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Sohu.com (SOHU) Q3 Earnings Beat Estimates, Revenues Up Y/Y

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·4-min read
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Sohu.com SOHU reported third-quarter 2021 adjusted earnings of 44 cents per share, which beat the Zacks Consensus Estimate by a wide margin of 633.3%. The company had reported a loss of 17 cents per share in the year-ago quarter.

Revenues increased 37% year over year to $216.1 million.

Sohu’s shares were down 0.3% in after hours trading. Shares have returned 35.3% year to date, underperforming the Zacks Internet Services industry’s growth of 48.7%. However, this Zacks Rank #3 (Hold) company’s shares have outperformed the Computer & Technology sector’s return of 27.9% year to date.

Top Line Details

In the third quarter, Brand advertising revenues decreased 18% year over year to $33.7 million, primarily due to lower portal advertising revenues.

Sohu.com Price, Consensus and EPS Surprise

Sohu.com Price, Consensus and EPS Surprise
Sohu.com Price, Consensus and EPS Surprise

Sohu.com price-consensus-eps-surprise-chart | Sohu.com Quote

Online game revenues of $166.8 million jumped 64.6% year over year, driven by strong demand for TLBB Vintage. The launch of Little Raccoon: Heroes in the third quarter also benefited Sohu.

For PC games, total average monthly active user (MAU) accounts were 2 million, up 3% year over year. Total quarterly aggregate active paying accounts (“APA”) were 1 million, up 4% year over year.

For mobile games, total average MAU were 4.6 million, up 22% year over year. Total quarterly APA was 1 million, up 55% year over year.

Other revenues decreased 4.3% year on year to $15.6 million.

Operating Details

Non-GAAP gross margin in third-quarter 2021 increased to 74% from 66% reported in the year-ago quarter.

Brand advertising business margin decreased to 29% from the year-ago quarter’s 31%. Online games’ non-GAAP gross margin was 83%, up from the year-ago quarter’s 80%.

Non-GAAP operating expenses were $131.9 million, up 20.5% year over year due to higher marketing expenses, as well as salary and benefits expenses.

Sohu’s non-GAAP operating profit was $27.5 million, against the year-ago quarter’s loss of $4.8 million.

Balance Sheet

As of Sep 30, 2021, Sohu’s cash and cash equivalents (including restricted cash and short-term investments) came in at $1.58 billion compared with $874.4 million as of Jun 30, 2021.

Q4 Guidance

For fourth-quarter 2021, Brand advertising revenues are anticipated in the range of $28-$31 million, down 26% to 33% on a year-over-year basis.

Online game revenues are expected in the band of $140-$150 million, which indicates a year-over-year decrease of 23-29%.

Upcoming Earnings to Watch

Investors interested in the Computer & Technology sector are eagerly awaiting earnings releases from players like Applied Materials AMAT, Box BOX and salesforce CRM.

Applied Materials is set to release its fourth quarter fiscal 2021 results on Nov 18. The Zacks Consensus Estimate for earnings is pegged at $1.94 per share, unchanged over the past 30 days. Applied Materials has a Zacks Rank #2 (Buy).

Applied Materials’ shares have returned 81.2% year to date compared with the Zacks Semiconductor Equipment - Wafer Fabrication industry’s growth of 66.5% and the Computer & Technology sector’s return of 27.9%.

Box, another Zacks Rank #2 stock, is scheduled to release third-quarter fiscal 2022 results on Nov 30. The Zacks Consensus Estimate for earnings stands at 21 cents per share, unchanged over the past 30 days.

Box shares have returned 43.8% year to date against the Zacks Internet Software industry’s decline of 7.1%. The stock has outperformed the Computer & Technology sector’s return of 27.9% year to date.

Salesforce, a Zacks Rank #1 (Strong Buy) stock, is also scheduled to release third-quarter fiscal 2022 results on Nov 30. The Zacks Consensus Estimate for CRM's earnings stands at 92 cents per share, unchanged over the past 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

salesforce shares have returned 37.8% year to date, underperforming the Zacks Computer-Software industry’s rise of 42.4%. However, the stock has outperformed the Computer & Technology sector’s return of 27.9% year to date.


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