue.
Yes.
Is that your question and also your auto loans would know about the <unk>.
Current quarter over the future.
Mobile game.
Mhm.
So and unusual to growth.
Connecting of any oil production growth.
And that DRG 200 will either to gain that you don't want the same critical on imaging.
On the judicial review.
And you saw and.
And easy to use.
Try and give will be used for their health and Norma and wheel and letting them.
Thank you and requires you to join.
<unk> had this Florida hospital anniversary show until the anniversary issue should be good.
Surely another vocal with mobile and <unk> and PC and mobile those anniversaries.
And yet.
And the legacy.
Right.
Yes, it was on us.
On the.
Ken onshore oil and gasoline.
On the digital amalgamated tablets at GAAP on unit economics.
And the solar with a cough MTI people and up tunnel and argued and one element SaaS accounts and that's in our catheter with a lesser impact on him.
You may need attention and see the south EBITDA costly hotsy-totsy arguable can on desktop and Helios a shutdown.
Inc.
Turning the lights out and address.
Kevin on the Kingdom TD and <unk>.
Can you link for the quarter net moniker.
<unk> actually got SaaS App and you can draw that sits on <unk> have.
These easy to shop on our devices.
Okay.
Yes.
Yes, sorry, if I may.
Translate clinically tested.
Sure.
And before Labor Day tells me the and mobile because.
We had less travel in the first quarter, our total people were encouraged.
And in case, you are and.
And our spring festival, so we had a high base and the first quarter. So in effect on quarter, Although we will have expansion pack for both mobile and our.
PC <unk> zone, but the Gainesville pacing and natural decline.
And for vintage, especially it peaked on.
After the initial launch so and a second on the quota and royalty client for the more comparable with the joining our first quarter.
Thank you.
I see.
And I have one quick question second question is on <unk>.
On my advertising.
Regarding the second quarter guidance.
It seems like the year <unk> guidance of negative five positive 5%.
And it doesn't sound it is strong enough and so I'm just wondering because we should be benefiting from a secular recovery trend and also lash COVID-19 impact should also effective price.
Wow.
Just any color you can provide income since the second quarter and just.
So wondering if towers on management could comment on the overall at Centene recently, given the regulatory headwinds.
And this upcoming.
100 years anniversary and nice Olympic games. So they are positive and negative external environment. So how will that impact the general appetite.
Yes. Thank you.
I think that the.
Compared with last year's Q2 right.
The Q2 of 2020 is a rebound right.
So we had a strong Q3 and 2020.
And then by this year.
And although economy and macroeconomic situations actually not that good.
And especially there is I'd.
And I'd say a shortage of foot.
Mobile chips for auto revenue.
And also companies car companies that are just the.
Hi.
And they don't have enough and they don't have enough.
Product cost to.
And to sell to the market so the standard much as much.
So that's why.
Compared with Q2 last year.
Q2, 2020 one.
And is not.
On a strong quarter.
Also in October.
The revenue base of our NPI and basically so small and it's not it's not and I think.
And not much seems to deal with.
What happened the business and even with ecommerce on the platform to another and also.
And with 100 years celebration.
Okay.
Okay Alright.
Thank you thanks Charles.
Okay.
Thank you. Our next question is from the line of Thomas Chong of Jefferies.
Please go ahead your line is open.
Hi, Charles Thank you management for.
And we're picking my questions.
A question regarding <unk>.
And our content strategies.
And Charles comments about.
How we think about.
B.
And the content distribution.
And B.
Yes.
And other measures like might streaming Charles Holley equity.
And to drive the use and engagement and on that's one.
How we should think about the advertising revenue growth or the usage trends.
In 2021.
And then my second question.
Relating to the cost side.
Okay and trust.
And about how we should think about.
The opex and the cost for a while.
So who are portal and <unk> co Inc.
Thank you.
Yeah I think.
The advertising.
Revenue.
Well it depends so much on the user base so.
So.
That's why we need to grow our user base and.
To two two.
And to grow on.
Until we grow our user base load factor on our revenue.
And we.
We have this.
And unique.
Activities like.
Like expense or.
Content is considered a content generation and events like.
So on news marathon.
The amount and expedition, that's we're going to do this quarter and all these.
And the major events, it's apparent of content and also.
And the live streaming.
Currently is at.
Activity into a real time events and attract attract users.
But the.
In terms of the kind of distribution, we are exploring the basically the.
Like everyone else we're doing.
On the.
Information streaming and stream like.
The AI or computer.
Hum.
The algorithm distribution.
But we are choosing we also have that but we are truly and the social network distribution as our.
And no better growth too.
Dispute distributable come in and either on.
Short form either video or text.
And so.
Yes.
So our live streaming.
Technology debt.
Become a central platform power.
And.
Matrix product matrix to turn our event and with the activities into into content and then also.
And I tried to advertisers and our users.
And long term loans loan rent.
And we depend on realized and rely on whether we are able to successfully.
To distribute our content and social network.
Yes.
<unk>.
Non.
By this algorithm and distribution the social network distributions both on a video content and also tax compound.
So when we launch a few social network products.
Within our ATP and the silver <unk> So video APB.
So until that is so basically we are growing our user base on.
<unk> without spending a lot of money, but by improving technology and products and distribution.
Distribution and.
Yeah.
And.
So in terms of cost.
And will remain similar basically.
Total cost.
Since we're not spending a lot of money on channel and promoting on others, but so the cost will remain the same and then the revenue side.
We will also be similar onshore we successfully.
Basically build this social network features and.
The user base explode.
I hope.
Good day.
Got it thank you Charles.
Okay.
Thank you once again for those who wish to ask a question. Please press star one on your tongue.
Charles.
And once again it is star one for your questions.
Thanks.
Sure.
Okay.
And.
Once again to ask a question. Please press star one on your telephone.
Next question is from the line of Eddie Leung of Bank.
Bank of America Merrill Lynch. Your line is open. Please go ahead.
And.
And depending guys. Thank you for taking my question.
A follow up question on on advertising.
And when you answered Alicia questions, you mentioned that one of the.
Uh huh.
And I E shows 40 on advertising pieces.
Was the automobile advertisers right so could you remind us.
Some of the top advertising industries are.
At the moment for Sohu and could you also give us some color on.
And kind of like a friend of mine or debt budgeting process for the rest of day yeah.
From conversations between yourselves and these key tie industry. Thank you.
Yes, as you pointed out actually the top and have had industry is auto industry and.
And then auto industry because.
<unk>.
The.
And the shortage of debt.
<unk>.
So.
Chip for a more of a thoughtful cost for auto for auto and home vehicle automobiles. So the production.
Amount of all of these contractors are complement manufacturers are actually.
So theyre not looking at and a lot of.
And <unk>.
So that's why.
The top advertising industry auto industry are spending less.
On the call.
And as I had.
So that's why we're on it.
And we're having a kind of a hard time, so and.
And that's why we need to have.
Unique and of hanging with less budget and.
And then we have to provide a unique solution to for their brand and marketing.
And from our brand marketing.
Like using the live streaming events and also on that the content and activities.
Yeah.
Hi, Charles could you also give us some color on some of the odd on important advertiser industries.
For example, and the.
A trend you can share with us on some of the let's say the FMC Jeep brands.
The financial services sector et cetera et cetera. Thank you.
Yes, that's low FMC and others.
And industry that actually we can explore and then probably they don't have this problem.
Chips problem.
So.
And.
Inc.
Subsidiaries, it's better and other industries.
So we are working hard on.
Two to get those advertisers.
<unk> like this and also luxury goods and.
And.
Uh huh.
A lot of others.
So.
Electronics <unk> and all this.
Yeah.
And then tomorrow. Thank you very much.
On a better picture.
Yes.
And.
Okay.
Okay.
Thank you.
Next question is from the line of Jason next day of MTA capital. Please go ahead.
So all day.
Hi, Thank you for taking my question. Charles My question is what steps are you taking to support the stock price given that it's trading at two thirds of incoming cash this would imply the entire company without this cash is worth negative can you. Please elaborate.
Well.
And we don't have that on cash.
We only have like to have.
Mm.
300 minutes ran through and 27 million.
Our cash and the market cap is like type debt.
Okay.
Yes, I think I'll start and the stock price.
Well I think.
And we need to demonstrate growth.
Right. So that's.
As I said that I would need to.
Tweaks floor and.
To do it, especially to build this network and platform to distribute the content and to devote and sort of a network.
With our current <unk>.
Yes.
And to grow user base to a much.
And on larger scale in America, and laundry user base, so that we can.
And so that we can get more and more.
And our market share of advertising brand advertising market share and also to <unk>.
Market, our own home products like market.
Our television.
Dramas right and also even if.
So it will build our own platform with large much larger user base.
I think Tony Okay, and also benefit because we will sell a Toyota and.
Promote China wind and our own.
Matrix.
The cost will be zero.
Have any cough.
And the inventories.
Promotional expenses.
And until we prove that we can build our total network so subtly.
And half of it.
Exponential growth and social networks on right basically grow exponentially, but it's like building a building and <unk>.
And reaction and also kind of getting a atomic bomb is neither transactions. So on here, we do that and then grow our user base exponentially.
We are.
So our growth potential will remain at the current pace of debt.
And metrics and are excited and excited so.
And where it's basically the split our stock price, we need to demonstrate a hyper growth rate and then the stock price of oil and improve.
And.
Yes. Thank you I was referring more to the incoming cash with the potential merger or the one plus billion dollars and cash.
Okay. So that as we said we don't talk about it because it's still I mean.
We don't.
And.
Speculate and.
And what we will do with more cash because.
And.
The derisking and still not down.
Great. Thank you.
Thank you.
Question is from the line of Alex call on.
Morgan Stanley. Please go ahead.
Alright. Thank you Charles Thank you management for taking my question.
So Maggie you mentioned that channel.
And there is a key game launches still fine tuning and also like we will introduce like more MMORPG games.
And we later this year so can we provide more granularity.
On the game pipeline, such as the car, which games on license approved or and I kind of any on most anticipated game months. Thank you.
We had average again.
Okay, and then Oahu.
And canceling Inc. Doctor.
The Doctor will add.
Okay.
And also following high hydro achieve take us touching on Flushing that she is on.
Now how high ecosystem and talking to you soon.
And you're seeing.
And Canada teaching machine, yes.
Yes.
And if I can say by essentially Neal.
Now on that Tayo that either.
Hi, Jun Zhang.
Thanks, so much.
<unk> say.
Yes.
To.
Plenty of fashion.
And just think.
Top high quality highly.
Hi, it looks like and he means the highest and as ISC and <unk> <unk> each.
And it's a king.
King <unk> session.
How are you seeing channel and bubble <unk> C and MMO RPG soon and attention on closing that each day and Andy <unk> here.
Yes.
We have a couple of key products to be launched later this year on next year for <unk>. So the taxes.
And I'm sure it will be published by Tencent and expected and launched in July and the second one net bright star as a formula into the game and licensed by Tencent and expect to launch it and the August of this year and otherwise the carphone lethal and newer.
Ron on the tussle and we just got our license approval. So we can pull.
Two the monetization has been on in June.
Result, Okay, and we will published by Ourself.
Third quarter, and it's a cartoon and for MMO.
And see us all.
<unk> developed a key and Im obviously.
Yes.
We plan to launch it at the end of this year already next year and.
And the next one is the next generation of TLC and <unk> mobile and.
We haven't decided on auto as a name yet, but it will be.
And the published by tenants and as well and also the and all of this year or next year. Thank.
Thank you.
And to tell attention and half.
And new accounts.
And.
Okay.
Thank you.
Ladies and gentlemen that concludes your conference for today and thank you for participating.
Even though all disconnect.
Yes.
Go ahead.
Got it.
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining shows first quarter 2021 earnings conference call.
This time, so if you took on to listen only mode. After management's prepared remarks there'll be a question and answer session. Today's conference call is being recorded.
And any objection you may disconnect at this time and I'd like.
Do tend to come on over to your host for today's conference call on quality.
And especially with patients directly on Sogou. Please go ahead.
And so let me just thank you for joining us today to discuss Sohus first quarter, putting us on the one result on a call on chairman and Chief Executive Officer, Dr. Charles Zhang on for John The lead and Welsh Carson and James Oh, So without the day on channel, you'll see yodle and children and Seattle, We always watch.
The amendment became their prepared remarks, I would like to remind me on the company's safe Harbor statement and connection with today's conference call except for the historical information contained herein. The matters discussed on this call may contain forward looking statements. These statements are based on.
And that's amazing and projections and therefore, you should not place undue reliance on them.
These statements involve risks and uncertainties and caution here was on a number of important factors could cause actual results to differ materially from those contango and equal looking statements.
For more information about the potential risks and uncertainties.
For two of the companies Inc. Humphrey please refer to the company's filings with the Securities and Exchange Commission, including the most of US and the annual report on form some debt.
Please also be not be reminded and that's still go to is out on hopefully Sally. Please also be reminded about sogou to results of operations have been excluded from our results from continuing operations, which are expected and adjustments to the historical statements have been made in order to provide a consistent basis.
Comparison.
Unless indicated otherwise results that there was talk about our day to continuing operations only and with that I will now turn the call over to Dr. Charles Zhang Charles Please proceed.
Thank you.
Joining our call and approved.
Hold on 'twenty.
We continued to execute and offerings and strategy of last year and delivered better than expected performance on the topline.
We are happy to report positive non-GAAP net income of 37.
And then U S dollar.
Which greatly exceeded our previous guidance.
This was mainly attributable to our strict budget control and the solid performance of our online game businesses.
In summary.
And for social media, we kept focusing on improving our products and technology well on.
The same time stimulating content generation and social distribution.
For Sohu video, we made continuous progress and producing both long form original dramas and short form live streaming content.
Further we integrated advanced live broadcasting technologies, and our product matrix and applied these technologies tour content marketing campaigns.
These campaigns not only effectively promoted the generation of Premier premium content, but also attracted a lot of user attention as well as advertiser budget.
For China are all on game business remained solid during the first quarter of 2021 with its revenue and greatly exceeding our prior guidance.
I will go through more details about each of these businesses in a moment, but first let's look at could review of our financial performance.
Okay.
For the first quarter of 2021 total.
Total revenue.
222 million U S dollars.
24% net year over year and down 12% quarter over quarter.
Brand advertising revenues.
$31 million up 20% year over year is down 26% quarter over quarter.
Hello, and game revenues, a 176 million U S dollar.
Up 32% year over year, and down 10% quarter over quarter.
GAAP net income from continuing operations attributable to flow Dot Com limited was $32 million.
Compared with a net loss of $10 million and the first quarter of 2020, and net income of $47 million.
And the fourth quarter of 2020.
Non-GAAP net income from continuing operations at <unk> Dot Com limited was.
37 30.
And $37 million compared with a net loss of $8 million and the.
The first quarter of last year.
And net income of 53 million and U S dollars in the fourth quarter on 'twenty.
Now let me go through.
Key businesses.
First of all media portal and and Tokyo.
We continue to upgrade our products and technology to stimulate high quality content generation and further enhanced social network distribution and features.
Based on our advanced live streaming technology strong operating experience and extensive media resources, we further burnished our credentials as a mainstream media platform.
Distributing.
Our premium content to the social media and video platform, we're attracting more exposure from viewers and advertisers, which is helping us to further diversify our revenue streams and explore new monetization opportunities.
For example in March we successfully aired live streaming broadcasting broadcasted, the 13th Sohu News Marathon, which is a well known event that we host with a variety of celebrities and pop stars.
Leveraging our live broadcasting technology, we conducted more than five hours nonstop and live shows the premium content generated by this campaign successfully attracted a lot of attention and other advertising as well.
Through this event will not only raised awareness.
Fitness and health, but also motivated users to create their own interactive content and promoted on social product.
Product matrix.
For video and.
We continue to execute our 10.
And the strategy.
For the long form content in 2021, we released several already low drama.
And the recent mysterious love.
Current and Golden Goddess, which has become and I'm a big hit after the.
Of the well intended love and I hope <unk> about three years ago.
And so mysterious love combined both Idaho, Rollouts and the crime scene and was warmly welcomed by audiences.
Further broadened our leading position in these two categories and greatly boosted our user base and revenue.
In terms of short form content, we kept working hard on developing our values live streaming content, which is where we disseminate professional knowledge and reliable information across various verticals.
For example, we launched the lifetime revenue.
So called the new year celebrations.
For the Chinese new year holiday.
Showcases come on at 40 live broadcast.
Attract a lot of kols, who share their thoughts on multiple topics.
Now, let me turn to Tayo.
The first quarter of 2021, thanks to the latest updates that our team made.
And.
And in game content as well as a drop in travel as people are encouraged and curve on the space plays for the free cash flow player engagement was better than <unk> expected.
Our <unk> franchise remained stable and online game revenue exceeded our prior guidance.
And our PC game revenue decreased on a sequential basis <unk> vintage revenue experienced a natural decline after a peak following the games initial launch.
And the quarter, we improved <unk> vintage and by making a variety of enhancements based on player feedback.
We also introduced some promotional events around the spring festival for the regular <unk>.
For mobile games, we also launched a variety of spring festival related events for legacy <unk> mobile, including Gateway for clearing player engagement.
These efforts helped and legacy <unk> mobile plat.
Performed better than we anticipated.
Next quarter trying to release, new expansion packs and in game events.
And to celebrate the anniversary.
And our regular <unk> PC and the legacy <unk> mobile.
While <unk> vintage and we plan to introduce a new downhill and other special in game content.
In terms of the pipeline.
Several key games are being developed and the fine tune Luke.
And look forward to launching later this year.
Looking ahead, we will continue to execute our top games strategies.
And promote innovation and the rollout more high quality mobile games, including <unk> or RPI them on all RPG game.
And are there just narrows.
And I'll, let me turn the call over to join our CFO, who will walk you through our financial results, China and on top.
I will now walk you through the key financials of our future settlements.
Quarter of 2021, all of the numbers, but I will mention opined on.
On a GAAP basis, you may find a reconciliation from non-GAAP to GAAP measures.
On our website.
First of all the media portal quarterly revenues were $80 million.
Up 18% year over year, and down 20% quarter over quarter.
Quarterly operating loss was $31 million.
Compared with net operating loss of 73 million.
And the same quarter last year.
So simple video.
Quarterly revenue.
$19 million.
So on 17% year over year, and 15% quarter over quarter low.
Our quarterly operating loss was $13 million.
Compared with operating loss of $11 million $11 million in the same quarter last year.
So channel.
Poverty revenue, including both silver and 170 $380 million up 32% year over year and down 10% quarter over quarter channel.
And youll postage and operating profit of $101 million.
Compared with $56 million in the same quarter last year.
For the second quarter of 2020, what we expect.
Brand advertising revenue to be between $36 million and $40 million online game revenue to be between $134 million and $144 million.
Non-GAAP net income from continuing operations and should do.
So what are kind of limited.
To be between $8 million and $18 million and.
And GAAP net income from continuing operations.
And both will start we'll talk on limited.
Between $3 million.
And $30 million.
This forecast reflects our current and preliminary view, which.
And is subject to substantial uncertainty.
Lots of Inc. Please be reminded that in the Q&A session.
Two questions regarding any simple business update all day.
Agreement with Tencent and silver privatization.
This concludes our prepared remarks on.
Operator, we would now like to open and ask questions.
Thank you.
And they decided to ask a question you will need for.
And first tier one on your telephone. Thank you withdraw your question. Please press the pound the cash piece.
And the standby, while we compile the Q&A last day.
Once again it is Taiwan to ask a question.
Okay.
And once again, please press star one to ask questions.
Our first question is from the line of Alicia Yap Citi. Your line is low.
Please go ahead.
Hi, Thank you for taking my questions go net.
Good evening Charles.
Guyana and other management team.
So I have two questions. The first one on the gaming outperformed and I gave you mentioned a little bit.
Guidance is driven by the PUC.
CPE and all that but I guess my question is more.
When you give out your guidance.
I think the cost.
The actual gaming revenue came in much.
Good day and guidance range. So just wondering what's the performance mainly happen.
Happen in March that problem debt.
And quarter it means out came in.
Stronger than what your guidance on.
On the gaming revenue.
And then with the.
<unk> sequential declines.
Although we see that might be some drop off and all that but given these.
Promotion debt.
And <unk> mobile maybe at launch and that anniversary Shouldnt be also aspect and don't think games should be day.
Rather than up.
Okay.
And Shelly.
And so any color you can keep on this gaming front and then I have a question on the advertising.
Well, let me cover our dividend.
And so first of all I think and in the first quarter.
On.
On the decline of <unk>, <unk> vintage and <unk> vantage is actually slower than we expected right because we thought it.
Vintage TWD vintage of peaks.
Q4 last year, and then we expect it to decline faster, but actually happened and these apps.
Probably people reference to high performance.
For the vintage.
The old.
Old game and so that's on.
And also because of the.
And first of all debt and people are advised to stay in their cities debt.
Moving on.
And that contributed to our better than expected.
Gaming revenue.
Yes.
So is that your question and also your auto loans would know about the.
The current quarter or the future right.
Mobile game.
Inc.
So and as usual.
Commodity you have anywhere.
Yes.
Debt to Warner will either to gain that you don't exam critical on energy.
And your distributor.
And Scott.
And it's easy to use.
Sure.
And I would give would be used codell handover and without letting them.
Thank you Luke on horizontal.
And to announce it up here and help us quota harsh and anniversary show and you see the anniversary issue should be good.
And should be another vocal with mobile and <unk> and PC and mobile daus and most recently.
And yet.
On June <unk>.
Okay.
Yes.
And with announcements.
And Ken I'll shuttle and on gasoline.
The easy low amalgamated adapt looks at that when you're on a daily and in Colombia.
And the solar with a cough antioxidant.
Kind of on the argued on one element and southeast and that's in our catheters with a lesser impact that's on here.
A major change and to the South EBITDA costly Hotsy-totsy argued look on on that is helping us and dealing with the shutdown and what do you think.
And.
So annualized GAAP measures.
Ken and I'll, let Cynthia <unk>.
And the links to the quarter.
<unk>.
I feel and that you may need to actually because SaaS app and you can draw that sits.
<unk>.
The easy to shop on Appalachia.
Okay.
Yes.
Yes, sorry.
Translate briefly testing and also.
And before Labor Day tells me the and mobile because.
We had less travel in the fourth quarter and Q2 people were encouraged to stay in place.
Spring Festival so.
We've had a high based on the first quarter. So in the second quarter, Although we will have expansion packs for both mobile and our <unk>.
And as a <unk> plus.
<unk> games will take on natural declines and that encore and for vintage, especially it peaked after their initial launch so and especially on the quota and royalty clients more.
And our first quarter.
Yes.
Thank you and I have one quick question second question on <unk>.
On my advertising regarding the <unk>.
Second quarter guidance.
It seems like the year over idea guidance of negative five positive 5%.
And it doesn't sound is strong enough. So I'm just wondering because we should be benefiting from the secular recovery and trench and also lash.
The impact should also affect our cash.
So just any color you can provide income since the second quarter and.
And he also wondering if management can comment.
Overall at Centene recently, Cleveland and regulatory headwinds.
And this upcoming.
100 years anniversary and nice Olympic games. So they are positive and negative external environment, So how will that impact debt.
At that debt that.
Thank you.
I think the.
Compared with last year's Q2 right.
Q2 of 2020 is the rebound right.
So we had a strong Q3 and 2020.
And then but this year.
And although economy and macroeconomic situations actually not that good.
Especially.
I'd say a shortage of flow.
Mobile chips for auto revenue.
On the auto companies car companies that are just the.
On that.
And have enough where they don't have enough.
Okay.
And product cost to.
And to sell for the market until the end of day I'll spend that much as much.
And so that's why.
Compared with Q2 last year.
Q2 coming on line.
And it's not.
The strong quarter.
Total loans.
Sure.
The revenue base of our Advertiser base is so small so it's not it's not and.
And not much seems to deal with.
And what happened recently with the ecommerce platform and other.
And it was 100 years celebration.
Okay Alright.
Thank you thanks Charles.
Okay.
Thank you. Our next question is from the line of Thomas Chong of Jefferies. Please go ahead. Your line is open.
Hi, Charles.
And then for picking my questions.
Question regarding our content strategies and Charles.
A comment about.
How we think about.
The debt.
Content distribution.
And B.
On the.
And other measures might streaming Charles Holley.
Good day.
Helped to drive the user and the engagement and on that one.
And how we should think about the at the time.
<unk> revenue growth.
The usage trends in.
2021 and.
And my second question.
And so relating to the cost side okay.
And Charles just to comment about how we should think about.
The opex and the cost for <unk>.
So through our portal and video piece on this going forward. Thank you.
Yeah I think.
The advertising.
Net revenue.
We will it depends so much on the user base so.
So.
And that's why we need to.
Grow our user base and.
To two two.
And to grow.
And until we grow our user base mid factor on our revenue.
And we.
And we have this.
And <unk>.
<unk>.
Activities.
Like expense or.
Content, and it's considered a content generation and events like on.
So on news marathon.
The amount and expedition and that's we're going to do this quarter and all this.
Major events, it's a part of content and also.
On the live streaming.
Currently is.
Activities into a real time events and attract attracted users.
But the.
In terms of the kind of distribution, we are exploring the basically the.
Like everyone else we're doing.
On the.
Information streaming and stream like.
The AI or computer.
Augers and distribution.
But we are choosing we also have that but we are truly and the social network distribution as our.
And no better growth too.
Dispute distributable comment on either on.
Our.
Short form either video or text.
And so.
Yes.
So our live streaming.
Technology debt.
Become a central platform power.
Matrix color on matrix to turn our event and what the activities into into content and then also.
Attract advertisers and our users.
But the long term loans loan rent.
And we depend on realized and rely on whether we are able to successfully.
<unk> to distribute our content through social network.
And.
Yes.
And.
Non.
Bye.
And the rhythm of distribution, but the sort of on network distribution. Both on a video content and also on <unk> compound.
So when we launch a few social network products.
Within our ATP and several new CPG and so video APB.
So until that is so basically we are growing our user base.
<unk> without spending a lot of money, but by improving technology and products and distribution.
Distribution.
Yes.
And so so in terms of the cost.
And we remained similar basically.
Total cost.
Since we're not spending a lot of money on channel promoting on others, but so the costs will remain the same and then the revenue side.
And I will also be similar until we successfully.
Basically build this social network features and.
The user base explode.
I hope I expect to share there.
Yes.
Got it thank you Charles.
Alright.
Thank you once again for those who wish to ask a question. Please press star one on your telephone.
And once again it is star one for your questions.
Okay.
Yeah.
Sure.
Okay.
Once again to ask a question. Please press star one on your telephone.
Our next question is from the line of Eddie Leung of Bank of America Merrill Lynch. Your line is open. Please go ahead.
And Doug.
And guys. Thank you for taking my question just a follow up question on on advertising.
And when Youre on.
And third Alicia questions, you mentioned that one of the.
And kind of like he shows 40 on advertising pieces.
And I was the automobile advertisers right. So could you remind us.
Some of the top advertising industries.
At the moment for Sogou and could you also give us some color on.
Oh.
And that's kind of like a friend of mine or debt budgeting process.
And the rest of day.
Fault.
Conversations between yourselves and not these three tie industry. Thank you.
Okay.
Yes, as you pointed out actually the top and have had industry is auto industry and.
And then auto industry because.
Of the.
Uh huh.
Shortage of debt.
<unk>.
So.
Chip for a more of a thoughtful cars auto on vehicle automobiles.
The production.
Amount of all of these contractors are currently on manufacturers are actually.
<unk>.
So theyre not looking at and a lot of.
And <unk>.
So that's why.
The top advertising industry auto industry are spending less.
And the <unk>.
And so I had.
So that's why we're having a kind of a hard time, so and.
And that's why we need to have.
Unique and of hanging with less budget and.
And then we have to provide a unique solution for their brand and marketing.
And for our brand marketing.
Like using the live streaming events and also on the content and activities.
Yeah.
Hi, Charles could you also give us some color on some of the odd.
Important advertiser industries.
For example, and the.
A trend you can share with us on some of the let's say the FMC Jeep brand.
The financial services sector et cetera et cetera. Thank you.
Yes, that's low.
I've, Havent CG and others that.
Industries that accident and explore and then probably they don't have this problem chips chips problem.
So.
Sure.
I think it's situated it's better and other industries.
So we are working hard on.
Two to get those advertisers.
<unk> like this and also luxury goods and.
And.
Uh huh.
A lot of others.
So.
Electronics and cheese and all this.
Yeah.
And if that tomorrow and get paid.
For a better picture.
Yes.
And.
Okay.
Okay.
Thank you.
Next question is from the line of Jason next day of MTA capital. Please go ahead.
Good day.
Hi, Thank you for taking my question. Charles My question is what steps are you taking to support the stock price given that it's trading at two thirds of incoming cash.
Would imply the entire company without this cash is worth negative can you. Please elaborate.
Well.
We don't have that much cash.
We only have like to have them.
300 minutes on.
Three and 27 million.
Total cash and the market cap is light type that are less volume.
Yes.
Yes, I think I'll start with that price.
Well I think.
We need to demonstrate growth.
Alright so.
That's why as I said that I would need to.
And to explore and.
To do it, especially to build this network and platform to distribute the content and to devote and sort of and networks.
With our current EPS.
Apps and to grow user base through a much.
And our larger scale.
In America, and laundry user base, so that we can.
And so that we can.
Get more and more.
And market share of advertising brand advertising market share and also too.
True market, our own home products like market outlook.
Our television.
Dramas right and also even if.
So it will build our own platform with large much larger user base.
I think Tony Okay, and also benefit because we will sell and tunnels and.
Promote channel you're winning are on.
Matrix.
The cost will be zero and levels.
Have any cost.
Our revenue guidance.
Promotional expenses.
And until we prove that we can build our telco network so subtly.
And half of it.
Yes.
And the national growth social networks on right basically grow exponentially, but it's slightly building on.
<unk> and <unk>.
And reaction and also kind of getting a atomic bomb is neither transaction and so until we do that and then grow our user base expand actually.
We are.
So our growth potential will remain at the current pace on that.
And metrics and are excited and excited so.
And that work basically to support our stock price, we need to demonstrate a hyper growth rate and then the stock price will improve.
Yes. Thank you I was referring more to the incoming cash with the potential merger, the one plus billion dollars and cash.
Okay. So that we've said we don't talk about this because it's still I mean.
We don't.
Speculate and.
And what we will do with more cash because.
And.
The deal is still not there.
Balance.
Yeah.
Great. Thank you.
Thank you.
Next question is from the line of Alex <unk> of Morgan Stanley. Please.
Please go ahead.
Alright. Thank you Charles Thank you management for taking my question.
And so Nigel you mentioned that zone.
And there is a key game launches still fine tuning and also like we will introduce more MMORPG games.
Later this year. So can we provide more granularity on the game pipeline, such as accounts, which games on license approved or like on any like most anticipated game launch. Thank you.
We had average again.
On gaming machine and then more cash.
So it sounds like each day for them.
And we will add.
Inc.
On a cell phone clay <unk> take us touching on watching that CFO.
Now, how your ecosystem Hitachi and Trulia share.
And you've seen standard changing machine yes.
If I can say by essentially Neal.
The whole on that Tayo that either so harsh on the Pie chart Zhang.
Oh wait until a successor.
Okay, Harsco, THL and say.
Curacao quite a fashion.
And just Inc.
Top high quality highly.
<unk> remains the highest and as ISC and they go and then lapping it.
And it's a.
King and Andy.
This transaction.
How are you seeing channel and bubble.
C and MMO RPG soon attention on closing the <unk>.
China and.
And Andy <unk> and ensure Sunshine.
Yes.
We have a couple of key product to be launched later this year or next year for <unk>.
Hudson Adventure and will be published by Tencent and expense will be launched in July and the second one net bright star as a semi are into the game and licensed by Samsung and expect to launch it and the August of this year.
On the Carphone and little rock and.
And we will round out the tussle and just on the license approval. So we can proceed to the monetization has been going on in June as a result, Okay. And then we will publish by ourself.
Third quarter, and it's a cartoon and before MMO.
And CSR is self developed key and on RBC.
Uh huh.
We plan to launch it at the end of this year or early next year and the net finance net generation of TLC day mobile and we haven't decided on the artificial name yet, but it will be.
And the published by Tencent as well and also the and all of this year or next year. Thank.
Thank you.
And to tell attention here.
And your account these checkpoints.
Yes.
Thank you.
Ladies and gentlemen that concludes your conference for today and and thank you for participating.
Even though all disconnect.