Q1 2024 Sohu.com Ltd Earnings Call
Operator: Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. This conference call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the conference over to your host for today's conference, Cole Huang, Pu, Investor Relations, Director of Sohu. Please go ahead.
Yeah.
Speaker Change: Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining so who was the first quarter 'twenty 'twenty four earnings conference call.
Speaker Change: At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
Speaker Change: Today's conference call is being recorded if you have any objections you may disconnect at this time.
Speaker Change: I would now like to turn the conference over to your host for today's conference call Huangpu Investor Relations Director of Sohu. Please go ahead.
Pu Huang: Thanks, operator. Thank you for joining us to discuss Sohu's fourth quarter 2024 results. On the call are Chairman and Chief Executive Officer Dr. Charles Zhang, CFO Joanna Li, and Vice President of Finance James Deng. Also with us are Changyuan CEO Dewen Chen and CFO Bin Wang.
Speaker Change: Thanks, operator, thank you for joining us to discuss those fourth quarter Sunday today follows up on the call are chairman and Chief Credit Officer, Dr. Charles Zhang CFO generally at a vice president of a Nextgen store also the depth of challenges the Odell and shall I say I've been wrong.
Pu Huang: Before my team begins their prepared remarks, I would like to remind you of the Commerce Safe Harbor Statement in connection with today's conference call and access to the historical information contained here. The matters discussed on this call may contain forwarding statements based on current plans, estimates, and projections. And therefore, you should not place undue reliance on them. For looking statements involving heuristics and uncertainties, we caution you that a number of important factors could cause actual results to differ materially from those containing NFO looking statements.
Speaker Change: Before I imagine must be Haynesville, Paypal remarks, I would like to remind you of the Companys Safe Harbor statement in connection with today's conference call.
Speaker Change: That's where they get the whole information containing here.
Speaker Change: Matters discussed on this call may contain forward looking statements. These statements are based on Kona, plus estimates and projections and therefore, you should not place undue we like all that.
Speaker Change: Forward looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those continue on the forward looking statements.
Speaker Change: More information about the potential risks and uncertainties. Please refer to the public filings with Securities and Exchange Commission, including the most with anybody pulled on form 20-F.
Pu Huang: For more information about the potential risks and uncertainties, please refer to the Commerce Files with the Securities and Exchange Commission, including the most recent annual report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.
Speaker Change: I will now turn the call although the Dr. Charles Zhang Charles Please proceed.
Chaoyang Zhang: Thanks, Huangpu. And thank you, everyone, for joining our call.
Speaker Change: Greg Chromebook.
Chaoyang Zhang: In the first quarter of 2024, our top-line performance was in line with our expectations, and our bottom-line performance exceeded our guidance, despite the impact of seasonality. For Sohu Media and Sohu Video, we continue to enhance user experiences by refining products and optimizing algorithms. We proactively integrated our product matrix and resources to stimulate content generation, consumption, and social distribution. Meanwhile, leveraging our unique IPs and differentiated advantages, we continued to host various events and campaigns, which not only stimulated users' interaction and content provision on our platform but also helped us gain more monetization opportunities. Alan Gaines delivered stable performance, with revenues in line with our expectations.
Speaker Change: Okay.
Speaker Change: In the first quarter of 2007 for our topline performance in line with our expectations and our bottom line performance exceeded our guidance.
Speaker Change: Despite the impact of seasonality.
Speaker Change: For Sohu media and Sohu video, we continue to enhance user experience.
Speaker Change: Our refining products and optimizing algorithms.
Speaker Change: We proactively integrated our product matrix and the resources to stimulate content generation consumption and social distribution.
Speaker Change: Meanwhile, leveraging our unique.
Speaker Change: And differentiated advantages, we continue to host various events and campaign, which not only stimulated users' interaction and content provision on our platforms.
Speaker Change: But also help us gain more monetization opportunities.
Speaker Change: Okay.
Alright, again delivered stable performance with revenues in line with our expectations.
Chaoyang Zhang: Before going through each business unit in more detail, let me first give you a quick review of financial performance. For the first quarter of 2024, total revenues were $139 million, down 14% year-over-year and 1% quarter-over-quarter. Brand advertising revenues were $16 million, down 29% year-over-year and 20% quarter-over-quarter.
Speaker Change: Before going through each business unit in more detail. Let me first give you a quick reveal our financial performance.
Speaker Change: For the first quarter of 2024 total revenues were $139 million down.
Speaker Change: Down, 14% year over year, and 1% quarter over quarter.
Speaker Change: Brand advertising revenues were $16 million down, 29% year over year, and 20% quarter over quarter.
Chaoyang Zhang: Online game revenues $118 million, down 9% year-over-year and up 3% quarter-over-quarter; the gap net loss attributable to Sohu.com Limited was $25 million compared with a net loss of $18 million in the first quarter of last year and a net loss of $30 million in the fourth quarter of last year; non-GAAP net loss attributable to Sohu.com Limited was $22 million compared with Now, I'll go through our key businesses in more detail.
Speaker Change: Online game revenues 100.
Speaker Change: The $18 million.
One, 9% year over year, and up 3% quarter over quarter.
Speaker Change: GAAP net loss attributable to <unk> Dot Com limited was $25 million compared with a net loss of $18 million in.
Speaker Change: In the first quarter of last year and a net loss.
Speaker Change: $13 million in the fourth quarter of last year.
Speaker Change: non-GAAP net loss attributable to Sohu Dot Com limited was $22 million compared.
Speaker Change: Compared with a net loss of $13 million in the first.
Speaker Change: Quarter of 2023, and a net loss of $11 million in the fourth quarter of 2023.
Speaker Change: No.
Speaker Change: Go through the our key businesses in more detail.
Chaoyang Zhang: First, Sohu Media and Sohu Video. We will continue to improve our products, upgrade algorithms, and enhance the user experience during the quarter. We deeply integrated the Sohu news and Sohu video apps to allow users to generate and distribute premium content across both platforms simultaneously. This resulted in a substantial addition of high-quality content to our product matrix, which in turn drove even greater content consumption and distribution. We held a variety of offline campaigns and continue to refine operations of online interest clubs in various verticals.
Speaker Change: First Sohu media and Sohu video.
Speaker Change: We continue to improve our product upgrade algorithms.
Speaker Change: The user experience during the quarter.
Speaker Change: With deeply integrated the Sohu news and Sohu video App.
Speaker Change: To allow users to generate and distribute premium content across both platforms simultaneously.
Speaker Change: This resulted in a substantial addition of high quality content to our product matrix.
Speaker Change: Which in turn drove even greater content consumption and distribution.
Speaker Change: Held a variety of offline campaigns and continue to refine operations.
Speaker Change: <unk> clubs.
Chaoyang Zhang: As a result, our user matrix and interactions have steadily increased. In this quarter, we hosted various events to improve user engagement and interactions and further built up a vigorous video social ecosystem, especially among the young generation. We successfully hosted an offline event.
Speaker Change: Various verticals.
Speaker Change: As a result.
Speaker Change: Matrix and interactions have steadily increased.
Speaker Change: In this quarter, we hosted various events to improve user engagement interactions and further to that.
Speaker Change: Good.
Speaker Change: The video social ecosystem, especially among the young generation.
Speaker Change: We successfully hosted the offline event.
Chaoyang Zhang: 2024 Spring Convention of Sohu Video Influencers, where users and live broadcasters from different verticals came together in person to share their perspectives and interact with each other. This event further fueled broadcasters' overall enthusiasm and vitality on our platform. During this quarter, we also launched 2024 Sohu Video K-pop Masterclass, which attracted a large number of K-pop fans to participate in our event, generating lots of fascinating K-pop related content and widespread discussions and distributions across various social media platforms. Besides, we hosted several noteworthy events promoting Hanfu, the traditional Chinese culture and Chinese customs, which also gained a lot of traction and recognition.
Speaker Change: 2020 for spring convention of Sohu video Influencers.
Speaker Change: We are users and live broadcasters in different verticals came together in person to share their perspective and interact with each other.
Speaker Change: This event further fueled broadcasters overall enthusiasm and the vitality on our platform.
Speaker Change: During this quarter. We also launched 2020 for Sohu video keep hop Master class.
Speaker Change: Which attracted a large number of key pop fans and to participate in our events.
Speaker Change: Generating lots of fascinating keep hub related content and widespread discussions and distributions.
Speaker Change: Across various social media platforms.
Speaker Change: Besides we hosted several noteworthy event promoting handful the traditional Chinese culture to Chinese customers.
Speaker Change: <unk> also gained a lot of traction and the recognition.
Chaoyang Zhang: We have consistently focused on building our unique ITs in the field of knowledge, live broadcasting, and kept exploring innovative monetization opportunities. For example, we integrated Charles' physics class into the 2024 Beijing International Automobile Exhibition, which further expanded our brand influence while at the same time increasing our monetization capabilities. To cater to the needs of advertisers, we also adopted a new approach of live exhibition at the 24th China Home Appliance and Consumer Electronics Expo in Shanghai. This not only allowed audiences to gain a deeper understanding of the product but also helped advertisers to achieve better marketing outcomes.
We have consistently focused on building our unique IP in the field of knowledge live broadcasting and exploring innovative monetization opportunities for.
Speaker Change: For example, we integrated Charles visit fast.
Speaker Change: Therapies getting because the crossroads last two years into the 2020 for Beijing International automobile exhibition.
Speaker Change: The big Internet, which further expanded our brand influence while at the same time, increasing our monetization capabilities.
Speaker Change: To cater to the needs of advertisers. We also adopted a new approach of life exhibition at the 24, China home appliance and consumer electronics Expo in Shanghai.
Speaker Change: This not only allowed audiences to gain a deeper understanding of the product of the product and help advertisers to achieve better marketing outcomes.
Chaoyang Zhang: But they also highlighted the unique monetization value we offer. Going forward, we will continue to leverage the advantages of Sohu's product matrix to provide differentiated marketing solutions for advertisers and drive advertising budgets. Next, turning to the online game business, During the quarter, online game ad revenues were in line with our expectations.
Speaker Change: But he also highlighted the unique monetization value we offer.
Speaker Change: Going forward, we will continue to leverage the advantages of Soho product matrix to provide differentiated marketing solutions for advertisers and drive advertising budgets.
Speaker Change: Yes.
Speaker Change: Turning to online game business.
Speaker Change: During the quarter online game revenues were in line with our expectations.
Speaker Change: Our games business.
Chaoyang Zhang: [inaudible] We rolled out holiday events around Chinese New Year and Valentine's Day, as well as promotional events for regular TLBBPC, which increased players' willingness to pay. In addition to holiday events, we fully upgraded the simulation and gameplay for TLBB Advantage, which was quite popular among players. In our mobile games business, we launched an expansion pack for Legacy TLBB Mobile to celebrate the Chinese New Year and continue to optimize the skills of each clan, which resulted in user engagement stabilizing.
Speaker Change: We wrote out holiday events around Chinese new year Valentine's day.
Speaker Change: As well as promotional events to a regular <unk>, which increased player's willingness to play that way.
In addition to holiday events, we fully upgraded stimulation.
Speaker Change: Gameplay, <unk> vintage, which was quite popular among players.
Speaker Change: In our mobile games business, we launched an expansion pack.
Speaker Change: Legacy <unk> mobile <unk> to celebrate the Chinese new year, and continuing to optimize the skills of its plan.
Speaker Change: Which resulted in user engagement stabilizing.
Chaoyang Zhang: Next quarter, we will launch expansion packs and content updates for the TLBB series and other titles to keep the players engaged. For new games, we launched a license-based card-based RPG, New Westworld Journey, on the Chinese mainland on May 16.
Next quarter, we will launch expansion pack and content updates for the <unk> series and other titles to keep players engaged.
Speaker Change: Our new games, we lost a licensed.
Speaker Change: Card based RPG, new Western World journey.
Speaker Change: Chinese mainland may.
Speaker Change: <unk> 16.
Chaoyang Zhang: Its current performance is in line with our expectations. As gaming technology rapidly advances and the market demand becomes deeper and more diversified, And there is our Top Game Strategy. We will creatively respond. Explore new ways to better meet players' needs, expand our portfolio for international markets, and continue to invest in professional talent development, as well as content and technology innovation in order to bring more high-quality games to the market. We will maintain our core competitiveness in developing MMORPGs going forward, while also producing multiple types of games, including card-based RPGs, sports games, and casual games, etc.
Speaker Change: Its current performance is in line with our expectations.
Speaker Change: As gaming technology rapidly advances and the market demand.
Speaker Change: Have deeper and more diversified.
And there are our.
Speaker Change: Pop games strategy.
Speaker Change: We will creatively.
<unk>, new ways to better meet players' need.
Speaker Change: We extend our portfolio for international markets and continue to invest in.
Speaker Change: Professional talent development.
Speaker Change: As well as content and technology innovation.
Speaker Change: Auto to bring.
Speaker Change: More high quality games to the market.
Speaker Change: Sure.
Speaker Change: We will maintain our core competitiveness in developing all Rpgs going forward.
So producing.
Speaker Change: Multi play types of games, including cart based Rpgs.
Speaker Change: Our sports games, and casual games et cetera.
Chaoyang Zhang: Now I'd like to give an update on the ongoing share repurchase program. As of May 16, 2024, Sohu had repurchased 1.7 million ADS for an aggregate cost of approximately $17 million. With that, I will now turn the call to Joanna Arcepo.
Speaker Change: Now I'd like to give an update.
Speaker Change: Give you an update on the ongoing share repurchase program.
Speaker Change: As of May 16, 2024.
Speaker Change: <unk> had repurchased $1 7 million.
Speaker Change: For an aggregate at aggregate cost of approximately $17 million.
Speaker Change: With that I will now turn the call to drain our sample.
Joanna Li: I will now walk you through the key financials of our major segments for the first quarter of 2024. All the numbers are on a non-GAAP basis. You may find the reconciliation of non-GAAP to GAAP measures on our IR website for Sohu Media and Sohu Video.
Speaker Change: Thank you Charles.
Speaker Change: I will now walk you through the key financials of our major segments for the first quarter 'twenty 'twenty four.
Speaker Change: Numbers on a non-GAAP basis, you may find a reconciliation of non-GAAP to GAAP measures.
Speaker Change: IR web site.
Speaker Change: So maybe I'll start with video.
Joanna Li: Quarterly revenues were $20 million, compared with revenues $30 million in the same quarter last year. The quarterly operating loss was $74 million, compared with operating loss $67 million in the same quarter last year, for Chaoyang's online game business and the 17173. Total revenue was $190 million, compared with revenue $131 million in the same quarter last year. Quarterly operating profit was $55 million, flat with the same quarter last year.
Speaker Change: Quarterly revenues were $20 million.
Speaker Change: Compared with revenues of $30 million in the same quarter.
For the year.
Operating loss was $74 million.
Speaker Change: <unk> operating loss of $67 million.
Speaker Change: The third quarter last year.
Speaker Change: So Charlie is unlike in places in the world.
Speaker Change: Quarterly revenue of $190 million.
Speaker Change: Compared with revenue of $131 million.
Speaker Change: In the same quarter last year.
Speaker Change: Quarterly operating profit.
Speaker Change: $55 million.
Speaker Change: Flat with the same quarter last year.
Joanna Li: For the second quarter of 2024, we expect... Brand advertising revenues to be between $80 million and $20 million. This implies an annual decrease of 16% to 25% and a sequential increase of 12% to 24%. We expect online game revenues to be between $133 million and $143 million. This implies an annual increase of 12% to 21% and a sequential increase of 13% to 21%. Non-Gap Net Loss Attributable to Sohu.com Limited to be between 27 million dollars and $37 million, and Gap Net Loss Attributable to Sohu.com Limited to be between $30 million and $40 million. This forecast reflects stock management's current and preliminary views, which are subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.
Speaker Change: For the second quarter of 2024 weeks.
Speaker Change: Brad.
Brad: Advertising revenue to be between $18 million and $20 million.
Brad: This implies annual decrease of 16% to 25%.
Scott: The sequential increase of 12% to tell me focused Scott.
Brad: Online game revenues to be between $133 million.
Brad: And $143 million.
Brad: This implies annual increase of 12% to 21%.
Brad: Sequential increase of 13% to tell you 1%.
Brad: non-GAAP net loss attributable to Sohu Com limited to.
Brad: To be between $27 million and the circumstance of a million dollars.
Brad: And the GAAP net loss attributable to Sohu Com limited.
Brad: To be between $30 million.
Brad: And $40 million.
Brad: This forecast reflects management's current and preliminary view.
Brad: Which is subject to substantial uncertainty.
Speaker Change: This concludes our prepared remarks.
Operator: We will now begin the question and answer session. To ask a question, please press star 1 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Once again, it's star 1 1 for questions. Our first question comes from Thomas Chong from Jefferies. Please ask your question, Thomas.
Speaker Change: Operator, we would now like to open the call to questions.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: Ask a question. Please press star one one on your telephone keypad, you wouldn't hear an automated message advising yohan is race too.
Speaker Change: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster once again Thats star one one for questions. Our first question comes from Thomas Chong from Jefferies. Please ask your question Thomas.
Thomas Chong: Hi, good evening. Thanks, management, for taking my question. My first question is about our advertising business. How should we think about the advertising sentiment in the coming quarters? In particular, we have the Olympics in Q3. Should we expect our advertising to return to positive year-on-year growth in the second half? And that's my first question.
Thomas Chong: Hi, Good evening, Thanks management for taking my question. My first question is about our advertising business.
Thomas Chong: How should we think about.
Thomas Chong: Clients coming.
Speaker Change: In particular, we have.
Speaker Change: Or do you detect.
Speaker Change: Q3 should we expect our advertising back to positive year on year in the second half and that's my first question and then my second question is about our online game.
Thomas Chong: And then my second question is about our online game guidance in Q2. Should we assume sequential growth? That we repurchase is about $17 million. I just want to get some color with regard to our full year plan. Should we assume that any color about how much share repurchase we will do in the remainder of the year? Or should we think about the $150 million share repurchase program should be fully used up in two years' time?
Chaoyang Zhang: Thank you.
Speaker Change: In Q2.
Speaker Change: Should we be Australia, the sequential growth.
Speaker Change: He is mainly coming from our new license games.
Speaker Change: After the break.
Speaker Change: Ill.
Speaker Change: Entrepreneurship license gain in Q2 that would be great and then my question is more about.
Speaker Change: Our capital allocation strategy.
Chaoyang Zhang: Charles I'd also mentioned that the aggregate.
Chaoyang Zhang: Among that maybe purchase is about 17.
Chaoyang Zhang: The U S dollar.
Speaker Change: Just wanted to get some color if he got to olive oil.
Chaoyang Zhang: Yes.
Chaoyang Zhang: Ken.
Speaker Change: Should we assume that.
Speaker Change: Any color about how much share repurchases. They will do in the remainder of the Es or should we think about the 150 million share repurchase program should be fully used up in two years' time. Thank you.
Chaoyang Zhang: Well, let me answer your third question first, okay? So we've been bought for $70 million, and we have $150 million because of the daily volume that we can buy. So our plan is to finish all the $150 million buybacks, and it probably takes two years. So limited by daily volume, daily volume trade. And so the first question about advertising, I think the, Well, the macroeconomic situation is still kind of with a lot of uncertainty.
Speaker Change: Well, let me answer your third question first okay. So we've been we've been bought $70 million.
Speaker Change: And then we have $150 million and because of the daily volume that we buy so.
Speaker Change: So our plan is to finish finished.
Speaker Change: $150 million buyback and probably takes three years.
Speaker Change: No.
Speaker Change: And.
Speaker Change: Sure.
Speaker Change: So limited by daily volume Daily volume trading.
Speaker Change: So the first quarter, our advertising I think the.
Speaker Change: Well, the macroeconomic situations and still kind of.
Speaker Change: With a lot of uncertainty.
Chaoyang Zhang: So the economy, yeah, so there's some recovery in certain sectors in Q2, but not very strong, and advertisers are spending a kind of cautiously. So in Q2, we do have a Q2Q increase for brand-name packaging compared with Q1. But compared with last year, I'm not sure we can...
Speaker Change: So economy.
Speaker Change: Yes, so the.
Speaker Change: There is some some recovery in certain sectors in Q2, but not very strong in.
Advertisers.
Speaker Change: Pending a kind of a cautious.
Speaker Change: So.
Speaker Change: In Q2, we do have.
Speaker Change: Kudos to increase of our brand advertising.
Speaker Change: Compared with Q1.
Speaker Change: <unk>.
Speaker Change: But compared with last year I'm not sure we can.
Speaker Change: Sure.
Speaker Change: There was 103 will achieve growth or.
Chaoyang Zhang: Yes, still decreasing. It all depends on, you know, what we are able to do because we need to, you know, continue to develop our user base so that we have a, you know, scale up our user base. That's a time when we can achieve, you know, advertising growth.
Speaker Change: Lunch.
Speaker Change: Yes steel decrease yes.
It all depends on we are able to because we need to.
Speaker Change: Continuing through.
Speaker Change: The balance of our user base, so that whatever.
Speaker Change: Scale up of our user base, that's the time when we.
Speaker Change: Can achieve.
Speaker Change: Advertising growth.
Speaker Change: Yes definitely.
Chaoyang Zhang: The second question is about online gaming and about whether, you know, the sequential increase is because of in-game or...
Speaker Change: Second question is about online gaming and about weather.
Speaker Change: Drove increase.
Chaoyang Zhang: The income growth in the second quarter is mainly due to the release of Paijiu Shaolin in Japan and South Korea at the end of April and the release of Xiyou Bihui Xixing in China on May 16. The income of these two projects led to an increase in the income in the second quarter. In the second quarter, the old game had a slight decline.
Speaker Change: Okay.
Speaker Change: Keeping with our solar tons. So we are seeing on <unk>.
Speaker Change: Angola, Hudson Pedro Sarnia, ETE residue <unk> Hudson.
Speaker Change: He'll be transmission.
Speaker Change: So.
Speaker Change: Archie toward a soda center now I'll, let you to dilute in Shanghai.
Chaoyang Zhang: The sequential increase in our revenue is mainly from Haiku Fly High, which we launched in Japan and South Korea at the end of March, and also from New West World Journey that we launched on May 16th on the Chinese mainland. And at the same time, there will be some decrease in our order gains. Hi Thomas, I think I missed the second part of your question. So the allocation of capital besides the buyback, we still have the cash level to fight the battle, right, to market our products and to develop our products.
Speaker Change: The sequential increase.
Speaker Change: Increase of our revenue is mainly from haiku fly high, which we launched in Japan, and South Korea at the end of March and also from new westward journey that we launched on May 16th in the Chinese mainland and at the same time.
Speaker Change: There are some there will be some decrease of our older games.
Speaker Change: Yeah.
Speaker Change: Hi, Thomas Thank you.
Speaker Change: I missed it.
Speaker Change: So the.
Speaker Change: Allocation of capital Besides the buyback we will.
Speaker Change: We still.
Speaker Change: Have the cash level to two.
Speaker Change: Fight the battle right to market, our products and to develop our products.
Speaker Change: Yes.
Thomas Chong: Got it. I thank you. Ciao.
Speaker Change: Got it thank you Chuck.
Speaker Change: Okay.
Operator: Our next question comes from the line of Alicia Yap from CT. Please ask your question, Alicia.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Alicia Yap.
Speaker Change: Please ask your question Alicia.
Alicia Yap: Hi, yes, thank you. Good evening, Charles, Johanna, and the management team. Thanks for taking my questions. I have a couple of follow-up questions. So number one is the follow-up on the guidance.
Alicia Yap: Hi, yes. Thank you.
Alicia Yap: Charles Johanna and management team Thanks for taking my questions.
I have a couple of questions follow ups. So number one is a follow up on the guidance. So I understand the sequential growth in the gaming guidance, but however, I think given gaming is a high margins and profitable business the sequential increase in revenue and profit from gaming.
Alicia Yap: So I understand the sequential growth in the gaming guidance, but, nevertheless, I think given gaming is a high-margin and profitable business, the sequential increase in revenue and profit from gaming should support overall group profitability. And why is your 2Q net loss guidance actually wider than you delivered for the first quarter? So any color you can share with us on the expense side, that will be great.
Alicia Yap: Overall group profitability and why is your <unk> net loss guidance is actually wider than you deliver more into first quarter. So any color. If you can share with us on the expense side that will be great and.
Alicia Yap: And the follow-up questions on the buyback, just wanted to make sure I got it correct. So I think last quarter you mentioned you bought back about 12 million as of February, you know, the end of February, and now you have 17 million. So is that true that you actually executed about 5 million over the last like three months or so? And is it just because of the daily volume that is the limitation, or is there something about the money transfer or kind of like moving out the money? Is there any restriction on that? Thank you.
Alicia Yap: The follow up question is on the buyback just wanted to make sure I got it correct. So I think in last quarter.
Speaker Change: You mentioned you bought back about 12 million at February.
Speaker Change: The end of February and now that you have 17 million. So is that true that you actually executed about $5 million.
Over the last three months or so.
And is it just because of the baby.
Volume that is the limitations or is there anything on the.
Speaker Change: The money transfer or kind of flat moving out the money is there any restrictions on that.
Chaoyang Zhang: I think the last question is just the daily volume limit. We would like to buy them all, to carry out all the 150 million buybacks, but we can't because of the daily volume limit. So yes, I think your calculation is right, right? In the last two months, we bought five million back, right? Yeah, we are trying to, and we hope that in the future, the volume will improve so that we can buy more, so that we can finish this 150 million as early as possible. As to the Q2 expense, right? Q2 net loss guidance is lower than Q1 because we spend more on marketing expenses for China's new game. Yes.
Speaker Change: Thank you.
Speaker Change: Just I think the last question.
Speaker Change: The daily limit.
Speaker Change: Back to <unk>.
Speaker Change: By them all right buyback of the OTA.
Speaker Change: The Carryout order, 100% minimum buyback, but we can't because of the daily volume limit.
Speaker Change: So yes, I think your calculations are right. The last two months, we bought back.
Speaker Change: Yes, we are trying to where we are.
Speaker Change: Hope that in the future of the volume will improve.
Speaker Change: Improve so that we can buy more so that food finish this 150 minutes as early as possible.
Speaker Change: Yes.
Speaker Change: As to the.
Speaker Change: Q2 weeks.
Because it comes with a net loss of the guidance is lower than Q1.
Also we will spend more.
Speaker Change: Marketing expenses for the timing of new game, yes.
Speaker Change: Yes.
Alicia Yap: Oh, I see. So it's only for the game promotion, but nothing like a step up for
Speaker Change: Oh I see.
Speaker Change: So at least for the game promotion, but nothing on a step up small does video or the media business.
Chaoyang Zhang: We, we, we, uh, uh, we, uh, A few dramas, right? That money already spent in Q1, right? Yeah, so no increase in media side spending.
Speaker Change: Uh huh.
Sure.
Speaker Change: We are.
Speaker Change: A few TV drama right that already spent the money already spent in <unk>.
Speaker Change: Yes.
Speaker Change: The increase in media side of spending.
Alicia Yap: I see. OK, helpful. Maybe can I sneak in a few last questions on the follow up. I think Charles, you mentioned while the macro, you know, kind of remains a little bit uncertain, but you did see a little bit of some recovery in certain sectors in the second quarter. Can you share with us which vertical or industry vertical that you actually saw a little bit of improvement in the second quarter?
Speaker Change: I see okay helpful. Maybe Ken I treat my last question's on also the follow up I think Charles you mentioned.
Speaker Change: While the macro.
Speaker Change: Kyle remain a little bit uncertain, but you did see a little bit some recovery in certain sector in the second quarter can you share with us which body core industry vertical that you actually see a little bit improvement in the second quarter.
Chaoyang Zhang: I think the FMCG is getting better, with beverage and food, and also the electric vehicle industry. The competition is very, very intense, and because of the competition, people are forced to spend some money, although they're spending much less than before, but there is some spending in the car industry, right? But overall, advertisers are still very cautious. I see. So maybe... I see, I see. Thank you, Charles.
Speaker Change: I think that <unk> is getting better with our beverage and the food and then yeah.
Speaker Change: So the electric vehicle.
Speaker Change: The electric vehicle industry.
Speaker Change: Competition is very very intensified and people are people are because of the competition and people are forced to spend some money, although they're spending that much less less than before but still there is some spending in colorado industry right and.
Speaker Change: But overall, it's still.
Speaker Change: Advertising still very cautious.
Speaker Change: I see.
Alicia Yap: Maybe just a quick follow-up with recent positive policy measures from the government, especially on the real estate side. Do you think overall sentiment from advertisers will be improving in maybe the second half? I think that is particular, that is about the real estate industry, right? It has nothing to do with anything else, right?
Speaker Change: So maybe.
I see thank you Josh maybe just a quick follow up with recent positive policy measures from the government assess.
Speaker Change: Especially on the real estate side do you think overall sentiment from advertiser will be absorbing in maybe the second half.
Chaoyang Zhang: The recent policies about real estate. But that removes the, does not do well in, I don't think consumers' income will be improved, so consumers' spending will not increase, so that's what I think. When consumers are not spending, but it seems they are spending a lot on traveling, the travel business is coming back a little bit. But overall, the spending willingness is not that strong. So the product means when people are not buying things, then the company's products will not expect sales, then advertising will not, you know, so it's not direct. The recent policies do not have a direct impact or a positive impact on the advertising market. Okay.
Speaker Change: I think that that is.
Speaker Change: The particular.
Speaker Change: It's about real estate industry right.
Speaker Change: <unk> with other.
Speaker Change: The recent policies about the real estate end.
Ruth: But that Ruth.
Does that well.
Ruth: Does not reflect any.
Ruth: Now I don't think that people who are consumers.
Ruth: Income will improve so spending consumer spending will not be.
Ruth:
Ruth: No it will not increase so that's.
Ruth: Yes.
Ruth: When consumers.
Ruth: Outstanding.
Ruth: But the address.
Ruth: It seems on spending a lot on how many you know.
Speaker Change: Pavel business, becoming current.
Speaker Change: Kind of coming back into the business, but overall it spending willingness is not as strong so.
Speaker Change: So the product that means when people are not buying things then the company's products, we will not.
Speaker Change: You will not be expected sales.
Speaker Change: Then Adam having so.
Speaker Change: It's not direct the recent policies does not have a direct impact positive impact on the.
Speaker Change: On the macro.
Alicia Yap: Okay, that's very helpful. Thank you, Charles.
Speaker Change: Advertising market.
Speaker Change: Okay. Okay. That's very helpful. Thank you Charles.
Speaker Change: Alright.
Operator: Well, I'm showing no further questions. Thank you very much for all your questions. And with that, we conclude today's conference call. Thank you for participating. You may now disconnect.
Chaoyang Zhang: Thank you.
Speaker Change: Well I'm showing no further questions. Thank you very much for all of your questions and with that we conclude today's conference call. Thank you for participating you may now disconnect.
Chaoyang Zhang: Okay, thank you.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].