Q1 2025 Sohu.com Ltd Earnings Call
Unknown Executive: Ladies and gentlemen, thank you for standing by and good evening.
Ladies and gentlemen, thank you for standing by and good evening. Thank you for Chinese Salt was first quarter 'twenty earnings Conference call.
Unknown Executive: Thank you for joining Sohu's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.
At this time all participants are in a listen only mode.
Unknown Executive: After management's prepared remarks, there will be a Q&A session. Today's conference call is being recorded.
After managements prepared remarks, there will be a Q&A session.
Unknown Executive: If you have any objections, you may disconnect at this time.
Today's conference call is being recorded if you have any objections you may disconnect at this time.
Pu Huang: I'd now like to turn the conference over to your host for today's conference call, Pu Huang, Investor Relations Director of Sohu. Please go ahead.
Speaker Change: I'd now like to turn the conference over to your host for today's conference call Whirlpool Investor Relations Director of Sohu. Please go ahead.
Pu Huang: Thanks, operator. Thank you for joining us to discuss Sohu's fourth quarter 2025 results.
Speaker Change: Thanks, operator, thank you for joining us to discuss <unk> fourth quarter 2025 results on the call are chairman and Chief Executive Officer, Dr. Charles Zhang CFO, John <unk> and the Vice President said has jumped up also with US a chunk of the C. O two inch and then let's see I felt Meanwhile.
Pu Huang: On the call, our Chairman and Chief Executive Officer, Dr. Charles Chang, CFO, Joanne Liu, and the Vice President of Finance, James Deng. Also with us, Chang, U.S.
Pu Huang: CEO, Dewen Chen, and CFO, Pu Huang.
Unknown Executive: Before I begin the prepared remarks, I would like to remind you of the Communist State Public Statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed under common content follow his statement. These statements are based on current plans, estimates, and projections, and therefore, you should not place undue reliance on them. follow his statements involving key risks and uncertainties. We caution you that a number of important factors could cause actual results of different material from those containing any following statements.
Speaker Change: Before management begins their prepared remarks, Oh did that to remind you of the Companys Safe Harbor statement in connection with today's conference call.
Speaker Change: That's for the historical information contained herein the matters discussed on this call may contain forward looking statements.
Speaker Change: Based on the kind of class estimate under protection.
Speaker Change: Therefore, you should not place undue reliance on them.
Speaker Change: These statements involve risks and uncertainties the culture here that a number of important factors could cause actual results to differ materially from those containing any for looking statements.
Unknown Executive: For more information about the potential risks and uncertainties, please refer to the company's findings with the Securities and Exchange Commission, including the most recent annual report on firm content.
Speaker Change: For more information about the potential risks and uncertainties. Please refer to the Companys filings with us the Cortez and Exchange Commission.
Speaker Change: Including our most recent annual report on form 20-F.
Pu Huang: With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.
Speaker Change: With that I will now turn the call over to talk spouse jaw.
Charles Zhang: Thanks, Hongpu, and thank you, everyone, for joining our call. In the first quarter of 2025, both our marketing services revenues, this is formerly known as the brand advertising revenue, and the non-GAAP bottom line performance reached the high end of our previous guidance, where our online game revenues were well above our expectations. For the Sohu Media platform, in addition to devoting efforts in product refinements and technology improvements, we continue to concentrate on strengthening the distinctive social features, social network features of our platform. Through various unique events, we were able to engage with more users while promoting vigorous social interactions and distributions on our platform and generating massive premium content at the same time.
Speaker Change: Please proceed.
Speaker Change: Thanks, <unk> and thank you everyone for joining our call.
Speaker Change: First quarter of 2025 goes our marketing services services revenues. This is a formerly known as the brand AD revenue.
Speaker Change: Our non-GAAP non.
Speaker Change: non-GAAP bottom line performance reached the high end of our previous guidance, while our online game revenues were well above our expectations.
Speaker Change: For the Sohu media platform. In addition to devoting efforts in product refinements and technology improvements we continue to concentrate on strengthening these distinctive social features Super network features of our platform.
Speaker Change: Sylvia is unique events, we were able to engage with more users while promoting vigorous social interactions and distributions on our platform and are generating massive premium content at the same time, leveraging our competitive advantage.
Charles Zhang: Leveraging our competitive advantage as a mainstream media platform and our unique IPs, we proactively explored greater monetization opportunities. Online games business also achieved a satisfactory performance thanks to the high quality content updates and continual improvements to our games.
Speaker Change: Onstream media platform and our unique IP, we proactively explored greater monetization opportunities.
Speaker Change: All our games business also achieved the construction performance thanks to the high quality content updates and continual improvements to our games.
Charles Zhang: Before going into each business unit in more detail, let me first give you a quick overview of our financial performance. For the first quarter of 2025, total revenues $136 million, down 3% year over year, and up 1% quarter over quarter. Marketing Services Revenues for $14 million, down 15% year-over-year and 27% quarter-over-quarter. All in good revenues, $117 million. Flat year-over-year and up 7% quarter-over-quarter. Gap net income attributable to Sohu.com Limited was $182 million compared with a net loss of $25 million in the first quarter of 2024 and a net loss of $21 million in the fourth quarter of 2024.
Speaker Change: Before going into each business unit in more detail. Let me first give you a quick overview of our financial performance.
Speaker Change: For the first quarter of 2020 five.
Speaker Change: Total revenues of $136 million down, 3% year over year and up 1% quarter over quarter.
Speaker Change: Marketing services revenues.
Speaker Change: $14 million down 15% year over year on the 27% quarter over quarter.
Speaker Change: Online game revenues 117 million.
Speaker Change: Dollars flat.
Speaker Change: Flat year over year, and up 7% quarter over quarter.
Speaker Change: GAAP net income attributable to Sohu Dot Com limited.
Speaker Change: Was a $182 million compared with a net loss of $25 million in the first quarter of 2024, and a net loss of 21 million in the first fourth quarter of 2024.
Charles Zhang: In this quarter, the company reversed a tax expense that had been previously recognized as an uncertain tax position and its related accrued interest expense. at approximately $199 million. Excluding this, non-GAAP net loss attributable to Sohu.com Limited was $16 million compared with a net loss of $22 million in the first quarter of 2024 and a net loss of $15 million in the fourth quarter of 2024.
Speaker Change: In this quarter the company.
Speaker Change: First a tax expense.
Speaker Change: Had been previously recognized.
Speaker Change: On uncertain tax position and its related accrued interest expense.
Speaker Change: At approximately $199 million.
Speaker Change: Excluding this non-GAAP net loss.
Speaker Change: Good about too so dot com limited was $16 million.
Speaker Change: Paired with a net loss of $22 million in the first quarter of 2024, and a net loss of $15 million in the fourth quarter of 2024.
Charles Zhang: Now, I will go through our key businesses in more detail. First Sohu Media Platform. We continuously optimized our products and with cutting-edge technologies while further strengthening the social network features. by strategically integrating resources across our platforms and leveraging the synergies created by our unique offline events. We successfully attracted a wide range of broadcasters. who are also our users from diverse fields and greatly increased their engagement. These help. To generate more high-quality content, further promote online social interaction and distribution, and ultimately build a vibrant and Dynamic Social Community on our platform.
Speaker Change: Now I will go through our key businesses in more detail.
Speaker Change: First our Sohu media platform.
Speaker Change: We're continuously applied.
Speaker Change: Optimized our product and it was cutting edge technologies, while further strengthening the social future sort of macro micro futures.
Speaker Change: But strategically in integrating resources across all platforms and leveraging the synergies created by our unique offline events.
Speaker Change: We successfully attracted a y.
Speaker Change: Yeah got broadcasters.
Speaker Change: Who are also our users from diverse.
Speaker Change: Hughes and greatly increased their engagement.
Speaker Change: Please.
Speaker Change: Help too.
Speaker Change: <unk> generates more high quality content and further promote online social interactions and distribution and ultimately build a vibrant.
Speaker Change: And dynamic social community on our platform.
Charles Zhang: In April, we successfully hosted the 2025 Spring Convention of the Sohu Video Influencers. in Beijing, where we gathered hundreds of pop stars, KOLs, and broadcasters and users in diverse verticals, such as K-pop and Chinese costume and handful, among others. This event offered a chance not only for enthusiastic participants with similar interests to connect and share in person, but also for them to get to know and interact with those in different fields, and thus further boosted the vitality of our platform.
Speaker Change: In April we successfully host Ted.
Speaker Change: 25.
Speaker Change: During convention of the Sohu video Influencers.
Speaker Change: Good luck with 20 people in Beijing, where we gather to hundreds of Pops.
Speaker Change: Pop Star Kols that broadcasters are users in diverse verticals, such as skip hop and our Chinese.
Speaker Change: Chinese customers handful among others.
Speaker Change: This event offered a chance not only for issues as the participants with similar interests to connect and share in person, but also from them for them to get to know and interact with those in different fields and thus further boosted the vitality of our platforms.
Charles Zhang: This quarter we also hosted our traditional flagship event, the 17th Sohu News Marathon. Suhoxin Marathon in Weihai City. As an influential cross-border marathon in China, This season's events continue to be presented through immersive live broadcasting, attracting both online and offline participants. Thank you for your participation. This event not only generated a large amount of content from real-time updates posted by Renner during the marathon and other derivative content after the race. They also promoted continuous social dissemination of related content and supported by the active social atmosphere on our platform. And we also continue to attract users and audiences, as well as advertisers, with a discreet name of my physics class, Charles Physics Class, IP.
Speaker Change: This quarter, we also hosted our traditional flagship events the 17th Sohu News marathon.
Speaker Change: So with the marathon.
Speaker Change: Hi.
Speaker Change: City.
Speaker Change: Inferential Cross border Marathon in China.
Speaker Change:
Speaker Change: This season's events continue to be presented through immersive live broadcasting attracting attracting both online and offline participants.
Speaker Change: Participation.
Speaker Change: This event not only generated a large amount of content from our real time updates supposedly probably remnant renters. During the marathon another derivative content. After these rates. They also promote it continues associated dissemination.
Speaker Change: <unk> of our related content and supported by the active social atmosphere on our platform.
Speaker Change: And we also continue to attract users and the audiences as well as the advertiser with screening.
Speaker Change: My Physics class Charles could you trust it.
Charles Zhang: In April, I was invited to give a physical physics lecture at Beijing Planetarium. Beijing Tianwen Guan, reflecting the recognition of the class, of the physics class brand, and Sohu's leading position in monetizing the polarization of physics sciences. Popularization, popularization of physics sciences. At the same time, we continue to explore the monetization potential of this IT and its derivatives, such as everything has physical principles, in various scenarios. For example, we combine the physics for us with famous exhibitions, such as the 2025 China AWE, the Appliance and Electronics World Expo in Shanghai, and also the 2025 Shanghai International Auto Industry Exhibition, Automobile Industry Exhibition in Shanghai.
Speaker Change: In April I was.
Speaker Change: The invited who gave that physical physics lecture at Beijing Planetarium.
Speaker Change: They didn't give them got reflecting they white rock young correlation of the class of the two the cross brand and.
Speaker Change: Leading position you monetize a prioritization of physical sciences.
Speaker Change: Popularization popularity sharply physics sciences.
Speaker Change: At the same time, we continue to explore the monetization potential of this IP and they'd stereotypes that has everything haven't physics physical principles, along with you already in various scenario scenarios. For example, we combined with <unk> trials with famous exhibitions.
Speaker Change: Such as the funding 75 trying to AWD, the appliance and electronics or export in Shanghai, and also plenty twenty-five Shanghai International auto industry.
Speaker Change: Industry exhibition automobile industry, especially in China.
Charles Zhang: In these exhibitions, we've provided audiences with live explanations of the physics principles involved integrated in the activated product and which effectively build up connections between advertisers and audiences. Through these efforts, we were able to provide advertisers with customized marketing solutions and further demonstrated our unique monetization value.
Speaker Change: In these acquisitions will provide it.
Speaker Change: Audiences with a light explanations of the physics principle seem all integrated and they actually are activated.
Speaker Change: Expanded products and.
Speaker Change: If equity buildup.
Speaker Change: Let's get to the advertisers and audiences.
Speaker Change: Through these efforts, we were able to provide advertisers with customized marketing solutions and further demonstrated our unique monetization value.
Charles Zhang: Besides the content generated from the above events, we also proactively expanded our content library. During the quarter, we released several original dramas and American TV series while introducing a large number of short dramas, among which Mystic Tales and other American TV episodes like Mandalorian, are well-received by our audiences.
Speaker Change: Besides the contents generated from.
Speaker Change: Bob you bad so we also proactively expanding our content library.
Speaker Change: During the quarter, we released several original dramas and American TV series.
Speaker Change: While introducing a large number of short dramas, among which mystic tails will see.
Speaker Change: And the other a market can be.
Speaker Change: Absolutely.
Speaker Change: Like.
Speaker Change: Mandar Lorena.
Speaker Change: Or well received by audiences.
Charles Zhang: The Next, turning our online game business. During the quarter, our online game business performed well, with revenues exceeding our prior guidance. In our PC game business, we roll out various holiday events around Chinese New Year and Valentine's Day as well as promotional events for regular TLBB PC. In addition to holiday events, we upgraded a character development system for TLBB Vintage to give players a whole new game experience. For LiveCTL BB Mobile, we launched an expansion pack to celebrate the Chinese New Year, featuring a variety of festival themes, the gameplay, and the rich benefits for players.
Speaker Change: The.
Speaker Change: Next turning our online game business during the quarter, our online game business performed well with revenues exceeding our prior guidance.
Speaker Change: Our PC game business, where we rollout.
Speaker Change: Holiday events.
Speaker Change: Around the Chinese new year Valentine's day promotional.
Speaker Change: Promotional events for our regulatory our regulatory I'll be BTC.
Speaker Change: The addition to holiday events, we upgraded.
Speaker Change: Character development system for <unk> vintage.
Speaker Change: Players a whole new gaming experience.
Speaker Change: For legacy <unk> mobile, we launched an expansion pack to celebrate the Chinese new year, featuring a variety of festival.
Speaker Change: The gameplay and rich benefit for players.
Charles Zhang: Thanks to these efforts, both player engagement and the revenue for this game remained stable on a sequential basis. Next quarter, we'll continue to launch expansion packs and content updates for the TLDB series. and other titles to further keep players engaged.
Speaker Change: Thanks to these efforts both player engagement and the revenue for this game remained stable on a sequential basis.
Speaker Change: Next quarter, we will continue to launch expansion packs and content updates for the <unk> seriously.
Speaker Change: And other titles to further keep players engaged.
Charles Zhang: As market competition intensifies and user demand for quality and innovation continues to rise, we'll forge ahead with our top game strategy, staying true to our user-centric philosophy. We'll continue to optimize our R&D process and enhance execution to improve efficiency and the product success rate. With these efforts, we look to bring more high-quality games to the market. Specifically, in terms of product development, we are actively exploring opportunities to unlock the potential of our TLBB IP.
Speaker Change: Okay.
Speaker Change: As market competition intensified and user demand for quality and innovation continues to rise we will forge ahead with our top games strategy staying true to our user centric.
Speaker Change: Philosophy.
Speaker Change: We'll continue to optimize our RF.
Speaker Change: In the process.
Speaker Change: He has execution to improve efficiency in our product success rate.
Speaker Change: With these efforts, we look to bring more high quality games to the market specifically in terms of product development, where we are actively exploring opportunities to unlock the potential of our <unk> IP.
Charles Zhang: Meanwhile, as we maintain our core competitiveness in MMORPGs, we will diversify our portfolio with multiple types of games, including card-based RPGs, sports games, and casual games, and expand our portfolio for global markets.
Speaker Change: Meanwhile, as we maintained our core competitiveness.
Speaker Change: Rpgs.
Speaker Change: Diversify our portfolio with multiple times that game, including cart based Rpgs sports games, and the tragic games and expand our portfolio for global markets.
Charles Zhang: Now let me give the update on the ongoing shared repurchase program. As of May 15, this year 2025, Sohu had repurchased $5.5 million ADS for an aggregate cost approximately $67 million.
Speaker Change: Now let me.
Speaker Change: Give the update on the ongoing share repurchase program.
Speaker Change: As of May 15 this.
Speaker Change: This year 25, five so who had purchased repurchased.
Speaker Change: $5 5 million from.
Speaker Change: For an aggregate cost of approximately $67 million.
Adriana: With that, I will now turn to our CFO, Adriana. Adriana, please.
Speaker Change: With that I'll now turn to our CFO agenda journalist.
Adriana: Thank you, Charles.
Adriana: I will now walk you through the key financials of our major segment for the first quarter of 2025. All numbers on a non-GAAP basis. You may find the reconciliation for non-GAAP to GAAP measures on our website. For Sohu Media Platform, quarterly revenues were $17 million, compared with $20 million in the same quarter last year. Quarterly operating loss was $70 million, compared with an operating loss of $74 million in the same quarter last year. For Changyou, quarterly revenue $118 million compared with $190 million in the same quarter last year. Quarterly operating profit $55 million plus with the same quarter last year.
Speaker Change: Thank you Charles.
Speaker Change: I'll now walk you through the key financials of our major segments.
Speaker Change: First quarter tended to be flat.
Speaker Change: All numbers on a non-GAAP basis, you may find a reconciliation from non-GAAP to GAAP measures on our website.
Speaker Change: First of all media platform.
Speaker Change: Or do they rather there was $72 million compared.
Speaker Change: How do we think the million dollars in the same quarter last year.
Speaker Change: Quarterly operating loss was $17 million.
Speaker Change: Compared with an operating loss of $74 million in the same quarter last year.
Speaker Change: Photon.
Speaker Change: Quarterly revenue of $180 million.
Speaker Change: Compared with $190 million in the same quarter last year.
Speaker Change: Quarterly operating profit $55 million flat with the same quarter last year.
Adriana: For the second quarter of 2025, we expect Marketing Services Revenues to be between $16 million and $17 million. This implies annual decrease of 14% to 19% and a sequential increase of 17% to 24%. online game revenues to be between 96 million dollars and 106 million dollars. This implies an annual decrease of 28 percent to 35 percent. and a sequential decrease of 10% to 18%.
Speaker Change: For the second quarter can be 25.
Speaker Change: We expect.
Speaker Change: Marketing services revenue to be between $60 million and the $72 million.
Speaker Change: This implies annual decrease.
Speaker Change: With a four 2% 19% and.
Speaker Change: And a sequential increase of 17% So tell me focus that.
Speaker Change: Online game revenues to be between $96 million and $106 million.
Speaker Change: The impact of annual decrease of 28% to 35%.
Speaker Change: And is it sequential decrease of 10% to 18%.
Adriana: both non-GAAP and GAAP-net loss attributable to Sohu.com Limited to be between $20 million and $30 million. This forecast reflects service management's current and preliminary view. which is subject to substantial uncertainty.
Speaker Change: Both non-GAAP and the GAAP net loss attributable to Sohu Dot Com limited to.
Speaker Change: To be between $10 million.
Speaker Change: And $30 million.
Speaker Change: This forecast reflects management's current and preliminary view.
Speaker Change: Which is subject to substantial uncertainty.
Unknown Executive: This concludes our prepared remarks.
Speaker Change: This concludes our prepared remarks.
Unknown Executive: Operator, we would now like to open the call to questions. Thank you, management.
Speaker Change: Operator, we would now like to open the call to questions.
Speaker Change: Thank you management.
Unknown Executive: To ask a question, please press star 1 1 and wait for a name to be announced.
Speaker Change: Yes.
Speaker Change: To ask a question. Please press star one one threat to begin with.
Unknown Executive: cancel request and press star 1.
Speaker Change: Let's see I'll request, please press star one.
Thomas Chong: First question comes from Thomas Chong of Jefferies. Please go ahead. Hi, good evening. Thanks, management, for taking my question.
Speaker Change: First question comes from Thomas Chong of Jefferies. Please go ahead.
Speaker Change: Yeah.
Thomas Chong: Hi, Good evening, Thanks management for taking my question. My first question is about our marketing services.
Thomas Chong: My first question is about our marketing services. Can management comment about the recent trend in advertising sentiment and how is it across the different categories such as FMCG, IT, auto, food, and electronics? And how should we think about the second half advertising outlook? Should we expect recovery trend in advertising momentum in the second half?
Thomas Chong: Management comments about the recent trend in appetite and sentiment and how does it.
Thomas Chong: Across the different categories, such as FMC G I T auto food and electronics and how should we think about the second half advertising outlook.
Thomas Chong: But I'll.
Thomas Chong: A couple of weak trend in advertising.
Thomas Chong: and my second question is about AI.
Thomas Chong: In the second half.
Thomas Chong: And my second question is about.
Thomas Chong: Can management comments about how AI benefits our advertising and online games operations? Are we seeing our eCPM or traffic benefits from better recommendation and also for gaming we are seeing efficiencies or productivity increase in our gaming business? Thank you.
Thomas Chong: Hi.
Speaker Change: Can management comment about how AI benefit our advertising and online games operations.
Speaker Change: Seeing our CPM or traffic.
Speaker Change: Great.
Speaker Change: Backlog recommendation and and also for gaming we are seeing.
Speaker Change: Efficiencies.
Speaker Change: Oh productivity increase in our gaming business. Thank you.
Unknown Executive: Okay, the first question is about the marketing services, which is formerly called advertising. And this quarter, the sector-wise, auto is doing better. And yeah, so auto is doing better, and IT services stay stable, and FMCG is stable.
Speaker Change: Okay. The first cars trains about the marketing services, which is formerly called the advertising and in.
Speaker Change: In this quarter.
Speaker Change: Sector wise, although is doing better.
Speaker Change: Yeah until 'twenty six been out so auto.
Speaker Change: Auto is doing better and IP services.
Speaker Change: Stable and FMC.
Unknown Executive: But luxury goods and alcohol is, you know, the spending is dropping a little bit. So that's the overall situation and yeah. So we have auto advertising or marketing services 26%, and IT services 17%, and FMCG 16%.
Bob: It's stable, but our luxury goods and the alcohol as Bob said.
Bob: Spending is dropping a little bit.
Bob: So that's the overall situation.
Bob: Yeah.
Bob: So we have plenty of auto auto advertising.
Bob: Our marketing services, 26%.
Bob: This is 17% and <unk>, 16%.
Unknown Executive: For the second half, I think, well, probably similar right? The economy is still not doing well.
Bob: For the second half, so I think well.
Bob: Probably it's similar right.
Bob: Economy is still not doing well.
Unknown Executive: So we will only expect, look forward to talk to our, the social network platform to, to have a accelerated growth so that we have a larger, much, much larger platform so that we can get a larger market share of the advertising market.
Bob: So we will only expect look forward to talk to our.
Bob: The sort of a natural platform to to have accelerated.
Bob: Accelerated.
Bob: So that we have a louder.
Bob: Much larger platform so that we can.
Bob: Get them, a larger market share of the advertising market.
Unknown Executive: Your second question is about the AI impact, right?
Bob: Second question is about the AI ban.
Unknown Executive: So, first of all, AI and deep-seated development... So first of all, since our media platform now takes the social network as our central strategy, And the social network is really a people-to-people interaction. It has relatively less exposure to AI and a large model of deep-seek, a large language model of deep-seek, unlike those information retrieval services like search engines or the recommendations. Yeah, we do have recommendations on our social news app and the social video, but now those video and news app The strategy is centered around the social network, so it has less exposure or less impact by this.
Bob: AI impact right. So first of all AI and deep Sea development.
Bob: So first of all the <unk> are.
Bob: Platform media platform now.
Bob: <unk>.
Bob: Total network as our central Central part of our strategy.
Bob: And some of that work is really people do people interaction.
Bob: Uh huh.
Bob: Relatively less exposure to AI.
Bob: Large model.
Bob: Seek a landline with modern dipstick.
Bob: I like those.
Bob: Information retrieval services like search engines or.
Speaker Change: <unk> recommendations, yes, we do.
Bob: Do you have any recommendations on our Oh I'm sorry.
Speaker Change: Use the App and the Sohu video, but now we are those video and.
Speaker Change: News apps.
Speaker Change: The strategy is centered around the circle network. So it has less exposure or less impact.
Speaker Change: Yes.
Unknown Executive: So of course, we can take advantage of the AI development or the advent of AI to improve some efficiency. But it's kind of like a generation of content or some abstracts of the articles and also for the live streaming and the video tools to do live streaming and the subtitles or the digital image, all those kind of things to help our users with better tools. That's kind of beneficial, but it's marginal. It's not that big. So what I'm saying is that the AI development posed as a kind of a threat or a kind of impact to certain companies that mainly depend on information retrieval, providing retrieval.
Speaker Change: So.
Speaker Change: Of course, we can.
Speaker Change: You know take advantage of the AI development.
Speaker Change: It doesn't have the AI to.
Speaker Change: To improve some efficiency, but it's the kind of.
Speaker Change: No generally generally some content some abstract of the articles and also for the live streaming and video tools to do live streaming.
Speaker Change: Titles or the digital digital image, all those kind of simply tell power users too.
Speaker Change: With better tools, that's that's kind of a benefit beneficial but it's it's.
Speaker Change: No it's not that big so what is it.
Speaker Change: I'm, saying that.
Speaker Change:
Speaker Change: In the AI development.
Speaker Change: Post as kind of a threat or kind of impact to certain companies who that is.
Speaker Change: Mainly depend on information retrieval, providing.
Unknown Executive: But for us, now with the social network strategy, we have less exposure to this kind of threat.
Speaker Change: No.
Speaker Change: But but we felt now is the southern network strategy, we have less.
Speaker Change: Exposure to this kind of threat.
Unknown Executive: Yeah, I like game. I think AI impact. It's beneficial, right? It's better, right? It helps.
Speaker Change: Okay.
Yeah, all I like game I think AI.
Speaker Change: Impact, it's beneficial rates better health.
Speaker Change: Right.
Michelle infusion onshore.
Unknown Executive: Yes, AI has been widely used in the production of art, UI, voice acting, music and sound effects, and advertising materials. In Changyou, we have largely applied AI technology in terms of art design, art production, UI design, the audio effect design, and the material for marketing. has greatly improved our efficiency. It has greatly improved our efficiency.
Speaker Change: Thanks Tayo.
Uh huh.
Speaker Change: Sources, so saw <unk> resort.
Speaker Change: Hello.
Speaker Change: Okay.
Speaker Change: So the Cisco airfone customers Hedrick CFO.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: And tell me all day, all we have largely applied AI technology in terms of.
Speaker Change: Art design production UI design.
Speaker Change: The effect is that right.
Speaker Change: That material for marketing.
Speaker Change: Our.
Speaker Change: And he got over assorted.
Speaker Change: It has greatly improved our efficiency.
Unknown Executive: We are currently working on AI self-learning to achieve some work on the design level of its own creation and development, and we have also made some progress. We've also achieved some progress in terms of the planning in terms of through the ways to make AI to learn by themselves.
Speaker Change: No channel maintenance.
Speaker Change: Now AI cohort success.
Speaker Change: At Syncrude Suncor type bonds, and there are certain turnaround any circumstance.
Speaker Change: It's regarding symptoms.
Speaker Change: We've also achieved some progress in terms of.
Speaker Change: The planning.
Speaker Change: In terms.
Speaker Change: Third a way to make AI to learn by themselves.
Speaker Change: Okay.
Unknown Executive: Thank you. Thank you for the questions.
Speaker Change: Okay, Sir thank you.
Speaker Change: Thank you.
Speaker Change: Thank you for the question Okay.
Speaker Change: The next question.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Alicia Yap: Next question comes from Alicia Yap of Citigroup. Please go ahead.
Speaker Change: The next question comes from Citi.
Speaker Change: Citigroup. Please go ahead.
Alicia Yap: Hello. Thank you. Good evening, Charles and management. Thanks for taking my questions.
Speaker Change: Hello.
Charles: Thank you good evening, Charles and management, Thanks for taking my questions.
Alicia Yap: I have two, three questions. First is that I wanted to follow up on the AI. I'm just wondering which AI model Sohu is currently integrating or incorporate into your gaming. Are you either using DeepSeek or other comparable AI large language model? And then I understand you mentioned about social network on your media, which is less impacted.
Charles: It has two or three questions. Firstly I wanted to follow up on.
Charles: Just wondering which AI model, so who is currently in.
Charles: Integrating our incorporate into.
Charles: Yeah.
Charles: Ideal.
Charles: Using deep seek all other.
Charles: Comparable AI lots of language models and then.
Charles: I understand you mentioned about social network audio media, which is less impact, but if you were true.
Alicia Yap: But if you were to incorporate that into your search and recommended functions within your SOHU portal, again, which AI models or tools that you will be using, I assume you're not going to develop your own large language model. So this is the first question. Yeah, both in our Sohu Video app and the Sohu News app, both now are social network-centered applications. But it also has these recommendation channels and also a search engine, a search box. Both of them are integrating some deep-seek and also some open. We actually developed, based on some open source language model, we developed ourselves based on some.
Charles: And cap rates Scott Intel.
Charles: Intel into such a recommended functions, making yourself, a portal, which again, which AI models are tools that you're using I assume youre not going to develop your own lots of language model. So this is Chris questions. Thank you.
Charles: Yes, both.
Charles: Total video.
Charles: So video.
Charles: And the Sohu news App, both now our social network centered or application, but it also has this recommendation.
Charles: Channels.
Charles: And also I also search engine search box.
Charles: <unk> of them are integrating some deep deep sea and also some open we actually develop.
Charles: Based on some open source.
Charles: Language model, we develop ourselves based on some.
Alicia Yap: Some open source language model. and so on.
Charles: Okay.
Charles: Some of the resource.
Charles: And the language model.
Alicia Yap: Thank you, everyone. Thank you. We've done a lot of work on the AI technology. Because the game, as I said, has art, dubbing and video production. So we used a lot of AI technology. because there are different types of AI tools. For online gaming business, we've employed different kinds of AI tools, a lot of different AI large language models, to be used in the production of different aspects, for example, for the art design, for the audio, for music, for video production. We also developed an AI agent that allows us to...
Charles: Sure.
Charles: Two zero.
Charles: Amen.
Charles: Mr Hager.
Charles: So youll see.
Charles: Youll make sure Youre paying.
Charles: Yeah.
Charles: Sure.
Charles: Great.
Charles: Got it.
Charles: Erica.
Charles: To put on AI.
Charles: And as a contributor.
Charles: Okay.
Charles: For all of them gaining business with employee cost.
Charles: Different kinds of AI through a lot of different AI large Atlantic model.
Charles: Two three.
Charles: We used to in the.
Charles: The production of different aspects for example for the RF design for the audio or music.
Charles: Our video production.
Charles: Or how can you clarify that.
Charles: Yes.
Charles: Let me go down there.
Alicia Yap: 方便的输入需求,然后这个AI进行自动的把方便的输入需求,然后这个AI进行自动的把 把几个不同的AI工具,他们的工作衔接上, And we have to connect the different AI tools to the work, 然后产生出我们要的最终的那个结果。 and then produce what we want, the final result. We also developed our own AI agent that can very conveniently based on our own needs and demand to integrate different AI tools to automatically finish the job.
Charles: Content sort of tissue.
Charles: So there isn't a simple Nevada.
Charles: Oxycodone or add on Chi.
Charles: Motor controller, and just having a hard time central them right now at 11 o'clock sits on a negotiable.
Charles: We also developed our own AI agent that can very conveniently based on our needs.
Charles: Me and demand too.
Charles: Great different AI tools to automatically.
Alicia Yap: Okay, thank you.
Speaker Change: Okay. Thank you my second question.
Alicia Yap: My second question...
Alicia Yap: My second question is, I actually not quite understand the tax reversal.
Charles: Okay.
Charles: My second question is.
Charles: Not quite understand.
Alicia Yap: So can you elaborate again, you know, what is or which business is that is related to that tax reversal that you have to gain this quarter? Text Reversal. The tax scheme that you actually have. Oh, tax. Oh, OK. Oh, tax. Oh, next tax. OK. Tax. I think it's a accounting issue.
Charles: The tax reversal. So can you elaborate again.
Speaker Change: What is which business is that it's related to that tax to be worse or that you have the gain this quarter.
Speaker Change: Text reversal.
Speaker Change: Yes.
Speaker Change: Okay, Oh, Okay attacks are lax tax okay tax taxes.
Speaker Change: I think it's it's accounting.
Adriana: So let me let Joanna to explain. This is mainly accounting treatment. The nature is that on certain tax matters, which is calculated by the weighted average basis, according to a different possibility. Now, the uncertainty is gone. So in this quarter, we totally reverse that. I see. Is that related to the Sohu media business or is it a gaming business? Sohu. Sohu Company. OK, I see. It's a counting issue, so it's not... Just the uncertainty now. So, there's no, uh, yeah, there's no actual cash, cash flow, real money flowing. So it's just accounting. I see. OK.
Speaker Change: Issue, So let me.
Speaker Change: Try not to expense. This is mainly a condo achievement at the later on.
Speaker Change: Certain tax matter.
Speaker Change: Calculating the bi.
Speaker Change: Our.
Speaker Change: Weighted average.
Speaker Change: According to the different.
Speaker Change: Probability now that they're out there today Scott so in this quarter.
Speaker Change: At this time.
Speaker Change: Yes.
Speaker Change: I see is that related to the Sohu media.
Speaker Change: Our gaming business.
Speaker Change: Our software.
Speaker Change: The total company.
Speaker Change: Hum.
Speaker Change: So company Paul.
Speaker Change: Okay, I think it's a coffee.
Speaker Change: Counting.
Speaker Change: Yeah, it's accounting issue so.
Speaker Change: Okay.
Speaker Change: Okay uncertain right now.
Speaker Change: Become a certainty so.
Speaker Change: There is no there is no actually cash cash flow real money flowing so it's just the economy.
Speaker Change: Yeah.
Alicia Yap: And then last question. I know, I mean, maybe now we have less risk, but obviously this whole ADR, delisting risk, is on and off, right, as the headwinds or the noises. Just in the event is that risk go up again, it's the management or are we thinking about any of the alternative? If, like, for example, coming back to Hong Kong for the secondary list. I appreciate any comments. Well, it's still up in the air, basically. When anything happens, we'll have a, you know, now we don't have any, because it's not happening, right? It's just a kind of speculation, so.
Speaker Change: I see Okay, and then last question.
Speaker Change: I know I mean, maybe now we have a massive risk but.
Speaker Change: Obviously, this whole ADR listing which is on and off right.
Speaker Change: As to having with all the noise that's.
Just in the event is that Grace AR go up again.
Speaker Change: Did management.
Speaker Change: Are you thinking about any of the alternative lifestyle sample coming back to Hong Kong. So the secondary Mitchell.
Speaker Change: Appreciate any comments.
Speaker Change: Well, it's still a opposite are basically installed.
Speaker Change: Well, just a Y O y.
Speaker Change: When anything happens will have a you know now we don't have any.
Speaker Change: Because it's not happening right just a kind of speculation so.
Alicia Yap: I see. But if there's really, really coming, then you obviously have an alternative plan that you actually are already thinking about. Not thinking about it. So when it happens, we'll start thinking about it. Okay. All right. Great. Thank you. Yes. We always have time, right? We are not a company that has to be listed, right? We can have a period of time that is not listed, right? So we always have time to think about those things, right? Okay, all right Okay, great. Thank you. Thank you so much, Charles. Thank you for the answer. Thank you.
Speaker Change: I see.
Speaker Change: It's really really come down you, obviously have an alternative plan.
Speaker Change: Actually you know or if you think about it.
Speaker Change: Not thinking about it so when it happens we'll start thinking about it.
Speaker Change: Okay, Alright, great. Thank you just who we are.
Speaker Change: We always have time right. We don't we are not in a.
Speaker Change: <unk>.
We are not a company that has to be lifted the right. We have a period of time that his knowledge with it right. So we're all always have time to think about those things right.
Speaker Change: Mhm, Okay alright.
Charles: Okay, great. Thank you. Thank you so much Charles Thank you for the answer.
Speaker Change: Okay.
Unknown Executive: Once again, to ask a question, please press star 1. There are currently no further questions at this time.
Speaker Change: Thank you for your questions once again to ask a question. Please press star one.
Speaker Change: Yes currently no further questions at this time that concludes today's conference call. Thank you all for participating you may now disconnect.
Unknown Executive: That concludes today's conference call. Thank you all for participating. You may now disconnect.
Speaker Change: Okay.
Unknown Executive: Thank you for watching!
Speaker Change: [music].