Sohu.com Limited (NASDAQ:SOHU) Q3 2023 Earnings Call Transcript November 13, 2023
Sohu.com Limited misses on earnings expectations. Reported EPS is $-0.74 EPS, expectations were $-0.59.
Operator: Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu's Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.
Huang Pu: Thanks, operator. Thank you for joining us to discuss Sohu's third quarter 2023 results. On the call are Chairman and Chief Exec Officer, Charles Zhang; CFO, Joanna Lv; and Vice President of Finance, James Deng. Also, with us are Changyou, Dewen Chen; and it's CFO, Yaobin Wang. Before management begins their prepared remarks, I would like to remind you of the company's safe harbor statements in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forward-looking statements. These statements are based on current plans, estimates, and projections, and therefore, you should not place undue reliance on them. For these statements involving inherent risks and uncertainties, we caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements.
For more information about potential risks and uncertainties, please refer to the company's filings 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 Charles Zhang. Charles, please proceed.
Charles Zhang : Thanks, Huang Pu, and thank you, everyone, for joining our call. In the third quarter of 2023, we continue to improve our product offering and enhance operational efficiency. Thanks to these efforts, we delivered both top and bottom line, bottom-line performance in line with our prior expectations. As Local Media Portal, we further refined our products and upgraded the user experience. As Sohu Video, with our "Twin Engine" strategy, we focused on the generation and distribution of compelling short-form content as well as live broadcast. These efforts helped us further boost user engagement and social interactions. Same time, benefiting from our unique content and marketing campaigns. We continue to explore a diverse range of monetization opportunities that leverage our differentiated competitive advantages.
For Online Games, with consistent release of new content updates and operational efforts, game revenues remained stable. Before I go into more detail of our key financial results, please be reminded that the bankruptcy proceeding for Changyou's cinema advertising business concluded during the quarter. This release is related to continuing operations only. So, this includes the disposable -- disposal gain from the cinema's -- Changyou's cinema underlying business. So, for this quarter, for the third quarter of 2023, the total revenues were $145 million, down 22% year-over-year and 4% quarter-over-quarter. Brand advertising revenue was $22 million, down 14% year-over-year and 8% quarter-over-quarter. Online game revenues were down $117 million, 21% year-over-year and 1% quarter-over-quarter.
GAAP net loss attributable to Sohu.com Limited was $14 million compared with a net loss of $22 million in the third quarter of 2022 and a net loss of $21 million in the second quarter of 2023. Non-GAAP net loss attributable to Sohu.com Limited was $10 million compared with a net loss of $17 million in the third quarter of 2022 and a net loss of $18 million in the second quarter of this year. So now let me go through our key businesses in more detail. First, Media Portal and Sohu Video. In Sohu Media Portal, we continue to upgrade our products and strengthen operational efficiency. We actively promoted the generation and the social distribution of high-quality content through enhanced real engagement and interaction. Most integrated cutting-edge technologies in our products resulting in a better user experience for both audiences and content providers.
At Sohu Video, our focus remains on executing the "Twin Engine" strategy. We further diversified our long-term long-form content library and continuously promoted our unique live streaming and live streaming and short-form content. We're committed to establishing a leading position in the field of knowledge and science-related live broadcasting, leveraging our distinctive IP, the Charles' Physics class. And this IP has formed a multidimensional dissemination through live broadcasting, short videos, offline seminars, books, and other means, which has driven considerable traffic and engagement on various topics across our platforms. In addition, as a video social platform, we were also proactively attracting broadcasters and users across various fields by refining our broadcaster ecosystem and organizing events centered on hot topics such as the 2023 Sohu K-Pop Dancing Festival and 2023 Sohu Broadcasters Conference, so basically user conference.
These live broadcasting events enabled users to interact with each other, online and offline, and further enhance their vitality and engagement on the Sohu Video platform. On the monetization side, despite the advertising budgets remain cautious. We totally follow the market trends and we're developing synergies between Sohu's product matrix and our advanced live broadcasting technology. These efforts enable us to execute unique high-value marketing campaigns and allow new monetization -- unlock new monetization opportunities. During the quarter, we hosted traditional and innovative events such as Talk Under the Starry Sky, [indiscernible], and BOSS1 plus 1, high-end dialogue. These events have been disseminated across the various social media platforms not only demonstrating our influence as a mainstream media platform but also effectively attracting millions of audiences and generating significant exposure for advertisers.
Now turning to the online game business. Game revenues remained stable during the quarter, driven by consistent release of new content updates and robust game cooperation’s. Within our PC games business, we roll out promotional events for regular TLBB PC and further optimized its character development system. With TLBB Vintage, we launched a month-long event during the Qixi festival, which helped stabilize player engagement. The Chinese Valentine's Day. In our mobile game business, we introduced a new strategic plan -- a new strategic plan war gameplay mode for legacy TLBB Mobile. Next quarter, we will launch expansion packs and the content updates for the TLBB series and other titles to keep players engaged. We will stick to our top game strategy going forward as gaming technology advances rapidly and the market demand becomes deeper and more diversified.
We will explore new ideas to better meet the players' needs, allocate more resources to professional talent development, and invest in content and technology innovation in order to bring more high-quality games to the market. In terms of games in pipeline, we will maintain our core competitiveness in MMORPGs while also producing card-based RPGs or sports and casual strategy game. Before I pass the call to Joanna Lv to go to our financial results in detail, we are pleased to announce that on November 11, 2023, two days ago, our Board of Directors authorized a share repurchase program of up to $80 million over a two-year period. The repurchase program underscores the continued confidence we have in our long-term growth prospects as well as our ongoing commitment to increasing shareholder value.
So, with that, I will now turn the call over to Joanna, please?
Joanna Lv: Thank you, Charles. I will now walk you through the key financials of our major segments for third quarter of 2023. All the numbers on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our IR website. For Sohu Media Portal, quarterly revenues were $60 million, compared with revenue of $80 million in the same quarter last year. The quarterly operating loss was $33 million compared with an operating loss of $39 million in the same quarter last year. For Sohu Video, quarterly revenues were $11 million compared with revenue of $60 million in the same quarter last year. Quarterly operating loss was $33 million compared with an operating loss of $31 million in the same quarter last year. For Changyou's online game business and 17173, quarterly revenues, $180 million compared with revenues of $150 million in the same quarter last year.
Quarterly operating profit was $52 million compared with an operating profit of $58 million in the same quarter last year. For the fourth quarter of 2023, we expect Brand advertising revenues to be between $20 million and $23 million. This impacts annual decrease of 20% to 31% and a sequential decrease of 9% to a sequential increase of 4%. Online game revenues to be between $106 million and $116 million. This impacts annual decrease of 4% to 13% and a sequential decrease of 1% to 9%. Non-GAAP net loss attributable to Sohu.com Limited to be between $10 million and $20 million, and the GAAP debt loss attributable to Sohu.com Limited to be between $30 million and $23 million. This forecast reflects Sohu's management's current and preliminary view, which is subject to substantial uncertainty.
This concludes our prepared remarks. Operator, we would now like to open the call to questions.
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