Second Quarter Highlights[1]
- Total revenues were
US$136 million , up 7% year-over-year and down 4% quarter-over-quarter. - Marketing services revenues were
US$15 million , down 3% year-over-year and up 21% quarter-over-quarter. - Online game revenues were
US$116 million , up 10% year-over-year and down 7% quarter-over-quarter. - After giving effect to reversal of a tax expense of approximately
US$13 million due to a reversal of uncertain tax positions, GAAP net income attributable toSohu.com Limited wasUS$0.2 million , compared with a net loss ofUS$20 million in the second quarter of 2025 and a net loss ofUS$4 million in the first quarter of 2026. - After giving effect to reversal of a tax expense of approximately
US$13 million due to a reversal of uncertain tax positions, non-GAAP[2] net income attributable toSohu.com Limited wasUS$0.5 million , compared with a net loss ofUS$20 million in the second quarter of 2025 and a net loss ofUS$4 million in the first quarter of 2026.
[1] Changyou's wholly-owned subsidiary |
[2] Non-GAAP results exclude share-based compensation expense. 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." |
Dr. Charles Zhang, Chairman and CEO of
Second Quarter Financial Results
Revenues
Total revenues were
Marketing services revenues were
Online game revenues were
Cost of Revenues
Both GAAP and non-GAAP total cost of revenues were
Both GAAP and non-GAAP cost of marketing services revenues were
Both GAAP and non-GAAP cost of online game revenues were
Operating Expenses
Both GAAP and non-GAAP operating expenses were
Operating Loss
GAAP operating loss was
Non-GAAP operating loss was
Income Tax Expense/(Benefit)
Both GAAP and non-GAAP income tax benefit was
Net Income/(Loss)
GAAP net income attributable to
Non-GAAP net income attributable to
Liquidity and Capital Resources
As of
Supplementary Information for Changyou Results[3]
Second Quarter 2026 Operating Results
- For PC games, total average monthly active user accounts[4] (MAU) were 2.6 million, an increase of 10% year-over-year and a decrease of 5% quarter-over-quarter. Total quarterly aggregate active paying accounts[5] (APA) were 1.0 million, an increase of 5% year-over-year and a decrease of 5% quarter-over-quarter. The year-over-year increase in MAU was mainly from Changyou's PC game
Tian Long Ba Bu ("TLBB"): Return, which was launched during the third quarter of 2025.
- For mobile games, total average MAU were 1.7 million, a decrease of 13% year-over-year and 2% quarter-over-quarter. Total quarterly APA were 0.2 million, a decrease of 24% year-over-year and 11% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases in MAU and APA were mainly due to the natural decline of some of Changyou's older games.
[3] "Changyou Results" consist of the results of Changyou's online game business and its 17173.com Website. |
[4] Monthly active user accounts refers to the number of registered accounts that are logged in to these games at least once during the month. |
[5] 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 2026 Unaudited Financial Results
Total revenues were
Both GAAP and non-GAAP total cost of revenues were
Both GAAP and non-GAAP operating expenses were
GAAP operating profit was
Non-GAAP operating profit was
Sohu today announced that on
As of
Business Outlook
For the third quarter of 2026, Sohu estimates:
- Marketing services revenues to be between
US$14 million andUS$15 million ; this implies an annual increase of 3% to 10%, and a sequential decrease of 1% to 8%. - Online game revenues to be between
US$105 million andUS$115 million ; this implies an annual decrease of 29% to 35%, and a sequential decrease of 1% to 10%. - Both non-GAAP and GAAP net loss attributable to
Sohu.com Limited to be betweenUS$13 million andUS$23 million .
For the third quarter 2026 guidance, the Company has adopted a presumed exchange rate of
This forecast reflects Sohu's management's current and preliminary view, which is subject to substantial uncertainty.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in
Sohu's management believes excluding share-based compensation expense from the Company's non-GAAP financial measures is useful for itself and investors. Further, the impact of share-based compensation expense could not 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 share-based compensation expense does not involve subsequent cash outflow and is not reflected in the cash flows at the equity transaction level, Sohu does not factor in its impact 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.
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/(loss), net income/(loss), net income/(loss) attributable to
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
Conference Call and Webcast
Sohu's management team will host a conference call at
The live Webcast and archive of the conference call will be available on the Investor Relations section of Sohu's website at https://investors.sohu.com/.
About Sohu
As a mainstream media platform with social features, Sohu is indispensable to the daily life of millions of Chinese, providing to a vast number of users a network of web properties and community based products, which offer a broad array of content, such as news and information, in the form of text, picture, video, and live broadcasting. Sohu also attracts users to actively engage in content generation and distribution, and actively interact with each other on the platform. Sohu's online game business is conducted by its subsidiary Changyou, which develops and operates a diverse portfolio of PC and mobile games, such as the well-known TLBB PC and Legacy TLBB Mobile.
For investor and media inquiries, please contact:
Ms.
Tel: +86 (10) 6272-6645
E-mail: ir@contact.sohu.com
Christensen Advisory
E-mail: sohu@christensencomms.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | |||||||
Three Months Ended | |||||||
Revenues: | |||||||
Marketing services | $ | 15,179 | $ | 12,560 | $ | 15,624 | |
Online games | 116,171 | 124,567 | 105,994 | ||||
Others | 4,190 | 4,157 | 4,649 | ||||
Total revenues | 135,540 | 141,284 | 126,267 | ||||
Cost of revenues: | |||||||
Marketing services | 13,400 | 12,583 | 12,979 | ||||
Online games | 13,829 | 15,899 | 14,544 | ||||
Others | 1,727 | 1,326 | 768 | ||||
Total cost of revenues | 28,956 | 29,808 | 28,291 | ||||
Operating expenses: | |||||||
Product development | 68,894 | 61,883 | 58,824 | ||||
Sales and marketing (includes share-based compensation | 43,801 | 42,850 | 48,545 | ||||
General and administrative (includes share-based | 12,188 | 13,475 | 12,922 | ||||
Total operating expenses | 124,883 | 118,208 | 120,291 | ||||
Operating loss | (18,299) | (6,732) | (22,315) | ||||
Other income, net | 7,166 | 4,682 | 3,481 | ||||
Interest income | 5,718 | 5,995 | 7,570 | ||||
Exchange difference | (1,224) | (1,318) | 185 | ||||
Income/(loss) before income tax expense | (6,639) | 2,627 | (11,079) | ||||
Income tax expense/(benefit)[6] | (6,874) | 6,942 | 8,937 | ||||
Net income/(loss) from continuing operations | 235 | (4,315) | (20,016) | ||||
Net income from discontinued operations[7] | 734 | - | - | ||||
Net income/(loss) | 969 | (4,315) | (20,016) | ||||
Net income/(loss) from continuing operations attributable to | 235 | (4,315) | (20,016) | ||||
Net income from discontinued operations attributable to | 734 | - | - | ||||
Net income/(loss) attributable to | 969 | (4,315) | (20,016) | ||||
Basic net income/(loss) from continuing operations per | $ | 0.01 | $ | (0.17) | $ | (0.69) | |
Basic net income from discontinued operations per share/ADS | $ | 0.03 | $ | - | $ | - | |
Basic net income/(loss) per share/ADS attributable to | $ | 0.04 | $ | (0.17) | $ | (0.69) | |
Shares/ADSs used in computing basic net income/(loss) per | 25,451 | 26,058 | 28,826 | ||||
Diluted net income/(loss) from continuing operations per | $ | 0.01 | $ | (0.17) | $ | (0.69) | |
Diluted net income from discontinued operations per share/ADS | $ | 0.03 | $ | - | $ | - | |
Diluted net income/(loss) per share/ADS attributable to | $ | 0.04 | $ | (0.17) | $ | (0.69) | |
Shares/ADSs used in computing diluted net income/(loss) per | 25,451 | 26,058 | 28,826 | ||||
[6] For the second quarter of 2026, income tax benefit included reversal of a tax expense of approximately | |||||||
[7] See footnote 1. | |||||||
[8] Each ADS represents one ordinary share. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(UNAUDITED, IN THOUSANDS) | ||||
As of | As of | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 116,224 | $ | 128,308 |
Short-term investments | 716,752 | 702,372 | ||
Accounts receivable, net | 37,450 | 43,335 | ||
Prepaid and other current assets | 99,677 | 93,903 | ||
Total current assets | 970,103 | 967,918 | ||
Fixed assets, net | 248,436 | 246,263 | ||
10,257 | 10,257 | |||
Long-term investments, net | 44,560 | 43,939 | ||
Intangible assets, net | 3,941 | 4,692 | ||
Long-term time deposits | 328,756 | 350,659 | ||
Other assets | 11,531 | 12,325 | ||
Total assets | $ | 1,617,584 | $ | 1,636,053 |
LIABILITIES | ||||
Current liabilities: | ||||
Accounts payable | $ | 37,062 | $ | 36,215 |
Accrued liabilities | 97,461 | 95,430 | ||
Receipts in advance and deferred revenue | 54,866 | 54,878 | ||
Accrued salary and benefits | 44,752 | 55,018 | ||
Taxes payables | 11,472 | 15,571 | ||
Other short-term liabilities | 76,068 | 76,601 | ||
Total current liabilities | $ | 321,681 | $ | 333,713 |
Long-term other payables | 3,385 | 2,896 | ||
Long-term tax liabilities | 8,142 | 21,051 | ||
Other long-term liabilities | 264 | 322 | ||
Total long-term liabilities | $ | 11,791 | $ | 24,269 |
Total liabilities | $ | 333,472 | $ | 357,982 |
SHAREHOLDERS' EQUITY: | ||||
| 1,283,768 | 1,277,727 | ||
Noncontrolling interest | 344 | 344 | ||
Total shareholders' equity | $ | 1,284,112 | $ | 1,278,071 |
Total liabilities and shareholders' equity | $ | 1,617,584 | $ | 1,636,053 |
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES | ||||||||||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | ||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||
GAAP | Non-GAAP | Non-GAAP | GAAP | Non-GAAP | Non-GAAP | GAAP | Non-GAAP | Non-GAAP | ||||||||||
Operating expenses | $ | 124,883 | $ | (296) | (a) $ | 124,587 | $ | 118,208 | $ | (244) | (a) $ | 117,964 | $ | 120,291 | $ | (353) | (a) $ | 119,938 |
Operating loss | $ | (18,299) | $ | 296 | (a) $ | (18,003) | $ | (6,732) | $ | 244 | (a) $ | (6,488) | $ | (22,315) | $ | 353 | (a) $ | (21,962) |
Income tax expense/(benefit)[9] | $ | (6,874) | $ | - | $ | (6,874) | $ | 6,942 | $ | - | $ | 6,942 | $ | 8,937 | $ | - | $ | 8,937 |
Net income/(loss) before non-controlling | $ | 235 | $ | 296 | (a) $ | 531 | $ | (4,315) | $ | 244 | (a) $ | (4,071) | $ | (20,016) | $ | 353 | (a) $ | (19,663) |
Net income/(loss) from continuing | $ | 235 | $ | 296 | (a) $ | 531 | $ | (4,315) | $ | 244 | (a) $ | (4,071) | $ | (20,016) | $ | 353 | (a) $ | (19,663) |
Net income from discontinued | $ | 734 | $ | - | $ | 734 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
Net income/( loss) attributable to | $ | 969 | $ | 296 | (a) $ | 1,265 | $ | (4,315) | $ | 244 | (a) $ | (4,071) | $ | (20,016) | $ | 353 | (a) $ | (19,663) |
Diluted net income/(loss) from | $ | 0.01 | $ | 0.02 | $ | (0.17) | $ | (0.16) | $ | (0.69) | $ | (0.68) | ||||||
Diluted net income from discontinued | $ | 0.03 | $ | 0.03 | $ | - | $ | - | $ | - | $ | - | ||||||
Diluted net income/( loss) per | $ | 0.04 | $ | 0.05 | $ | (0.17) | $ | (0.16) | $ | (0.69) | $ | (0.68) | ||||||
Shares/ADSs used in computing diluted | 25,451 | 25,451 | 26,058 | 26,058 | 28,826 | 28,826 | ||||||||||||
Note: | ||||||||||||||||||
(a) Share-based compensation expense | ||||||||||||||||||
[9] See footnote 6. | ||||||||||||||||||
[10] See footnote 1. | ||||||||||||||||||
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