Release Date: May 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sohu.com Ltd (SOHU, Financial) achieved marketing services revenues and non-GAAP bottom line performance at the high end of previous guidance.
- Online game revenues exceeded expectations, driven by high-quality content updates and improvements.
- The Sohu Media platform successfully engaged more users through unique events, enhancing social interactions and content distribution.
- The company hosted successful events like the Sohu Video influencers Spring Convention and the Sohu News Marathon, boosting platform vitality.
- Sohu.com Ltd (SOHU) is exploring greater monetization opportunities by leveraging its competitive advantage as a mainstream media platform.
Negative Points
- Total revenues for the first quarter of 2025 were down 3% year-over-year.
- Marketing services revenues decreased by 15% year-over-year and 27% quarter-over-quarter.
- The company reported a non-GAAP net loss of $16 million, despite reversing a tax expense.
- Online game revenues, while exceeding expectations, remained flat year-over-year.
- The economic outlook remains uncertain, impacting advertising momentum and overall market conditions.
Q & A Highlights
Q: Can management comment on the recent trend in advertising sentiments across different categories such as FMCG, IT, auto, food, and electronics? What is the outlook for the second half of the year?
A: Charles Zhang, CEO: In this quarter, the auto sector performed better, while IT services and FMCG remained stable. However, luxury goods and alcohol saw a decline in spending. For the second half, we expect similar trends as the economy is still not doing well. We aim to grow our social network platform to capture a larger market share in advertising.
Q: How is AI benefiting Sohu's advertising and online games operations? Are there improvements in eCPM or traffic from better recommendations?
A: Charles Zhang, CEO: Our media platform, centered around social networks, has less exposure to AI impacts compared to information retrieval services. AI helps improve efficiency in content generation and live streaming tools. In gaming, AI has improved efficiency in art design, UI design, and marketing materials.
Q: Which AI models is Sohu integrating into its gaming and media operations? Are you using DeepSeek or other AI models?
A: Charles Zhang, CEO: We integrate DeepSeek and open-source language models in our Sohu Video and News apps. In gaming, we use various AI tools for art and audio design, and we have developed our own AI agent to integrate these tools based on our needs.
Q: Can you elaborate on the tax reversal that resulted in a gain this quarter? Which business is it related to?
A: Joanna Lv, CFO: The tax reversal is an accounting treatment related to an uncertain tax position that has now been resolved. It is not specific to any business segment but pertains to Sohu as a whole.
Q: Given the ADR delisting risks, is Sohu considering alternatives like a secondary listing in Hong Kong?
A: Charles Zhang, CEO: Currently, we are not actively considering alternatives as the delisting risk is speculative. If it becomes a reality, we will evaluate our options then. We are not in a rush as we can operate without being listed for a period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
