Q3 2024 Sohu.com Ltd Earnings Call
Okay.
Speaker Change: Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining so who's a third 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: Like to turn the conference over to your host for today's conference call Guangzhou Investor Relations Director of Sogou. Please go ahead.
Speaker Change: Yeah, so greater than people join us to discuss our third quarter.
What I'll call, our chairman and Chief Executive Officer, Dr. Charles Zhang CFO, John Hurley, and the Vice President of a next gen stuff, although it does childhood Theodore Lin Chen C F L being law.
Speaker Change: The format of Olympic games their prepared remarks, I would like to remind you of the Companys Safe Harbor statement in connection with today's conference call.
Well the historical information company either another discuss on this call may contain forward looking statements. These statements are based on kind of class I played on the projections and therefore, you should not place undue reliance on them.
Speaker Change: These statements involve.
Speaker Change: Risks and uncertainties, we caution you that a number of important factors could cause actual results to differ materially from those contained and if all of these statements.
Speaker Change: More information about the potential of it.
Speaker Change: There are certain to please refer to the company's filings with the Securities and Exchange Commission, including our most recent annual report on form 20-F.
I'll now turn the call over to Dr. Charles Zhang.
Please proceed.
Thanks.
Speaker Change: Thank you everyone for joining our call.
Speaker Change: In the third quarter of plenty, but for our brand advertising revenue back the high end of our previous guidance well, both our online game revenues.
Speaker Change: Our bottom line performance exceeded expectations.
Speaker Change: For Sohu media and video in addition to continue.
Speaker Change: Refinements and user experience improvements, we continue to integrate <unk>.
Speaker Change: Sources and host various unique events and marketing campaigns.
Speaker Change: With this effort because these efforts we were able to effectively stimulate social interactions among users.
Speaker Change: And our brand influence and secure more monetization opportunities.
Speaker Change: As a result.
Speaker Change: For game, either with other high quality content updates and robots game operations online game business delivered better than expected performance.
Speaker Change: Before going through each business unit in more detail.
First give you a quick overview of our financial performance.
Speaker Change: For the third quarter of 2024 total revenues of $102 million.
Speaker Change: 5% year over year, and down 12% quarter over quarter.
Speaker Change: Brand advertising revenues $19 million.
Speaker Change: Down, 15% year over year, and 6% quarter over quarter.
Online game revenues $128 million.
Speaker Change: Up 9% year over year and are down 13% quarter over quarter.
Speaker Change: GAAP net loss attributable to Sohu dot com eliminate.
Speaker Change: $60 million compared with a net loss of $14 million in the third quarter of last year and a net loss of $38 million in the second quarter of this year.
Speaker Change: non-GAAP net loss attributable to <unk> Dot Com limited was $12 million compared with a net loss of $10 million in the third quarter of last year, and a net loss of $34 million.
Last quarter second quarter of 2024.
Speaker Change: Now I'll go through I'll keep it tends to be multichannel.
Speaker Change: First Sohu media and Sohu video.
Speaker Change: During this quarter, we kept promoting the social distribution features built up connections between users and meet their increasing needs further consolidated our brand influence.
Speaker Change: The carryout unique any transfer of events covering various verticals.
In September we successfully hosted the 'twenty 'twenty 'twenty 'twenty four Ottoman convention of Sohu video Influencers.
Speaker Change: Put it that way.
Users broadcasters and pop stars met in person to share their stock.
Social network.
Speaker Change: Through our platform.
This event greatly enhanced the recognition of the Sohu video platform among broadcasters broadcasters.
Speaker Change: Uh huh.
Speaker Change: Significantly improved.
Speaker Change: <unk> and interactions.
Speaker Change: We also proactively postpaid diversified events based on our influential.
Interest clubs.
And groups in different areas.
Speaker Change: Kober initiated a groundbreaking overseas collaboration with the.
Speaker Change: Event 2024 being concert in.
Speaker Change: South Korea.
Speaker Change: Where are we gathered 100 super a superb top hip hop contestants who stood stood out after six months of intense competition nationwide and we lend we allowed the team to provide them a chance to go to South Korea to dance together with those.
Speaker Change: Either they're idose.
Speaker Change: The world from the Idose.
Speaker Change: This event attracted lots of <unk> strength and generally the hot discussions across the various social media platforms. So with video has become a leading platform for keep hop dense.
Issues guests in China, drawing a large number of fence and providing them with the states to realize they are getting their dreams.
Speaker Change: Moreover, we consistently reinforce our leading position in knowledge and science related live streaming are highly regarded.
Speaker Change: Physics class right.
Through the class, which has just celebrated its 30 year anniversary and publish coverage.
Speaker Change: Physics book.
Speaker Change: Has formed a dynamic multi national multi dimensional.
Speaker Change: Simulation through various forms and together with the charts with the class. We also have a Charles English class and other <unk>.
Speaker Change: Relative life contents that further strengthen our core competitiveness in this field.
Speaker Change: We continue to innovate our content offerings and combine them to customize brand marketing solutions for advertisers. These helped us gain recognition from large number of high value audiences and advertisers provided us with innovative monetization opportunities.
Yeah.
Speaker Change: Now let me turn.
Speaker Change: Turning to the LNG business.
Speaker Change: During the third quarter of 2024 Chinese online game revenues exceeded our prior guidance.
Speaker Change: As <unk> performed better than expected and our PC game revenues increased on a sequential basis.
Speaker Change: Meanwhile, due to the natural decline of the new westward journey, which was launched.
Speaker Change: During the second quarter mobile games revenue decreased on a sequential basis.
We launched this year is the crossover events around that around the Chinese.
Festival Chichi festival for the both our regular <unk> PC and <unk> vintage heater.
Teetering seem opex Matt.
Speaker Change: Maps and the game player plays which were well received by players.
Speaker Change: Besides we also revamped the skill sets of our major trend up regulate PD, PCE, which effectively pulled back former players because again.
Speaker Change: For legacy <unk> mobile.
Speaker Change: We upgraded the skill sets of our clan based on clear clear feedback and introduce the corresponding new storyline and activities.
Its place.
Speaker Change: <unk> players we're happy with.
Speaker Change: Next quarter, we will continue to launch expansion packs and the content updates for the <unk> series.
New westward journey and other titles to keep players.
Speaker Change: Two two.
Speaker Change: Updates for the <unk> newest journey westward journey and other titles to keep players engaged.
Speaker Change: As market competition intensified use either demand it becomes more diversified will afford her head with our pop game strategy.
Speaker Change: And we remain committed to a user centric philosophy.
Speaker Change: We will continuously optimize the R&D process.
Speaker Change: Hence execution and expand our international presence by doing so we are confident that we can bring more high quality games to the market in terms of the game pipeline, we will maintain our core competitiveness MMO RPG going forward, which are also which also while.
Speaker Change: While also exploring possibilities in <unk>.
Speaker Change: Multiple types of games, including card based RPG sports games, and casual games et cetera.
Speaker Change: Now I would like to give an update on the ongoing.
The share purchase program.
Speaker Change: <unk> today announced that its board of directors has authorized.
To extend the period of program of the program for an additional one year to November 10 2026.
Speaker Change: It previously was.
Speaker Change: Two year program of 20.
Speaker Change: 2025.
As of.
Speaker Change: November seven 2024 this year.
Speaker Change: So who has had purchased repurchased $3 4 million.
Speaker Change: For an aggregate cost of approximately.
Speaker Change: $42 million. So the total buyback program was $150 million is about one third lesson when startup the year product.
Speaker Change: So that's why we need three years right.
Speaker Change: With that I'll now turn the call to over to join our journey.
Speaker Change: Thanks for the call I will now walk you through the <unk>.
Speaker Change: Of all of our major segments.
Speaker Change: Third quarter.
Speaker Change: Paul.
Speaker Change: On the line.
Speaker Change: You made a filing to recover to Asia for that matter.
Speaker Change: Our web site.
Speaker Change: Political media and local media property revenue.
Speaker Change: $3 million.
Speaker Change: With 77.
Speaker Change: The $1 million in the same quarter last year.
Speaker Change: Quarterly operating loss was $72 million.
Speaker Change: With an operating loss of $66 million in the same quarter last year.
Speaker Change: So Chinese online game business.
Speaker Change: 1003.
Speaker Change: Quarterly revenue of $179 million.
Speaker Change: Comparator with $180 million in the same quarter last year.
Speaker Change: Quarterly operating profit.
Speaker Change: $4 million.
Speaker Change: I'll start with operating profits typically.
In the same quarter last year.
Speaker Change: For the fourth quarter of 2018 before.
Correct.
Speaker Change: Advertising revenues to be between $70 million and $19 million.
Speaker Change: Then in Paris, and you will be critical.
Speaker Change: So the 16%.
Speaker Change: The sequential decrease of 9% So let me question.
Speaker Change: Perfect.
Speaker Change: Oh, Mike and revenue to be between $97 million.
Speaker Change: $170 million.
Speaker Change: This implies annual decrease of 7%.
Speaker Change: So the 50%.
Speaker Change: On a sequential decrease of 16% with 74%.
non-GAAP net loss attributable to those would all come out of it to be between $76 million and the $36 million.
Speaker Change: And the GAAP net loss attributable to <unk> limited.
Speaker Change: Between $30 million and $40 million.
Speaker Change: This forecast does backstop of management's current and preliminary view.
Speaker Change: Is that back towards the title uncertainties.
Speaker Change: This concludes our prepared remarks.
Speaker Change: Operator.
Speaker Change: I would like to open the call to Paul Cheng.
Paul Cheng: Thank you.
Paul Cheng: We will now begin the question and answer session. You'll ask a question. Please press star one on your telephone.
Paul Cheng: With an automated message advising your hand is raised to withdraw your question. Please press star one again.
Paul Cheng: Okay.
Speaker Change: We will now take our first question from the line of Alicia Yapp from Citigroup. Please ask your question Alicia.
Speaker Change: Oh, hi, thank you.
Speaker Change: Good evening, Charles and management team. Thanks for taking my questions I have.
Speaker Change: A few questions Firstly Scott.
Speaker Change: In terms of the advertising outlook have you seen any improvement in terms of the AD budget spend by advertiser entering.
Fourth quarter.
Speaker Change: Overall advertiser sentiment has improved slightly heading into <unk>.
Speaker Change: The remaining of the gear and then.
Speaker Change: Given your guidance actually imply year over year decline is narrow lang for your revenue guidance.
Speaker Change: Is that what you are seeing is an improving trend and also a possible. If you could also resumed positive growth as we enter 2025.
Speaker Change: Second question is on your <unk> guidance, where Celesio reported revenue.
Speaker Change: So in <unk>, you guided very conservatively and they get you deliver massive beat in the quarter.
Speaker Change: $128 million and then your guidance for Q again, very conservative. So just what are the main reasons for you to guide conservatively.
Speaker Change: Which came to four months that you have not factored into the guidance for Q.
Then last question is it seems like it takes a little bit slow.
Speaker Change: To execute your buyback given the trading liquidity just wondering if management could think of any better way to enhance the return to shareholder or would you consider to speed up.
Speaker Change: Is there any way you could see that to speed up the buyback.
Speaker Change: In more shares in the shorter term period. Thank you.
Speaker Change: In terms of advertising.
Speaker Change: The economy is.
Speaker Change: Well, it's steady but gradually.
Speaker Change: Uh huh.
Speaker Change: Moving a little bit growth rate right.
Speaker Change: Sure Jamie.
Speaker Change: The slowdown was going about yeah. So these are the advertising market is still.
Speaker Change: Soft not.
Speaker Change: Not as strong robust.
Housing market.
Speaker Change: But in Q3, we achieved the higher.
Speaker Change: Higher end of the forecast because.
Speaker Change: Our unique.
Speaker Change: Nick.
Speaker Change: Offline and online.
Speaker Change: Marketing <unk>.
Speaker Change: Events designed very unique and very unprecedented.
Speaker Change: Kind of events that provide some opportunity for advertisers to.
Speaker Change: To spend money on the on our.
Speaker Change: Projects on the events and because overall our overall.
Speaker Change: And hedging amount is not that large.
Speaker Change: So.
Speaker Change: So we have we got.
Speaker Change: We did better than we thought.
Speaker Change: Because.
Speaker Change: No.
Speaker Change: That much related to the macroeconomic situations.
Speaker Change: Very small.
Speaker Change: Of the total.
Speaker Change: Yeah.
Speaker Change: Okay.
I think there is a recently there is some kind of stimulus package on the policy side and.
Speaker Change: The effect to see that.
Speaker Change: The M&A market would recover probably sometime next year.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: So Mr. Yoshizawa Winland, Alicia alumina, Aoc Julien 10, kilo my goodness without sheltering at home and <unk>.
<unk> content and should be done.
Sure Sheila.
Speaker Change: Also the cleaning in each Sim only genesee <unk>, Wyoming, he or she wishes.
Geoscience total Italian interestingly leader kind of embargo.
Speaker Change: With our <unk>.
Speaker Change: Costco several tuscola, Illinois.
Speaker Change: Yeah.
Speaker Change: The reason for the revenue beat in the third quarter is mainly because.
Speaker Change: The new content and new servers that we launched during the quarter for both COPD vintage and irregularity LTV Tc.
Their performance.
Speaker Change: Better than expected.
Speaker Change: Sure.
Speaker Change: <unk> also seen way too.
Speaker Change: <unk> channel.
Speaker Change: We're seeing no call.
Speaker Change: Okay.
Speaker Change: With us all the time.
Speaker Change: The third highest order et cetera.
Speaker Change: I'll say.
Speaker Change: C C.
Speaker Change: The recent week, we guided conservatively for the full quarter.
Speaker Change: The strategy for <unk> during the fourth quarter is mainly to maintain the users the ability to offer them more benefit is that also.
Speaker Change: Increasing revenue so it looks a bit conservative.
Speaker Change: Okay. Thank you.
Speaker Change: Yes.
Yes, the buyback program.
Speaker Change: Yes, because the daily limit right daily volume limit we don't have.
Impact or shape the price too.
Speaker Change: Too much so theres a limitation.
Speaker Change: Number of shares we can buy that's why two years is not enough.
Speaker Change: We probably we can.
Speaker Change: Probably can't finish can buy.
Speaker Change: $50 million a year of property.
Speaker Change: That's why we need to extend to 2026.
Speaker Change:
Speaker Change: Great. Thank you do you have any follow up question Alicia.
Speaker Change: No. Thank you that's it thank you so much.
Speaker Change: Thank you Eric.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone keypad.
Speaker Change: Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question Thomas.
Thomas Chong: Thank you management for taking my question I have two questions first how should we expect in 2025 online games outlook on the market and the question is that how should we expect <unk> operating margin trend in the next few years. Thank you.
Thomas Chong: Yes.
Thomas Chong: Yes.
Thomas Chong: Do we see the.
Thomas Chong: Sure.
Thomas Chong: At that time.
Thomas Chong: Yeah.
Hi, there.
Thomas Chong: Right.
Thomas Chong: The question is about the channel.
Yields came or the industry the game on immunology 2025.
About Chung yoga.
Yes of course.
Thomas Chong: <unk> has for associated.
Thomas Chong: We're seeing some good Samsung.
Thomas Chong: Sure.
Thomas Chong: Scenarios.
Not.
Thomas Chong: Not all of our call.
Thomas Chong: Alcohol.
Thomas Chong: Technical <unk>.
Thomas Chong: Thanks Keith.
Thomas Chong: <unk>.
Thomas Chong: It's been tested.
Thomas Chong: Okay.
Thomas Chong: Sure.
Cynthia <unk> content.
Thomas Chong: So sundar symbolic Tesla.
Thomas Chong: I mean, obviously equally between.
Thomas Chong: Between systems.
Thomas Chong: Well Tony.
Thomas Chong: Our goal is to pay the stability of our older games and.
Thomas Chong: We will strive to make them grow.
Thomas Chong: We have around 10 <unk> under.
Thomas Chong: Under development now with some of them, having achieved having obtained the license approval, including.
Thomas Chong: One game called NBA absolute superstars.
Speaker Change: Mitchell answered agency and the other one.
Speaker Change: Caught hero.
Speaker Change: Three kingdoms.
Speaker Change: <unk>.
Speaker Change: Sure.
Speaker Change: Alright.
Speaker Change: Alright.
Speaker Change: I'll start.
Speaker Change: Testing recently and before.
Speaker Change: But we also have a new version of <unk>.
Speaker Change: The PC game, and we're going to have.
Monetization test here recently.
Speaker Change: Mike.
Speaker Change: Okay.
Okay.
Speaker Change: Okay, well, we'll have a star.
Speaker Change: Start the test for a new version of our <unk> PC game.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: <unk>.
Speaker Change: Great. Thank you.
Speaker Change: We have now reached the end of the question and answer session. Thank you all very much for your questions and with that we conclude our conference call today.
Speaker Change: Thank you for your participation you may now disconnect.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: [music].