BEIJING,
Aug. 9, 2021 /PRNewswire/ -- Sohu.com
Limited (NASDAQ: SOHU), China's
leading online media, video, gaming and search business group,
today reported unaudited financial results for the second quarter
ended June 30, 2021.
In view of the previously-announced Share Purchase
Agreement between subsidiaries of Tencent Holdings Limited ("Tencent") and the Company and its wholly-owned
subsidiary Sohu.com (Search) Limited ("Sohu Search") with respect
to Sohu Search's Sogou Inc. ("Sogou") shares (the "Sogou Share
Purchase"), the results of operations for Sogou have been
excluded from the Company's results from continuing operations in
the Company's condensed consolidated statements of operations and
are presented in separate line items as discontinued operations.
Retrospective adjustments to the historical statements have been
made in order to provide a consistent basis of comparison. Unless
indicated otherwise, results presented in this release are related
to continuing operations only[1].
Second Quarter Highlights
- Total revenues were US$204
million[2], up 28% year-over-year and down 8%
quarter-over-quarter.
- Brand advertising revenues were US$37
million, down 3% year-over-year and up 20%
quarter-over-quarter.
- Online game revenues were US$151
million, up 43% year-over-year and down 14%
quarter-over-quarter.
- GAAP net income from continuing operations attributable to
Sohu.com Limited was US$22 million,
compared with net income of US$11
million[3] in the second quarter of 2020 and net
income of US$32 million in the first
quarter of 2021.
- Non-GAAP[4] net income from continuing operations
attributable to Sohu.com Limited was US$25
million, compared with net income of US$12 million in the second quarter of 2020 and
net income of US$37 million in the
first quarter of 2021.
Dr. Charles Zhang, Chairman and
CEO of Sohu.com Limited, commented, "For the second quarter of
2021, despite the negative impact of COVID-19, we kept exploring
new monetization opportunities while strictly controlling the
budget. Thanks to the outperformance of our online game business,
our profitability exceeded the prior guidance. For Sohu Media, we
focused on innovating our products and technology, and effectively
promoting the generation and distribution of high-quality content.
For Sohu Video, we continued to execute our "Twin engine" strategy
of developing high quality long-form and short-form content, while
at the same time refining our advanced live broadcasting
technologies and rolling them out to various applications. We were
also able to diversify our revenue sources and better capture
advertising budgets by integrating our live broadcasting
technologies into our unique events. For Changyou, online games
performed well during the quarter, and its revenue exceeded the
high end of our prior guidance."
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[1] The parties
currently expect the completion of the transaction will be during
the second half of 2021, subject to the satisfaction or waiver of
all the conditions to the transaction.
|
|
[2] On a constant
currency (non-GAAP) basis, if the exchange rate in the second
quarter of 2021 had been the same as it was in the second quarter
of 2020, or RMB7.08=US$1.00, US$ total revenues in the second
quarter of 2021 would have been US$186 million, or US$18 million
less than GAAP total revenues, and up 17%
year-over-year.
|
|
[3] Both the GAAP and
non-GAAP net income from continuing operations attributable to
Sohu.com Limited for the second quarter of 2020 mentioned in this
release excluded the impact of an additional accrual of withholding
income tax of US$88 million recognized by Changyou in that quarter
following completion of the Changyou privatization, as Changyou
changed its policy for its PRC subsidiaries with respect to
distribution of cash dividends.
|
|
[4] Non-GAAP results
exclude share-based compensation expense; changes in fair value
recognized in the Company's consolidated statements of operations
with respect to equity investments with readily determinable fair
values; an impairment charge recognized for an investment unrelated
to the Company's core businesses; and interest expense recognized
in connection with the one-time transition tax (the "Toll Charge")
imposed by the U.S. Tax Cuts and Jobs Act signed into law on
December 22, 2017 (the "U.S. TCJA"). Explanation of the Company's
non-GAAP financial measures and related reconciliations to GAAP
financial measures are included in the accompanying "Non-GAAP
Disclosure" and "Reconciliations of Non-GAAP Results of Operation
Measures to the Nearest Comparable GAAP Measures."
|
Second Quarter Financial Results
Revenues
Total revenues were US$204
million, up 28% year-over-year and down 8%
quarter-over-quarter.
Brand advertising revenues totaled US$37
million, down 3% year-over-year and up 20%
quarter-over-quarter. The quarter-over-quarter increase was mainly
attributable to a seasonality increase and our continuing efforts
to boost our revenues in portal and video advertising.
Online game revenues were US$151
million, up 43% year-over-year and down
14% quarter-over-quarter. The year-over-year increase was
mainly contributed by TLBB Vintage, which was launched in the
fourth quarter of 2020. The quarter-over-quarter decrease was
mainly due to the natural decline of TLBB PC.
Gross Margin
Both GAAP and non-GAAP gross margin was 76%, compared with
67% in the second quarter of 2020 and 79% in the first quarter of
2021.
GAAP gross margin for the brand advertising business
was 27%, compared with 40% in the second quarter of 2020
and 20% in the first quarter of 2021. Non-GAAP gross
margin for the brand advertising business was 28%, compared
with 40% in the second quarter of 2020 and 20% in the
first quarter of 2021.The year-over-year decrease was mainly
due to increases in costs of events hosted in the second quarter of
2021, which have been resumed to a large extent with the easing of
COVID-19. The quarter-over-quarter increase was mainly due to
increased revenues in the portal and video advertising
businesses.
GAAP gross margin for online games was 89%, compared with 77% in
the second quarter of 2020 and 89% in the first quarter of 2021.
Non-GAAP gross margin for online games was 89%, compared with 78%
in the second quarter of 2020 and 90% in the first quarter of 2021.
The year-over-year increase in gross margin was mainly due to a
higher percentage revenue contribution from PC games, which
typically require lower revenue-sharing payments.
Operating Expenses
For the second quarter of 2021, GAAP operating expenses
totaled US$130 million, up 23%
year-over-year and 5% quarter-over-quarter. Non-GAAP operating
expenses were US$127 million, up 25%
year-over-year and 4% quarter-over-quarter. The year-over-year
increase was mainly due to increases in marketing expenses and
salary and benefits expenses.
Operating Profit
GAAP operating profit was US$25
million, compared with an operating profit of US$1
million in the second quarter of 2020 and an operating profit of
US$51 million in the first quarter of
2021.
Non-GAAP operating profit was US$28 million, compared with
an operating profit of US$5 million in
the second quarter of 2020 and an operating profit of
US$53 million in the first
quarter of 2021.
Income Tax Expense
GAAP income tax expense was US$11
million, compared with income tax expense of US$86 million in the second quarter of 2020 and
income tax expense of US$23 million
in the first quarter of 2021. Non-GAAP income tax expense was
US$9 million, compared with income
tax expense of US$83 million in the
second quarter of 2020 and income tax expense of US$23 million in the first quarter of 2021. The
income tax expense in the second quarter of 2021 included a
one-time tax benefit of US$9 million
recognized by Changyou after final settlement of its income tax due
for 2020. For the second quarter of 2020, Changyou recognized an
additional accrual of withholding income tax of US$88 million, as Changyou changed its policy for
its PRC subsidiaries with respect to distribution of cash dividends
after the completion of the privatization of Changyou.
Net Income
GAAP net income from continuing operations attributable to
Sohu.com Limited was US$22 million,
or net income of US$0.55 per
fully-diluted ADS, compared with net income of US$11 million in the second quarter of 2020 and
net income of US$32 million in the
first quarter of 2021.
Non-GAAP net income from continuing
operations attributable to Sohu.com Limited was
US$25 million, or net income of US$0.63 per fully-diluted ADS, compared
with net income of US$12
million in the second quarter of 2020 and net
income of US$37 million in the
first quarter of 2021.
Liquidity
As of June 30, 2021, cash and cash
equivalents and short-term investments were US$349 million.
Supplementary Information for Changyou Results
Second Quarter 2021 Operating
Results
- For PC games, total average monthly active user
accounts[5] (MAU) were 2.1 million, an increase of 9%
year-over-year and a decrease of 8% quarter-over-quarter. The
year-over-year increase was mainly contributed by TLBB Vintage,
which was launched in the fourth quarter of 2020, partially offset
by termination of the operation of Warframe. The
quarter-over-quarter decrease was mainly due to the natural decline
of TLBB PC. Total quarterly aggregate active paying
accounts[6] (APA) were 0.9 million, a decrease of 3%
year-over-year and 4% quarter-over-quarter.
- For mobile games, total average MAU were 1.9 million, a
decrease of 39% year-over-year and 7% quarter-over-quarter. The
year-over-year decrease was mainly from Legacy TLBB Mobile and TLBB
Honor. The quarter-over-quarter decrease was mainly due to TLBB
Honor. Total quarterly APA were 0.5 million, a decrease of 21%
year-over-year and an increase of 5% quarter-over-quarter. The
year-over-year and quarter-over-quarter changes were mainly due to
TLBB Honor.
|
[5] Monthly active
user accounts refers to the number of registered accounts that are
logged in to these games at least once during the month.
|
|
[6] Quarterly
aggregate active paying accounts refers to the number of accounts
from which game points are utilized at least once during the
quarter.
|
Second Quarter 2021 Unaudited Financial
Results
Total revenues were US$154
million, an increase of 41% year-over-year and a decrease of
14% quarter-over-quarter. Online game revenues were US$151 million, an increase of 43% year-over-year
and a decrease of 14% quarter-over-quarter. Online advertising
revenues were US$3 million, a
decrease of 19% year-over-year and 11% quarter-over-quarter.
GAAP and non-GAAP gross profit were both US$136 million, an increase of 61% year-over-year
and a decrease of 15% quarter-over-quarter.
GAAP operating expenses were US$63 million, an increase of 24% year-over-year
and 4% quarter-over-quarter. The year-over-year increase was mainly
due to an increase in bonus expenses related to revenue growth, as
well as an increase in marketing and promotional spending for
online games.
Non-GAAP operating expenses were US$61 million, an increase of 28% year-over-year
and 4% quarter-over-quarter.
GAAP operating profit was US$73 million, compared with an operating profit
of US$33 million for the second
quarter of 2020 and US$99 million for
the first quarter of 2021.
Non-GAAP operating profit was US$75 million, compared with a non-GAAP operating
profit of US$37 million for the
second quarter of 2020 and US$101
million for the first quarter of 2021.
Business Outlook
For the third quarter of 2021, Sohu estimates:
- Brand advertising revenues to be between US$35 million and
US$39 million; this implies an annual
decrease of 5% to 15% and a sequential decrease of 5% to a
sequential increase 6%.
- Online game revenues to be between US$145 million and US$155
million; this implies an annual increase of 43% to 53% and a
sequential decrease of 4% to a sequential increase 2%.
- Non-GAAP net income from continuing operations attributable to
Sohu.com Limited to be between nil and US$10
million; and GAAP net income/(loss) from continuing
operations attributable to Sohu.com Limited to be between a net
loss of US$4 million and a net income
of US$6 million.
For the third quarter 2021 guidance, the Company has
adopted a presumed exchange rate of RMB6.47=US$1.00, as
compared with the actual exchange rate of approximately
RMB6.92=US$1.00 for the third quarter of 2020, and
RMB6.46=US$1.00 for the second quarter of
2021.
This forecast reflects Sohu's management's current and
preliminary view, which is subject to substantial uncertainty,
particularly in view of the potential ongoing impact of the
worldwide COVID-19 pandemic, which remains difficult to
predict.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States of
America ("GAAP"), Sohu's management uses non-GAAP measures
of gross profit, operating profit, net income, net income
attributable to Sohu.com Limited and diluted net income
attributable to Sohu.com Limited per ADS, which are adjusted from
results based on GAAP to exclude the impact of the share-based
awards, which consist mainly of share-based compensation expense;
changes in fair value recognized in the Company's consolidated
statements of operations with respect to equity investments with
readily determinable fair values; an impairment charge recognized
for an investment unrelated to the Company's core businesses; and
interest expense recognized in connection with the Toll Charge
imposed by the U.S. TCJA. These measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP
results.
Sohu's management believes excluding share-based compensation
expense, changes in fair value recognized in the Company's
consolidated statements of operations with respect to equity
investments with readily determinable fair values; the impairment
charge recognized for an investment unrelated to the Company's core
businesses; and interest recognized in connection with the Toll
Charge from its non-GAAP financial measure is useful for itself and
investors. Further, the impact of share-based compensation expense
and changes in fair value recognized in the Company's consolidated
statements of operations with respect to equity investments with
readily determinable fair values; the impairment charge recognized
for an investment unrelated to the Company's core businesses; and
interest expense recognized in connection with the Toll Charge
cannot be anticipated by management and business line leaders and
these expenses were not built into the annual budgets and quarterly
forecasts that have been the basis for information Sohu provides to
analysts and investors as guidance for future operating
performance. As the impact of share-based compensation expense,
changes in fair value recognized in the Company's consolidated
statements of operations with respect to equity investments with
readily determinable fair values, and the impairment charge
recognized for an investment unrelated to the Company's core
businesses does not involve subsequent cash outflow or is reflected
in the cash flows at the equity transaction level, Sohu does not
factor this impact in when evaluating and approving expenditures or
when determining the allocation of its resources to its business
segments. As a result, in general, the monthly financial results
for internal reporting and any performance measures for commissions
and bonuses are based on non-GAAP financial measures that exclude
share-based compensation expense, changes in fair value recognized
in the Company's consolidated statements of operations with respect
to equity investments with readily determinable fair values, the
impairment charge recognized for an investment unrelated to the
Company's core businesses, and also excluded the interest expense
recognized in connection with the Toll Charge.
The non-GAAP financial measures are provided to enhance
investors' overall understanding of Sohu's current financial
performance and prospects for the future. A limitation of using
non-GAAP gross profit, operating profit, net income, net income
attributable to Sohu.com Limited and diluted net income
attributable to Sohu.com Limited per ADS, excluding share-based
compensation expense, is that the impact of share-based awards has
been and will continue to be a significant recurring expense in
Sohu's business for the foreseeable future. In order to mitigate
these limitations Sohu has provided specific information regarding
the GAAP amounts excluded from each non-GAAP measure. The
accompanying tables include details on the reconciliation between
the GAAP financial measures that are most directly comparable to
the non-GAAP financial measures that have been presented.
Notes to Financial Information
Financial information in this press release other than the
information indicated as being non-GAAP is derived from Sohu's
unaudited financial statements prepared in accordance with
GAAP.
Safe Harbor Statement
This announcement contains forward-looking statements. It is
currently expected that the Business Outlook will not be updated
until release of Sohu's next quarterly earnings announcement;
however, Sohu reserves right to update its Business Outlook at any
time for any reason. Statements that are not historical facts,
including statements about Sohu's beliefs and expectations, are
forward-looking statements. These statements are based on current
plans, estimates and projections, and therefore you should not
place undue reliance on them. 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 contained in any forward-looking statement. Potential
risks and uncertainties include, but are not limited to,
instability in global financial and credit markets and its
potential impact on the Chinese economy; exchange rate
fluctuations, including their potential impact on the Chinese
economy and on Sohu's reported US dollar results; recent slow-downs
in the growth of the Chinese economy; the uncertain regulatory
landscape in the People's Republic of
China; fluctuations in Sohu's quarterly operating results;
the possibilities that Sohu will be unable to recoup its investment
in video content and that Changyou will be unable to develop a
series of successful games for mobile platforms or successfully
monetize mobile games it develops or acquires; Sohu's reliance on
online advertising sales, online games and mobile services for its
revenues; the impact of the U.S. TCJA; the effects of the COVID-19
virus on the economy in China in
general and on Sohu's business in particular; the possibility that
the pending Sogou Share Purchase and the pending
previously-announced merger of Sogou with a subsidiary of
Tencent (the "Sogou Merger")
contemplated by an Agreement and Plan of Merger (the "Sogou Merger
Agreement") with direct and indirect wholly-owned subsidiaries of
Tencent will not occur as planned if
events arise that result in the termination of the Share Purchase
Agreement and/or the Sogou Merger Agreement, or if one or more of
the various closing conditions to the Sogou Share Purchase and/or
the Sogou Merger are not satisfied or waived. Further
information regarding these and other risks is included in Sohu's
annual report on Form 20-F for the year ended December 31, 2020, and other filings with and
information furnished to the Securities and Exchange
Commission.
Conference Call and Webcast
Sohu's management team will host a conference call at
7:30 a.m. U.S. Eastern Time,
August 9, 2021 (7:30 p.m. Beijing/Hong
Kong time, August 9, 2021)
following the quarterly results announcement. Participants can
register for the conference call by navigating to
http://apac.directeventreg.com/registration/event/1496285. Once
preregistration has been completed, participants will receive
dial-in numbers, an event passcode, and a unique registrant ID.
To join the conference, please dial the number you receive,
enter the event passcode followed by your unique registrant ID, and
you will be joined to the conference instantly. Please dial in 10
minutes before the call is scheduled to begin.
A telephone replay of the call will be available after the
conclusion of the conference call at 10:30
a.m. Eastern Time August 9 through
August 16, 2021. The dial-in details for the telephone
replay are:
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International:
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+1-646-254-3697
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Passcode:
|
1496285
|
The live Webcast and archive of the conference call will be
available on the Investor Relations section of Sohu's Website at
http://investors.sohu.com/.
About Sohu.com
Sohu.com Limited (NASDAQ: SOHU) is China's premier online brand and indispensable
to the daily life of millions of Chinese, providing a network of
web properties and community based/web 2.0 products which offer the
vast Sohu user community a broad array of choices regarding
information, entertainment and communication. Sohu has built one of
the most comprehensive matrices of Chinese language web properties
and proprietary search engines, consisting of the mass portal and
leading online media destination www.sohu.com; developer and
operator of online games www.changyou.com/en/; interactive
search engine www.sogou.com; and online video website
tv.sohu.com.
Sohu's corporate services consist of online brand advertising on
Sohu's matrix of websites as well as bid listing and home page on
its in-house developed search directory and engine. Sohu also
provides multiple news and information services on mobile
platforms, including Sohu News App and the mobile news portal
m.sohu.com. Sohu's online game subsidiary Changyou develops and
operates a diverse portfolio of PC and mobile games, such as
Tian Long Ba Bu ("TLBB"), one of the
most popular PC games in China.
Changyou also owns and operates the 17173.com Website, a game
information portal in China.
Sohu's online search subsidiary Sogou (NYSE: SOGO) has grown to
become the second largest search engine by mobile queries in
China. It also owns and operates
Sogou Input Method, the largest Chinese language input software.
Sohu, established by Dr. Charles
Zhang, one of China's
internet pioneers, is in its twenty-fifth year of operation.
For investor and media inquiries, please contact:
In China:
|
Ms. Pu
Huang
|
|
Sohu.com
Limited
|
|
Tel:
|
+86 (10)
6272-6645
|
|
E-mail:
|
ir@contact.sohu.com
|
In the United
States:
|
Ms. Linda
Bergkamp
|
|
Christensen
|
|
Tel:
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+1 (480)
614-3004
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|
E-mail:
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lbergkamp@christensenir.com
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SOHU.COM
LIMITED
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Jun. 30,
2021
|
|
Mar. 31,
2021
|
|
Jun. 30,
2020
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Brand advertising
|
$
|
36,840
|
$
|
30,741
|
$
|
38,001
|
|
|
Online games
|
|
151,272
|
|
176,495
|
|
105,937
|
|
|
Others
|
|
16,290
|
|
14,857
|
|
16,023
|
|
|
Total
revenues
|
|
204,402
|
|
222,093
|
|
159,961
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Brand advertising (includes share-based
compensation expense of $90, $19, and
$36,
respectively)
|
|
26,770
|
|
24,532
|
|
22,790
|
|
|
Online games (includes share-based compensation
expense of $78, $77, and $152,
respectively)
|
|
17,026
|
|
18,560
|
|
23,959
|
|
|
Others
|
|
5,518
|
|
3,784
|
|
6,348
|
|
|
Total cost of
revenues
|
|
49,314
|
|
46,876
|
|
53,097
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
155,088
|
|
175,217
|
|
106,864
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Product development (includes share-based
compensation expense of $1,228,
$1,051, and $2,075,
respectively)
|
|
65,254
|
|
69,319
|
|
58,325
|
|
|
Sales and marketing (includes share-based
compensation expense of $212, $59,
and $93,
respectively)
|
|
45,560
|
|
36,988
|
|
32,969
|
|
|
General and administrative (includes share-based
compensation expense of $1,658,
$1,093, and $1,606,
respectively)
|
|
19,493
|
|
18,127
|
|
14,302
|
|
|
Total operating
expenses
|
|
130,307
|
|
124,434
|
|
105,596
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
24,781
|
|
50,783
|
|
1,268
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
7,509
|
|
3,882
|
|
10,720
|
|
|
Interest
income
|
|
4,221
|
|
3,861
|
|
1,383
|
|
|
Interest
expense
|
|
(2,488)
|
|
(2,511)
|
|
(1,431)
|
|
|
Exchange
difference
|
|
(1,325)
|
|
(1,304)
|
|
(171)
|
|
|
Income before income
tax expense
|
|
32,698
|
|
54,711
|
|
11,769
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense[7]
|
10,847
|
23,177
|
86,166
|
|
|
Net income/(loss)
from continuing operations
|
|
21,851
|
|
31,534
|
|
(74,397)
|
|
|
Net income/(loss)
from discontinued operations, net of
tax[8,9]
|
|
55,882
|
|
52,252
|
|
(8,692)
|
|
|
Net
income/(loss)
|
|
77,733
|
|
83,786
|
|
(83,089)
|
|
|
|
|
|
|
|
|
|
|
Less: Net
income/(loss) from continuing operations
attributable to the noncontrolling interest
shareholders
|
|
-
|
|
(1)
|
|
2,640
|
|
|
Less: Net
income/(loss) from discontinued
operations attributable to the noncontrolling
interest
shareholders
|
|
36,994
|
|
34,591
|
|
(5,799)
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
from continuing operations
attributable to Sohu.com Limited
|
|
21,851
|
|
31,535
|
|
(77,037)
|
|
|
Net income/(loss)
from discontinued operations
attributable to Sohu.com Limited
|
|
18,888
|
|
17,661
|
|
(2,893)
|
|
|
Net income/(loss)
attributable to Sohu.com Limited
|
|
40,739
|
|
49,196
|
|
(79,930)
|
|
|
|
|
|
|
|
|
|
|
Basic net
income/(loss) from continuing operations per
share/ADS attributable to Sohu.com
Limited[10]
|
$
|
0.55
|
$
|
0.80
|
$
|
(1.96)
|
|
|
Basic net
income/(loss) from discontinued operations
per share/ADS attributable to Sohu.com Limited
|
$
|
0.48
|
$
|
0.45
|
$
|
(0.07)
|
|
|
Basic net
income/(loss) per share/ADS attributable to
Sohu.com Limited
|
$
|
1.03
|
$
|
1.25
|
$
|
(2.04)
|
|
|
Shares/ADSs used in
computing basic net
income/(loss) per share/ADS attributable to Sohu.com
Limited
|
|
39,509
|
|
39,509
|
|
39,271
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income/(loss) from continuing operations
per share/ADS attributable to Sohu.com Limited
|
$
|
0.55
|
$
|
0.80
|
$
|
(1.96)
|
|
|
Diluted net
income/(loss) from discontinued operations
per share/ADS attributable to Sohu.com Limited
|
$
|
0.48
|
$
|
0.44
|
$
|
(0.07)
|
|
|
Diluted net
income/(loss) per share/ADS attributable to
Sohu.com Limited
|
$
|
1.03
|
$
|
1.24
|
$
|
(2.04)
|
|
|
Shares/ADSs used in
computing diluted net
income/(loss) per share/ADS attributable to Sohu.com
Limited
|
|
39,509
|
|
39,509
|
|
39,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[7]
Following completion of the Changyou privatization, Changyou
changed its policy for its PRC subsidiaries with respect to
distribution of
cash dividends. As a result, Changyou recognized an additional
accrual of withholding income tax of US$88 million for the second
quarter of
2020.
|
|
[8] On
September 29, 2020, the Company entered into a Share Purchase
Agreement with Tencent's subsidiary TitanSupernova Limited
("Parent"), pursuant to which the Company's wholly-owned subsidiary
Sohu.com (Search) Limited agreed to sell all of the Sogou Class
A
ordinary shares and Sogou Class B ordinary shares owned by it to
Parent at a purchase price of $9.00 per share. In view of the
Share
Purchase Agreement, the results of operations for Sogou have been
excluded from the Company's results from continuing operations in
the
condensed consolidated statements of operations for the third
quarter and are presented in separate line items as discontinued
operations.
Retrospective adjustments to the historical statements have been
made in order to provide a consistent basis of comparison. Unless
indicated
otherwise, results presented are related to continuing operations
only.
|
|
[9] Net
income from discontinued operations included unrealized gains from
a change in the fair value of Sogou's equity investment in
Zhihu
Inc. (NYSE: ZH) in the amount of $76 million and $77 million in the
2021 Q2 and 2021 Q1, respectively.
|
|
[10] Each
ADS represents one ordinary share.
|
|
SOHU.COM
LIMITED
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(UNAUDITED, IN
THOUSANDS)
|
|
|
|
|
|
|
|
|
|
As of Jun. 30,
2021
|
|
As of Dec. 31,
2020
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
203,742
|
$
|
217,057
|
|
|
Restricted cash
|
|
525,114
|
|
330,791
|
|
|
Short-term investments
|
|
145,502
|
|
100,745
|
|
|
Accounts receivable, net
|
|
77,150
|
|
87,521
|
|
|
Prepaid and other current assets
|
|
107,704
|
|
106,590
|
|
|
Assets held for sale (current)[11]
|
|
1,437,380
|
|
1,412,168
|
|
|
Total current
assets
|
|
2,496,592
|
|
2,254,872
|
|
|
Long-term
investments, net
|
|
47,493
|
|
31,634
|
|
|
Fixed assets,
net
|
|
330,715
|
|
337,674
|
|
|
Goodwill
|
|
48,596
|
|
48,434
|
|
|
Intangible assets,
net
|
|
10,654
|
|
4,842
|
|
|
Restricted time
deposits
|
|
94,178
|
|
101,519
|
|
|
Prepaid non-current
assets
|
|
-
|
|
1,006
|
|
|
Other
assets
|
|
35,493
|
|
42,140
|
|
|
Total
assets
|
$
|
3,063,721
|
$
|
2,822,121
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
|
96,464
|
$
|
107,611
|
|
|
Accrued liabilities
|
|
144,635
|
|
157,513
|
|
|
Receipts in advance and deferred revenue
|
|
59,353
|
|
52,055
|
|
|
Accrued salary and benefits
|
|
102,286
|
|
100,826
|
|
|
Taxes payable
|
|
19,948
|
|
28,006
|
|
|
Short-term bank loans
|
|
476,050
|
|
315,550
|
|
|
Other short-term liabilities
|
|
108,403
|
|
106,171
|
|
|
Liabilities held for sale (current)[11]
|
|
328,051
|
|
416,998
|
|
|
Total current
liabilities
|
$
|
1,335,190
|
$
|
1,284,730
|
|
|
|
|
|
|
|
|
Long-term accounts
payable
|
|
7,037
|
|
3,202
|
|
|
Long-term bank
loans
|
|
84,500
|
|
92,000
|
|
|
Long-term tax
liabilities
|
|
423,587
|
|
406,353
|
|
|
Other long-term
liabilities
|
|
4,029
|
|
3,855
|
|
|
Total long-term
liabilities
|
$
|
519,153
|
$
|
505,410
|
|
|
Total liabilities
|
$
|
1,854,343
|
$
|
1,790,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
|
Sohu.com Limited shareholders' equity
|
|
455,989
|
|
347,369
|
|
|
Noncontrolling interest
|
|
753,389
|
|
684,612
|
|
|
Total shareholders' equity
|
$
|
1,209,378
|
$
|
1,031,981
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
3,063,721
|
$
|
2,822,121
|
|
|
|
|
|
|
|
|
|
[11] On
September 29, 2020, the Company entered into a Share Purchase
Agreement with Tencent's subsidiary TitanSupernova Limited
("Parent"), pursuant to
which the Company's wholly-owned subsidiary Sohu.com (Search)
Limited agreed to sell all of the Sogou Class A ordinary shares and
Sogou Class B ordinary
shares owned by it to Parent at a purchase price of $9.00 per
share. Sogou related assets and liabilities were classified as
assets/liabilities held for sale.
|
|
SOHU.COM
LIMITED
|
|
|
RECONCILIATIONS OF
NON-GAAP RESULTS OFOPERATIONS MEASURES TO THE NEAREST
COMPARABLE GAAP MEASURES
|
|
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
Jun. 30, 2021
|
|
Three Months Ended
Mar. 31, 2021
|
|
Three Months Ended
Jun. 30, 2020
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90
|
(a)
|
|
|
|
|
19
|
(a)
|
|
|
|
|
36
|
(a)
|
|
|
|
Brand advertising
gross profit
|
$
|
10,070
|
$
|
90
|
$
|
10,160
|
$
|
6,209
|
$
|
19
|
$
|
6,228
|
$
|
15,211
|
$
|
36
|
$
|
15,247
|
|
|
Brand advertising
gross margin
|
|
27%
|
|
|
|
28%
|
|
20%
|
|
|
|
20%
|
|
40%
|
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78
|
(a)
|
|
|
|
|
77
|
(a)
|
|
|
|
|
152
|
(a)
|
|
|
|
Online games gross
profit
|
$
|
134,246
|
$
|
78
|
$
|
134,324
|
$
|
157,935
|
$
|
77
|
$
|
158,012
|
$
|
81,978
|
$
|
152
|
$
|
82,130
|
|
|
Online games gross
margin
|
|
89%
|
|
|
|
89%
|
|
89%
|
|
|
|
90%
|
|
77%
|
|
|
|
78%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
(a)
|
|
|
|
|
-
|
(a)
|
|
|
|
|
-
|
(a)
|
|
|
|
Others gross
profit
|
$
|
10,772
|
$
|
-
|
$
|
10,772
|
$
|
11,073
|
$
|
-
|
$
|
11,073
|
$
|
9,675
|
$
|
-
|
$
|
9,675
|
|
|
Others gross
margin
|
|
66%
|
|
|
|
66%
|
|
75%
|
|
|
|
75%
|
|
60%
|
|
|
|
60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168
|
(a)
|
|
|
|
|
96
|
(a)
|
|
|
|
|
188
|
(a)
|
|
|
|
Gross
profit
|
$
|
155,088
|
$
|
168
|
$
|
155,256
|
$
|
175,217
|
$
|
96
|
$
|
175,313
|
$
|
106,864
|
$
|
188
|
$
|
107,052
|
|
|
Gross
margin
|
|
76%
|
|
|
|
76%
|
|
79%
|
|
|
|
79%
|
|
67%
|
|
|
|
67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
130,307
|
$
|
(3,098)
|
(a) $
|
127,209
|
$
|
124,434
|
$
|
(2,203)
|
(a) $
|
122,231
|
$
|
105,596
|
$
|
(3,774)
|
(a) $
|
101,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,266
|
(a)
|
|
|
|
|
2,299
|
(a)
|
|
|
|
|
3,962
|
(a)
|
|
|
|
Operating
profit
|
$
|
24,781
|
$
|
3,266
|
$
|
28,047
|
$
|
50,783
|
$
|
2,299
|
$
|
53,082
|
$
|
1,268
|
$
|
3,962
|
$
|
5,230
|
|
|
Operating
margin
|
|
12%
|
|
|
|
14%
|
|
23%
|
|
|
|
24%
|
|
1%
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense[12]
|
$
|
10,847
|
$
|
(1,755)
|
(c,d)$
|
9,092
|
$
|
23,177
|
$
|
(618)
|
(c,d)$
|
22,559
|
$
|
86,166
|
$
|
(3,140)
|
(c,d)$
|
83,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,266
|
(a)
|
|
|
|
|
2,299
|
(a)
|
|
|
|
|
3,962
|
(a)
|
|
|
|
|
|
|
(1,673)
|
(c)
|
|
|
|
|
1,677
|
(c)
|
|
|
|
|
(3,619)
|
(c)
|
|
|
|
|
|
|
1,198
|
(d)
|
|
|
|
|
1,178
|
(d)
|
|
|
|
|
1,934
|
(d)
|
|
|
|
|
|
|
156
|
( e)
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
Net income/(loss)
before non-
controlling interest
|
$
|
21,851
|
$
|
2,947
|
$
|
24,798
|
$
|
31,534
|
$
|
5,154
|
$
|
36,688
|
$
|
(74,397)
|
$
|
2,277
|
$
|
(72,120)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,266
|
(a)
|
|
|
|
|
2,299
|
(a)
|
|
|
|
|
3,962
|
(a)
|
|
|
|
|
|
|
-
|
(b)
|
|
|
|
|
-
|
(b)
|
|
|
|
|
(421)
|
(b)
|
|
|
|
|
|
|
(1,673)
|
(c)
|
|
|
|
|
1,677
|
(c)
|
|
|
|
|
(3,619)
|
(c)
|
|
|
|
|
|
|
1,198
|
(d)
|
|
|
|
|
1,178
|
(d)
|
|
|
|
|
1,934
|
(d)
|
|
|
|
|
|
|
156
|
( e)
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
Net income/(loss)
from continuing
operations attributable to Sohu.com
Limited for dilutednet loss per
share/ADS
|
$
|
21,851
|
$
|
2,947
|
$
|
24,798
|
$
|
31,535
|
$
|
5,154
|
$
|
36,689
|
$
|
(77,092)
|
$
|
1,856
|
$
|
(75,236)
|
|
|
Net income/(loss)
from discontinued
operations attributable to Sohu.com
Limited for dilutednet loss per
share/ADS[13]
|
$
|
18,776
|
$
|
493
|
$
|
19,269
|
$
|
17,556
|
$
|
405
|
$
|
17,961
|
$
|
(2,894)
|
$
|
997
|
$
|
(1,897)
|
|
|
Net income/( loss)
attributable to
Sohu.com Limited for
diluted net
loss per share/ADS
|
$
|
40,627
|
$
|
3,440
|
$
|
44,067
|
$
|
49,091
|
$
|
5,559
|
$
|
54,650
|
$
|
(79,986)
|
$
|
2,853
|
$
|
(77,133)
|
|
|
Dilutednet
income/(loss) from
continuing operations per
share/ADS attributable to Sohu.com
Limited
|
$
|
0.55
|
|
|
$
|
0.63
|
$
|
0.80
|
|
|
$
|
0.93
|
$
|
(1.96)
|
|
|
$
|
(1.92)
|
|
|
Diluted net
income/(loss) from
discontinued operations per
share/ADS attributable to Sohu.com
Limited
|
$
|
0.48
|
|
|
$
|
0.49
|
$
|
0.44
|
|
|
$
|
0.45
|
$
|
(0.07)
|
|
|
$
|
(0.05)
|
|
|
Diluted net
income/(loss) per
share/ADS attributable to Sohu.com
Limited
|
$
|
1.03
|
|
|
$
|
1.12
|
$
|
1.24
|
|
|
$
|
1.38
|
$
|
(2.04)
|
|
|
$
|
(1.96)
|
|
|
Shares/ADSs used in
computing
dilutednet income/(loss) per
share/ADS attributable to Sohu.com
Limited
|
|
39,509
|
|
|
|
39,509
|
|
39,509
|
|
|
|
39,509
|
|
39,271
|
|
|
|
39,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) To eliminate
the impact of share-based awards as measured using the fair value
method. This adjustment does not have an impact on income tax
expense.
|
|
(b) To adjust Sohu's
economic interests in Changyou attributable to the above non-GAAP
adjustments. This adjustment does not have an impact on income tax
expense.
|
|
(c) To adjust
for a change in the fair value of the Company's investment in
Hylink and the income tax effect.
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(d) To adjust for the
effect of the U.S. TCJA.
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(e) To adjust for an
impairment charge recognized for investments unrelated to the
Company's core businesses
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[12]
Following completion of the Changyou privatization, Changyou
changed its policy for its PRC subsidiaries with respect to
distribution of cash dividends. As a result, Changyou recognized an
additional
accrual of withholding income tax of US$88 million for the second
quarter of 2020.
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[13] On
September 29, 2020, the Company entered into a Share Purchase
Agreement with Tencent's subsidiary TitanSupernova Limited
("Parent"), pursuant to which the Company's wholly-owned
subsidiary
Sohu.com (Search) Limited agreed to sell all of the Sogou
Class A ordinary shares and Sogou Class B ordinary shares owned by
it to Parent at a purchase price of $9.00 per share. In view of the
Share
Purchase Agreement, the results of operations for Sogou have been
excluded from the Company's results from continuing operations in
the condensed consolidated statements of operations for the
third
quarter and are presented in separate line items as discontinued
operations. Retrospective adjustments to the historical statements
have been made in order to provide a consistent basis of
comparison.
Unless indicated otherwise, results presented are related to
continuing operations only.
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SOURCE Sohu.com Ltd.