BEIJING, Nov. 16, 2020 /PRNewswire/ -- Sohu.com Limited
(NASDAQ: SOHU), China's leading
online media, video, search and gaming business group, today
reported unaudited financial results for the third quarter ended
September 30, 2020.
Third Quarter Highlights
As previously announced, on September 29,
2020, the Company's subsidiary Sogou Inc. ("Sogou") entered
into a definitive Agreement and Plan of Merger (the "Sogou Merger
Agreement") with THL A21 Limited, TitanSupernova Limited
("Parent"), and Tencent Mobility
Limited, each of which is a direct or indirect wholly-owned
subsidiary of Tencent, which
contemplates that Parent will be merged with and into Sogou in an
all-cash transaction (the "Sogou Merger"), and Sogou will become a
wholly-owned indirect subsidiary of Tencent. As also previously announced, on
September 29, 2020, the Company
entered into a Share Purchase Agreement with Parent (the "Share
Purchase Agreement"), pursuant to which the Company's wholly-owned
subsidiary Sohu.com (Search) Limited ("Sohu Search") agreed to sell
all of the Sogou Class A ordinary shares and Sogou Class B ordinary
shares owned by it to Parent (the "Share Purchase"), shortly before
the effectiveness of the Sogou Merger, at a purchase price of
US$9.00 per share, which is equal to
the per-share consideration under the Sogou Merger Agreement. 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 Company's 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 in this release are related to continuing operations
only.
- Total revenues were US$158
million, down 6% year-over-year and 1%
quarter-over-quarter.
- Brand advertising revenues were US$41
million, down 11% year-over-year and up 8%
quarter-over-quarter.
- Online game revenues were US$101
million, down 6% year-over-year and 4%
quarter-over-quarter.
- GAAP net loss from continuing operations attributable to
Sohu.com Limited was US$15 million,
compared with a net loss of US$33
million in the third quarter of 2019 and a net loss of
US$77 million in the second quarter
of 2020.
- Non-GAAP net loss from continuing operations attributable to
Sohu.com Limited was US$7 million,
compared with a net loss of US$30
million in the third quarter of 2019 and a net loss of
US$75 million in the second quarter
of 2020.
Dr. Charles Zhang, Chairman and
CEO of Sohu.com Limited, commented, "In the third quarter of 2020,
to further consolidate our core competitiveness and credibility, we
continued to optimize our products, refine our technology, enhance
the quality of premium content, and improve its distribution. At
the same time, we kept exploring creative new and differentiated
monetization opportunities. Benefiting from our more mature and
sophisticated Sohu Video App and its advanced live broadcasting
technology, we successfully hosted several innovative content
marketing campaigns that could leverage the broad reach of our
product portfolio. We saw positive feedback in terms of user
interaction and from advertisers. For this quarter, despite the
current challenging macroeconomic environment, our brand
advertising revenue reached the high end of our prior guidance and
achieved 8% quarter-over-quarter growth. Changyou's online games
performed well for the third quarter of 2020, with revenue
exceeding the high end of our prior guidance."
Third Quarter Financial Results
Revenues
Total revenues for the third quarter of 2020 were US$158 million, down 6% year-over-year and 1%
quarter-over-quarter.
Brand advertising revenues for the third quarter of 2020 totaled
US$41 million, down 11%
year-over-year and up 8% quarter-over-quarter. The year-over-year
decrease was mainly due to the continuous negative impact of the
COVID-19 outbreak. The quarter-over-quarter increase was mainly due
to increased revenues in the portal and video advertising
businesses resulting from continuing efforts to boost revenues.
Online game revenues for the third quarter of 2020 were
US$101 million, down 6%
year-over-year and 4% quarter-over-quarter. The year-over-year
decrease was mainly due to the natural decline in revenue of Legacy
TLBB Mobile and TLBB Honor.
Gross Margin
Both GAAP and non-GAAP[1] gross margin was 66%
for the third quarter of 2020, compared with 63% in the
third quarter of 2019 and 67% in the second quarter of 2020.
Both GAAP and non-GAAP gross margin for the brand advertising
business in the third quarter of 2020 was 31%, compared
with 31% in the third quarter of 2019 and 40% in the
second quarter of 2020. The quarter-over-quarter margin
decrease was mainly due to increased video content cost as a result
of resumption of original content shooting with the easing of
restrictions related to COVID-19 in China.
GAAP gross margin for online games in the third quarter of 2020
was 80%, compared with 78% in the third quarter of 2019 and 77% in
the second quarter of 2020. Non-GAAP gross margin for online
games in the third quarter of 2020 was 80%, compared with 78% in
the third quarter of 2019 and 78% in the second quarter of
2020.
|
[1]
Non-GAAP results exclude share-based compensation expense; non-cash
tax benefits from excess tax deductions related to share-based
awards; changes in fair value recognized in the Company's
consolidated statements of operations with respect to equity
investments with readily determinable fair values; impairment
charge recognized for investments unrelated to the Company's core
businesses; income/expense from the adjustment of contingent
consideration previously recorded for acquisitions; and interest
accrued in relation to the previously unrecognized tax benefit.
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."
|
Operating Expenses
For the third quarter of 2020, GAAP operating expenses
totaled US$115 million, down 7%
year-over-year and up 9% quarter-over-quarter. Non-GAAP operating
expenses were US$109 million, down
11% year-over-year and up 8% quarter-over-quarter. The change in
operating expenses was mainly due to changes in marketing
expenses.
Operating Profit/(Loss)
GAAP operating loss for the third quarter of 2020 was
US$11 million, compared with an
operating loss of US$17 million in the third quarter of 2019
and an operating profit of US$1
million in the second quarter of 2020.
Non-GAAP operating loss for the third quarter of 2020
was US$5 million, compared with an operating loss
of US$17 million in the third quarter of 2019 and an
operating profit of US$5
million in the second quarter of 2020.
Income Tax Expense
GAAP income tax expense was US$11
million for the third quarter of 2020, compared with income
tax expense of US$15 million in the
third quarter of 2019 and income tax expense of US$86 million in the second quarter of 2020.
Non-GAAP income tax expense was US$10
million for the third quarter of 2020, compared with income
tax expense of US$12 million in the
third quarter of 2019 and income tax expense of US$83 million in the second quarter of 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 Loss
GAAP net loss from continuing operations attributable
to Sohu.com Limited for the third quarter of 2020 was US$15
million, or a net loss of US$0.39 per fully-diluted ADS, compared
with a net loss of US$33
million in the third quarter of 2019 and a net
loss of US$77 million in the
second quarter of 2020.
Non-GAAP net loss from continuing
operations attributable to Sohu.com Limited for the third
quarter of 2020 was US$7 million, or a net loss of
US$0.17 per fully-diluted
ADS, compared with a net loss of US$30 million in the third quarter of 2019
and a net loss of US$75 million
in the second quarter of 2020.
Liquidity
As of September 30, 2020, cash and
cash equivalents and short-term investments were US$192 million.
Supplementary Information for Changyou Results
Third Quarter 2020 Operational Results
- For PC games, total average monthly active
accounts[2] were 2.0 million, a decrease of 5%
year-over-year and an increase of 5% quarter-over-quarter. Total
quarterly aggregate active paying accounts[3] were 1.0
million, flat year-over-year and an increase of 11%
quarter-over-quarter. The quarter-over-quarter increase was mainly
due to improved performance of some of Changyou's older games,
including TLBB PC, as a result of promotional activities.
- For mobile games, total average monthly active accounts were
3.8 million, an increase of 9% year-over-year and 23%
quarter-over-quarter. The year-over-year and quarter-over-quarter
increases were mainly due to the launch of Illusion Connect in
South Korea in the third quarter
of 2020. Total quarterly aggregate active paying accounts were 0.6
million, a decrease of 45% year-over-year and flat
quarter-over-quarter. The year-over-year decrease reflected the
natural declining life cycles of Changyou's older games, including
Legacy TLBB Mobile and TLBB Honor.
|
[2] Monthly active accounts refers to
the number of registered accounts that are logged in to these games
at least once during the month.
|
|
[3] Quarterly aggregate active paying
accounts refers to the number of accounts from which game points
are utilized at least once during the quarter.
|
Third Quarter 2020 Unaudited Financial Results
Total revenues for the third quarter of 2020 were
US$104 million, a decrease of 6%
year-over-year and 5% quarter-over-quarter. Online game revenues
were US$101 million, a decrease of 6%
year-over-year and 4% quarter-over-quarter. Online advertising
revenues were US$3 million, a
decrease of 1% year-over-year and 18% quarter-over-quarter.
GAAP gross profit for the third quarter of 2020 was
US$83 million, a decrease of 4%
year-over-year and 2% quarter-over-quarter. Non-GAAP gross
profit for the third quarter of 2020 was US$83 million, a decrease of 3% year-over-year
and 2% quarter-over-quarter.
GAAP operating expenses for the third quarter of
2020 were US$53 million, an increase
of 4% year-over-year and quarter-over-quarter.
Non-GAAP operating expenses for the third quarter of
2020 were US$50 million, a decrease
of 2% year-over-year and an increase of 4%
quarter-over-quarter.
GAAP operating profit for the third quarter of 2020
was US$30 million, compared with an
operating profit of US$35 million for
the third quarter of 2019 and US$33
million for the second quarter of 2020.
Non-GAAP operating profit for the third quarter of
2020 was US$33 million, compared with
a non-GAAP operating profit of US$35
million for the third quarter of 2019 and US$37 million for the second quarter of 2020.
Recent Developments
On September 29, 2020, Sogou
entered into the Sogou Merger Agreement, and the Company and Sohu
Search entered into the Share Purchase Agreement. The closing of
the Share Purchase under the Share Purchase Agreement is expected
to take place shortly prior to the completion of the Sogou Merger.
If completed, the Share Purchase and the Sogou Merger will result
in Sogou becoming a privately-held indirect wholly-owned
subsidiary of Tencent, Sohu Search
will receive aggregate consideration in the Share Purchase of
approximately US$1.18 billion in
cash, and Sohu will no longer have any beneficial ownership
interest in Sogou.
Business Outlook
For the fourth quarter of 2020, Sohu estimates:
- Brand advertising revenues to be between US$37 million and
US$42 million; this implies an annual
decrease of 11% to an annual increase of 1% and a
sequential decrease of 10% to a sequential increase of
2%.
- Online game revenues to be between US$140 million and US$150
million; this implies an annual increase of 6% to 14% and a
sequential increase of 38% to 48%.
- Non-GAAP net income from continuing
operations attributable to Sohu.com Limited to be between
US$15 million and US$25 million; and GAAP net income from
continuing operations attributable to Sohu.com Limited to be
between US$10 million and
US$20 million.
For the fourth quarter 2020 guidance, the Company has
adopted a presumed exchange rate of RMB6.74=US$1.00, as
compared with the actual exchange rate of approximately
RMB7.03=US$1.00 for the fourth quarter of 2019, and
RMB6.92=US$1.00 for the third quarter of
2020.
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 expenses
and non-cash tax benefits from excess tax deductions related to
share-based awards; changes in fair value recognized in the
Company's consolidated statements of operations with respect to
equity investments with readily determinable fair values;
impairment charge recognized for investments unrelated to the
Company's core businesses; income/expense from the adjustment of
contingent consideration previously recorded for acquisitions; and
interest expense recognized in connection with the Toll
Charge. 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; impairment
charge recognized for investments unrelated to the Company's core
businesses; non-cash tax benefits from excess tax deductions
related to share-based awards; income/expense from the adjustment
of contingent consideration previously recorded for acquisitions;
and income tax expense, income tax benefit, uncertain tax position,
and interest recognized in relation to 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; impairment charge recognized for
investments unrelated to the Company's core
businesses; non-cash tax benefits from excess tax deductions
related to share-based awards; income/expense from the adjustment
of contingent consideration previously recorded for acquisitions;
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 and
changes in fair value recognized in the Company's consolidated
statements of operations with respect to equity investments with
readily determinable fair values, impairment charge recognized
for investments unrelated to the Company's core
businesses, non-cash tax benefits from excess tax deductions
related to share-based awards, and income/expense from the
adjustment of contingent consideration previously recorded for
acquisitions 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
and changes in fair value recognized in the Company's consolidated
statements of operations with respect to equity investments with
readily determinable fair values, impairment charge recognized for
investments unrelated to the Company's core
businesses, non-cash tax benefits from excess tax deductions
related to share-based awards, and income/expense from the
adjustment of contingent consideration previously recorded for
acquisitions, 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, non-cash tax benefits from excess tax
deductions related to share-based awards, and income/expense from
the adjustment of contingent consideration previously recorded for
acquisitions, is that the impact of share-based awards and non-cash
tax benefits from excess tax deductions related to share-based
awards has been and will continue to be a significant recurring
expense in Sohu's business for the foreseeable future, and
income/expense from the adjustment of contingent consideration
previously recorded for acquisitions may recur in the 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 Share Purchase and the Sogou Merger 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 Share Purchase and/or
the Sogou Merger are not satisfied or waived, and other risks and
uncertainties regarding the Share Purchase Agreement and the Share
Purchase, and the Sogou Merger Agreement and the Sogou Merger, that
are discussed in the transaction statement on Schedule 13E-3
filed with the SEC on October 28,
2020. Further information regarding these and other risks is
included in Sohu's annual report on Form 20-F for the year ended
December 31, 2019, and other filings
with 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,
November 16, 2020 (8:30 p.m. Beijing/Hong
Kong time, November 16, 2020)
following the quarterly results announcement. Participants can
register for the conference call by navigating to
http://apac.directeventreg.com/registration/event/7562279. 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 November 16 through
November 25, 2020. The dial-in details for the telephone
replay are:
|
International:
|
+1-646-254-3697
|
|
Passcode:
|
7562279
|
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; interactive search engine
www.sogou.com; developer and operator of online
games www.changyou.com/en/ 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-fourth 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:
|
+1 (480)
614-3004
|
|
E-mail:
|
lbergkamp@christensenir.com
|
|
SOHU.COM
LIMITED
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Sep. 30,
2020
|
|
Jun. 30,
2020
|
|
Sep. 30,
2019
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Brand
advertising
|
$
|
41,094
|
$
|
38,001
|
$
|
46,366
|
|
|
Online
games
|
|
101,324
|
|
105,937
|
|
108,012
|
|
|
Others
|
|
15,476
|
|
16,023
|
|
13,121
|
|
|
Total
revenues
|
|
157,894
|
|
159,961
|
|
167,499
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Brand advertising
(includes stock-based
compensation expense of $240, $36, and $4,
respectively)
|
|
28,459
|
|
22,790
|
|
31,992
|
|
|
Online games
(includes stock-based compensation
expense of $151, $152, and nil, respectively)
|
|
20,024
|
|
23,959
|
|
23,286
|
|
|
Others
|
|
5,075
|
|
6,348
|
|
6,746
|
|
|
Total cost of
revenues
|
|
53,558
|
|
53,097
|
|
62,024
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
104,336
|
|
106,864
|
|
105,475
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Product development
(includes stock-based
compensation expense of $2,469, $2,075, and $95,
respectively)
|
|
59,532
|
|
58,325
|
|
55,734
|
|
|
Sales and marketing
(includes stock-based
compensation expense of $496, $93, and $35,
respectively)
|
|
40,250
|
|
32,969
|
|
54,261
|
|
|
General and
administrative (includes stock-based
compensation expense of $2,516, $1,606, and $24,
respectively)
|
|
15,176
|
|
14,302
|
|
12,967
|
|
|
Total operating
expenses
|
|
114,958
|
|
105,596
|
|
122,962
|
|
|
|
|
|
|
|
|
|
|
Operating
profit/(loss)
|
|
(10,622)
|
|
1,268
|
|
(17,487)
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
7,859
|
|
10,720
|
|
9,944
|
|
|
Interest
income
|
|
1,933
|
|
1,383
|
|
1,166
|
|
|
Interest
expense
|
|
(1,352)
|
|
(1,431)
|
|
(2,631)
|
|
|
Exchange
difference
|
|
(2,043)
|
|
(171)
|
|
1,516
|
|
|
Income/(loss) before
income tax expense
|
|
(4,225)
|
|
11,769
|
|
(7,492)
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense[4]
|
11,082
|
86,166
|
14,646
|
|
|
Net loss from
continuing operations
|
|
(15,307)
|
|
(74,397)
|
|
(22,138)
|
|
|
Net income/(loss)
from discontinued operations, net of
tax[5]
|
|
(42,181)
|
|
(8,692)
|
|
33,938
|
|
|
Net
income/(loss)
|
|
(57,488)
|
|
(83,089)
|
|
11,800
|
|
|
|
|
|
|
|
|
|
|
Less: Net
income/(loss) from continuing operations
attributable to the noncontrolling interest s
hareholders
|
|
(50)
|
|
2,640
|
|
11,320
|
|
|
Less: Net
income/(loss) from discontinued
operations attributable to the noncontrolling
interest shareholders
|
|
(27,874)
|
|
(5,799)
|
|
23,399
|
|
|
|
|
|
|
|
|
|
|
Net loss from
continuing operations attributable to
Sohu.com Limited
|
|
(15,257)
|
|
(77,037)
|
|
(33,458)
|
|
|
Net income/(loss)
from discontinued operations
attributable to Sohu.com Limited
|
|
(14,307)
|
|
(2,893)
|
|
10,539
|
|
|
Net loss attributable
to Sohu.com Limited
|
|
(29,564)
|
|
(79,930)
|
|
(22,919)
|
|
|
|
|
|
|
|
|
|
|
Basic net loss from
continuing operations per ADS
attributable to Sohu.com Limited
|
$
|
(0.39)
|
$
|
(1.96)
|
$
|
(0.85)
|
|
|
Basic net
income/(loss) from discontinued operations
per ADS attributable to Sohu.com Limited
|
$
|
(0.36)
|
$
|
(0.07)
|
$
|
0.27
|
|
|
Basic net loss per
ADS attributable to Sohu.com
Limited
|
$
|
(0.75)
|
$
|
(2.04)
|
$
|
(0.58)
|
|
|
ADS used in computing
basic net income/(loss) per
ADS attributable to Sohu.com Limited
|
|
39,286
|
|
39,271
|
|
39,254
|
|
|
|
|
|
|
|
|
|
|
Diluted net loss from
continuing operations per ADS
attributable to Sohu.com Limited
|
$
|
(0.39)
|
$
|
(1.96)
|
$
|
(0.85)
|
|
|
Diluted net
income/(loss) from discontinued
operations per ADS attributable to Sohu.com Limited
|
$
|
(0.36)
|
$
|
(0.07)
|
$
|
0.26
|
|
|
Diluted net loss per
ADS attributable to Sohu.com
Limited
|
$
|
(0.75)
|
$
|
(2.04)
|
$
|
(0.59)
|
|
|
ADS used in computing
diluted net income/(loss) per
ADS attributable to Sohu.com Limited
|
|
39,286
|
|
39,271
|
|
39,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[4]
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.
|
|
[5] 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.
|
|
SOHU.COM
LIMITED
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(UNAUDITED, IN
THOUSANDS)
|
|
|
|
|
|
|
|
|
|
As of Sep. 30,
2020
|
|
As of Dec. 31,
2019
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
191,913
|
$
|
162,662
|
|
|
Restricted
cash
|
|
111,210
|
|
3,290
|
|
|
Short-term
investments[6]
|
|
-
|
|
321,483
|
|
|
Account and financing receivables,
net
|
|
122,613
|
|
126,081
|
|
|
Prepaid and other
current assets
|
|
102,619
|
|
97,531
|
|
|
Held for sale
assets (current)[7]
|
|
1,433,171
|
|
1,304,621
|
|
|
Total current
assets
|
|
1,961,526
|
|
2,015,668
|
|
|
Long-term
investments, net
|
|
35,294
|
|
30,987
|
|
|
Fixed assets,
net
|
|
328,390
|
|
337,682
|
|
|
Goodwill
|
|
47,758
|
|
47,390
|
|
|
Intangible assets,
net
|
|
5,640
|
|
9,922
|
|
|
Restricted time
deposits[6]
|
|
97,267
|
|
240
|
|
|
Prepaid non-current
assets
|
|
1,205
|
|
1,882
|
|
|
Other
assets
|
|
34,979
|
|
30,413
|
|
|
Held for sale assets
(non-current)[7]
|
|
-
|
|
217,680
|
|
|
Total
assets
|
$
|
2,512,059
|
$
|
2,691,864
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
|
111,303
|
$
|
121,318
|
|
|
Accrued liabilities
|
|
147,751
|
|
157,861
|
|
|
Receipts in advance and deferred revenue
|
|
49,388
|
|
50,321
|
|
|
Accrued salary and benefits
|
|
85,065
|
|
86,666
|
|
|
Taxes payable
|
|
18,618
|
|
25,997
|
|
|
Short-term bank loans
|
|
100,000
|
|
114,528
|
|
|
Other short-term liabilities
|
|
113,212
|
|
91,065
|
|
|
Held for sale liabilities (current)[7]
|
|
446,005
|
|
453,111
|
|
|
Total current
liabilities
|
$
|
1,071,342
|
$
|
1,100,867
|
|
|
|
|
|
|
|
|
Long-term accounts
payable
|
|
785
|
|
767
|
|
|
Long-term bank
loans
|
|
92,000
|
|
0
|
|
|
Long-term tax
liabilities[8]
|
|
387,523
|
|
277,544
|
|
|
Other long-term
liabilities
|
|
828
|
|
83
|
|
|
Held for sale liabilities
(non-current)[7]
|
|
-
|
|
5,686
|
|
|
Total long-term
liabilities
|
$
|
481,136
|
$
|
284,080
|
|
|
Total liabilities
|
$
|
1,552,478
|
$
|
1,384,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
|
Sohu.com Limited shareholders' equity
|
|
283,941
|
|
428,454
|
|
|
Noncontrolling interest
|
|
675,640
|
|
878,463
|
|
|
Total shareholders' equity
|
$
|
959,581
|
$
|
1,306,917
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
2,512,059
|
$
|
2,691,864
|
|
|
|
|
|
|
|
|
[6] During
the third quarter of 2020, Changyou redeemed its short-term
financial products to support the company's operation, partly as
the restricted time
deposits used to secure the offshore bridge loans to repay the
previous offshore bank loans related to the Changyou's
privatization.
|
|
[7] On
September 29, 2020, the Company has 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 has agreed to sell all of the Sogou Class A ordinary share
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.
|
|
[8]
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 in the second quarter of
2020.
|
|
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
Sep. 30, 2020
|
|
Three Months Ended
Jun. 30, 2020
|
|
Three Months Ended
Sep. 30, 2019
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240
|
(a)
|
|
|
|
|
36
|
(a)
|
|
|
|
|
4
|
(a)
|
|
|
|
Brand advertising
gross profit
|
$
|
12,635
|
$
|
240
|
$
|
12,875
|
$
|
15,211
|
$
|
36
|
$
|
15,247
|
$
|
14,374
|
$
|
4
|
$
|
14,378
|
|
|
Brand advertising
gross
margin
|
|
31%
|
|
|
|
31%
|
|
40%
|
|
|
|
40%
|
|
31%
|
|
|
|
31%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151
|
(a)
|
|
|
|
|
152
|
(a)
|
|
|
|
|
0
|
(a)
|
|
|
|
Online games gross
profit
|
$
|
81,300
|
$
|
151
|
$
|
81,451
|
$
|
81,978
|
$
|
152
|
$
|
82,130
|
$
|
84,726
|
$
|
0
|
$
|
84,726
|
|
|
Online games gross
margin
|
|
80%
|
|
|
|
80%
|
|
77%
|
|
|
|
78%
|
|
78%
|
|
|
|
78%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
(a)
|
|
|
|
|
0
|
(a)
|
|
|
|
|
0
|
(a)
|
|
|
|
Others gross
profit
|
$
|
10,401
|
$
|
0
|
$
|
10,401
|
$
|
9,675
|
$
|
0
|
$
|
9,675
|
$
|
6,375
|
$
|
0
|
$
|
6,375
|
|
|
Others gross
margin
|
|
67%
|
|
|
|
67%
|
|
60%
|
|
|
|
60%
|
|
49%
|
|
|
|
49%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
391
|
(a)
|
|
|
|
|
188
|
(a)
|
|
|
|
|
4
|
(a)
|
|
|
|
Gross
profit
|
$
|
104,336
|
$
|
391
|
$
|
104,727
|
$
|
106,864
|
$
|
188
|
$
|
107,052
|
$
|
105,475
|
$
|
4
|
$
|
105,479
|
|
|
Gross
margin
|
|
66%
|
|
|
|
66%
|
|
67%
|
|
|
|
67%
|
|
63%
|
|
|
|
63%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
114,958
|
$
|
(5,481)
|
(a) $
|
109,477
|
$
|
105,596
|
$
|
(3,774)
|
(a) $
|
101,822
|
$
|
122,962
|
$
|
(154)
|
(a) $
|
122,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,872
|
(a)
|
|
|
|
|
3,962
|
(a)
|
|
|
|
|
158
|
(a)
|
|
|
|
Operating
profit/(loss)
|
$
|
(10,622)
|
$
|
5,872
|
$
|
(4,750)
|
$
|
1,268
|
$
|
3,962
|
$
|
5,230
|
$
|
(17,487)
|
$
|
158
|
$
|
(17,329)
|
|
|
Operating
margin
|
|
-7%
|
|
|
|
-3%
|
|
1%
|
|
|
|
3%
|
|
-10%
|
|
|
|
-10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense[9]
|
$
|
11,082
|
$
|
(642)
|
(c,d)$
|
10,440
|
$
|
86,166
|
$
|
(3,140)
|
(c,d)$
|
83,026
|
$
|
14,646
|
$
|
(2,468)
|
(c,d)$
|
12,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,872
|
(a)
|
|
|
|
|
3,962
|
(a)
|
|
|
|
|
158
|
(a)
|
|
|
|
|
|
|
1,587
|
(c)
|
|
|
|
|
(3,619)
|
(c)
|
|
|
|
|
448
|
(c)
|
|
|
|
|
|
|
1,171
|
(d)
|
|
|
|
|
1,934
|
(d)
|
|
|
|
|
2,618
|
(d)
|
|
|
|
Net loss before
non-
controlling interest
|
$
|
(15,307)
|
$
|
8,630
|
$
|
(6,677)
|
$
|
(74,397)
|
$
|
2,277
|
$
|
(72,120)
|
$
|
(22,138)
|
$
|
3,224
|
$
|
(18,914)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,872
|
(a)
|
|
|
|
|
3,962
|
(a)
|
|
|
|
|
158
|
(a)
|
|
|
|
|
|
|
-
|
(b)
|
|
|
|
|
(421)
|
(b)
|
|
|
|
|
2
|
(b)
|
|
|
|
|
|
|
1,587
|
(c)
|
|
|
|
|
(3,619)
|
(c)
|
|
|
|
|
448
|
(c)
|
|
|
|
|
|
|
1,171
|
(d)
|
|
|
|
|
1,934
|
(d)
|
|
|
|
|
2,618
|
(d)
|
|
|
|
Net loss from
continuing
operations attributable to
Sohu.com Limited for diluted
net loss per ADS
|
$
|
(15,257)
|
$
|
8,630
|
$
|
(6,627)
|
$
|
(77,092)
|
$
|
1,856
|
$
|
(75,236)
|
$
|
(33,492)
|
$
|
3,226
|
$
|
(30,266)
|
|
|
Net income/(loss)
from
discontinued operations
attributable to Sohu.com
Limited for diluted net loss per
ADS[10]
|
$
|
(14,307)
|
$
|
1,462
|
$
|
(12,845)
|
$
|
(2,894)
|
$
|
997
|
$
|
(1,897)
|
$
|
10,285
|
$
|
1,351
|
$
|
11,636
|
|
|
Net loss attributable
to
Sohu.com Limited for diluted
net loss per
ADS
|
$
|
(29,564)
|
$
|
10,092
|
$
|
(19,472)
|
$
|
(79,986)
|
$
|
2,853
|
$
|
(77,133)
|
$
|
(23,207)
|
$
|
4,577
|
$
|
(18,630)
|
|
|
Diluted net
loss from
continuing operations per
ADS attributable to Sohu.com
Limited
|
$
|
(0.39)
|
|
|
$
|
(0.17)
|
$
|
(1.96)
|
|
|
$
|
(1.92)
|
$
|
(0.85)
|
|
|
$
|
(0.77)
|
|
|
Diluted net
income/(loss) from
discontinued operations per
ADS attributable to Sohu.com
Limited
|
$
|
(0.36)
|
|
|
$
|
(0.33)
|
$
|
(0.07)
|
|
|
$
|
(0.05)
|
$
|
0.26
|
|
|
$
|
0.30
|
|
|
Diluted net
loss per ADS
attributable to Sohu.com
Limited
|
$
|
(0.75)
|
|
|
$
|
(0.50)
|
$
|
(2.04)
|
|
|
$
|
(1.96)
|
$
|
(0.59)
|
|
|
$
|
(0.47)
|
|
|
Shares used in
computing
diluted net income/(loss) per
ADS attributable to Sohu.com
Limited
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39,286
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39,286
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39,271
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39,271
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39,254
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39,254
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Note:
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(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.
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(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.
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(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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[9]
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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[10] 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 has agreed to sell all of the
Sogou Class A ordinary share 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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View original content to download
multimedia:http://www.prnewswire.com/news-releases/sohucom-reports-third-quarter-2020-unaudited-financial-results-301173366.html
SOURCE Sohu.com Ltd.
