#China #Beijing #financial results #Sohu #online media

Overview

Sohu.com Limited, a prominent Chinese online media and gaming platform, has revealed its unaudited financial results for both the fourth quarter and the entire fiscal year of 2024. The company, which trades on the NASDAQ under the ticker symbol SOHU, noted a continued decline in revenue across its brand advertising and online gaming sectors, reflecting wider challenges in the industry.

Fourth Quarter Highlights

During the fourth quarter of 2024, Sohu reported total revenues of $135 million, representing a 5% decrease compared to the same quarter in the previous year. The online gaming segment accounted for a significant portion of its revenues, generating $110 million, albeit a 4% decline year-over-year and a stark 14% drop from the preceding quarter. In contrast, brand advertising revenues were slightly better, at $19 million, marking a 7% decrease year-over-year but a 1% increase from the third quarter of 2024.

However, with these revenue challenges, Sohu faced a GAAP net loss of $21 million, significantly higher than the $13 million loss reported in Q4 2023. The company’s non-GAAP net loss also showed an increase, at $15 million, compared to $11 million in the same quarter of the previous year.

Fiscal Year 2024 Overview

For the entire fiscal year, Sohu's total revenue was reported at $598 million, remaining relatively flat compared to 2023. A notable area of concern lies within brand advertising revenues, which dwindled by 17% to $73 million compared to the previous year. Conversely, the online gaming segment saw a modest increase, generating $502 million and reflecting a 5% growth year-over-year. Nevertheless, Sohu experienced a GAAP net loss of $100 million, a substantial increase from a $66 million loss in 2023, depicting a challenging financial landscape for the company.

Management's Commentary

Dr. Charles Zhang, Sohu's Chairman and CEO, expressed cautious optimism, stating that the brand advertising revenues reached the upper limits of the company's forecasts. Furthermore, he mentioned that the online games segment had performed better than anticipated, supported by ongoing efforts in delivering high-quality games and significant content updates that resonated with players. Sohu's media arm continued to enhance its offerings by refining products, optimizing algorithms, and maintaining strict budget control.

Zhang emphasized the company's strategy to combine its extensive product matrix with unique intellectual properties to enrich user experience and monetize effectively.

Financial Metrics Analysis

Overall, the gross margins for both GAAP and non-GAAP were reported at 73%, lower than 76% in Q4 2023, primarily attributed to the declining performance of the brand advertising sector. Operating expenses for Q4 2024 totaled $123 million, which saw a slight decrease of 8% compared to the previous year, reflecting Sohu's strategic cost management efforts amidst revenue downturns.

Sohu also reported liquidity and capital resources of approximately $1.2 billion by the end of December 2024, however, the future guidance anticipates continued revenue challenges with predicted decreases in brand advertising and slight fluctuations in online game revenues.

Looking Ahead

As Sohu prepares for the first quarter of 2025, its estimates suggest a further decline in brand advertising by 13% - 19%, whereas online gaming revenues might see a minor downward trend. The company remains steadfast in its commitment to overcome current challenges while looking to leverage its extensive user base and ongoing investments in innovative content to drive future growth.

In conclusion, Sohu's ability to navigate these turbulent financial waters remains critical as it strives to recover and enhance its standing in the competitive online media and gaming landscape.