• Total Revenue: $152 million, up 5% year-over-year, down 12% quarter-over-quarter.
• Brand Advertising Revenue: $19 million, down 15% year-over-year, down 6% quarter-over-quarter.
• Online Game Revenue: $128 million, up 9% year-over-year, down 13% quarter-over-quarter.
• GAAP Net Loss: $16 million, compared to a net loss of $14 million in Q3 last year and $38 million in Q2 this year.
• Non-GAAP Net Loss: $12 million, compared to a net loss of $10 million in Q3 last year and $34 million in Q2 this year.
• Sohu Media and Sohu Video Revenue: $23 million, compared to $27 million in the same quarter last year.
• Changyou Online Game Revenue: $129 million, compared to $118 million in the same quarter last year.
• Changyou Operating Profit: $62 million, compared to $52 million in the same quarter last year.
• Share Repurchase Program: 3.4 million ADS repurchased for approximately $42 million out of a $150 million program.

• Warning! GuruFocus has detected 2 Warning Signs with SOHU.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Brand advertising revenue was at the high end of previous guidance, indicating strong performance in this segment.
• Online game revenues exceeded expectations due to high-quality content updates and robust game operations.
• Sohu Video successfully hosted unique events, enhancing user engagement and brand recognition.
• The company continues to innovate content offerings, providing customized brand marketing solutions for advertisers.
• The share repurchase program has been extended, showing commitment to returning value to shareholders.

Negative Points

• Total revenues decreased by 12% quarter-over-quarter, indicating a decline in overall business performance.
• Brand advertising revenues fell by 15% year-over-year, reflecting challenges in the advertising market.
• The company reported a GAAP net loss of $16 million, an increase from the previous year's loss.
• Mobile games revenue decreased sequentially due to the natural decline of certain game titles.
• The advertising market remains soft, with no significant improvement in advertiser sentiment.

Q & A Highlights

Q: In terms of the advertising outlook, have you seen any improvement in ad budget spend by advertisers entering the fourth quarter? Do you think overall advertiser sentiment has improved slightly heading into the remainder of the year? A: Charles Zhang, CEO: The advertising market remains soft, but we achieved the higher end of our forecast in Q3 due to unique marketing events. We expect market recovery possibly next year due to recent policy stimulus.

Q: Your gaming guidance for Q3 was conservative, yet you delivered a massive beat. Why are you guiding conservatively for Q4? A: Joanna Lv, CFO: The Q3 revenue beat was due to better-than-expected performance from new content and servers for TLBB Vintage and regular TLBB PC. We are guiding conservatively for Q4 as our strategy focuses on maintaining user stability rather than increasing revenue.

Q: It seems slow to execute your buyback program. Is there a way to speed it up or enhance shareholder returns? A: Charles Zhang, CEO: The buyback is limited by daily volume constraints to avoid impacting the stock price. We plan to extend the program to 2026 to accommodate these limitations.

Q: How should we expect the 2025 online games outlook for Changyou? A: Joanna Lv, CFO: Our goal for 2025 is to maintain stability and growth for older games. We have around 10 games in development, with some already licensed, including NBA Absolute Superstar and Hero Three Kingdoms. We will also test a new version of the TLBB PC game.

Q: What is the expected trend for operating margins in the next few years? A: Joanna Lv, CFO: We aim to stabilize and potentially grow our operating margins by focusing on retaining the stability of existing games and introducing new titles to the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.