Record Total Revenues Up 13% Year-on-Year to US$136.6 Million
Non-GAAP Fully Diluted EPS of US$0.96, Close to High End of Company Guidance
BEIJING, Oct. 26 /PRNewswire-Asia/ -- Sohu.com Inc. (Nasdaq: SOHU), China's leading online media, communications, search, online games and mobile value-added services company, today reported unaudited financial results for the third quarter ended September 30, 2009.
Third Quarter Highlights
-- Total revenues reached record US$136.6 million, up 13% year-on-year, in
line with the Company's guidance.
-- Brand advertising revenues were US$48.5 million, in line with the
Company's guidance.
-- Online game revenues reached a record US$68.7 million, up 26% year-on-
year and 3% quarter-on-quarter, in line with the company guidance.
-- Before deducting the share of net income pertaining to the Non-
Controlling Interest in Changyou, non-GAAP net income for the third
quarter of 2009 was US$51.6 million, close to the high end of the
Company's guidance, up 21% year-on-year and 5% quarter-on-quarter.
-- After deducting the share of net income pertaining to the Non-
Controlling Interest in Changyou, non-GAAP net income for the third
quarter of 2009 was US$37.4 million, or US 96 cents per fully diluted
share, close to the high end of the Company's guidance.
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 the "Reconciliation to Unaudited Condensed Consolidated Statements of Operations."
Dr. Charles Zhang, Chairman and CEO of Sohu.com, commented, "This quarter marks another achievement of record total revenues as we continue successes in both our portal and online game businesses. We are pleased to receive external recognition for the success of our business from Fortune magazine, which ranked us as the third-fastest growing U.S.-listed company in August of this year."
"Our investments in branding, online content and advanced technologies are attracting new users and advertisers and are helping us to deliver on our long-term strategy to build China's leading mainstream media platform," continued Dr. Zhang. "Our online game business also continues to deliver record results. The strong foundation established by the successful performance and increasing popularity of our existing games allows us to strategically license high-quality games and invest in new technologies to further enrich and diversify our game portfolio. We remain confident that our online game business will retain its leadership position while continuing to capture additional market share."
Commenting on Sohu's brand advertising business, Ms. Belinda Wang,
Co-President and Chief Marketing Officer of Sohu.com, added, "Brand advertising revenues over the first nine months of 2009 grew 5.6% year-on-year, despite the global financial crisis and the tough comparison from heavy ad spending pertaining to the 2008 Beijing Olympic Games. As advertisers increasingly demand targeted, cost-effective advertising, they are shifting greater proportions of their advertising budgets to Internet media from traditional advertising. With one of China's most powerful mainstream media platforms, we are well positioned to benefit from this ongoing trend."
Third Quarter Financial Results
Revenues
Total revenues for the third quarter ended September 30, 2009 were US$136.6 million, representing increases of 7% sequentially and 13%
year-on-year.
Brand advertising revenues for the third quarter of 2009 totaled US$48.5 million, representing a sequential increase of 11% and a decrease of 2%
year-on-year.
Online game revenues for the third quarter of 2009 were US$68.7 million, representing increases of 3% sequentially and 26% year-on-year.
Wireless revenues for the third quarter of 2009 were US$16.8 million, representing increases of 12% sequentially and 16% year-on-year. The increase in wireless revenues was mainly a result of the Company promoting its products through a greater number of channels.
Gross Margin
Gross margin was 76% in the third quarter of 2009, compared with 77% in the second quarter of 2009 and 74% in the third quarter of 2008. Non-GAAP gross margin for the third quarter of 2009 was 76%, compared with 78% in the second quarter of 2009 and 74% in the third quarter of 2008.
Brand advertising gross margin for the third quarter of 2009 was 68%, compared with 68% in the second quarter of 2009 and 62% in the third quarter of 2008. Non-GAAP brand advertising gross margin for the third quarter of 2009 was 69%, compared with 68% in the second quarter of 2009 and 62% in the third quarter of 2008.
Online game gross margin for the third quarter of 2009 was 93%, compared with 94% in the second quarter of 2009 and 94% in the third quarter of 2008. Non-GAAP online game gross margin in the third quarter of 2009 was also 93%, compared with 94% in the second quarter of 2009 and 94% in the third quarter of 2008.
Wireless gross margin for the third quarter of 2009 was 43%, compared with 45% in the second quarter of 2009 and 51% in the third quarter of 2008.
Non-GAAP wireless gross margin for the third quarter of 2009 was 43%, compared with 45% in the second quarter of 2009 and 51% in the third quarter of 2008.
Operating Expenses
For the third quarter of 2009, Sohu's operating expenses totaled US$50.8 million. Non-GAAP operating expenses totaled US$46.7 million, up 7% sequentially from US$43.5 million and up 9% year-on-year. The
quarter-on-quarter and year-on-year increases primarily reflect increases in salaries and compensation expenses as a result of increased headcount and an increase in professional fees.
Operating Margin
Non-GAAP operating profit margin was 42% for the third quarter of 2009, compared with 43% in the previous quarter and 38% in the third quarter of 2008.
Income Tax Expense
For the third quarter of 2009, income tax expense was US$7.0 million, compared with US$8.0 million in the previous quarter.
Net Income
Before deducting the share of net income pertaining to the Non-Controlling Interest in Changyou, GAAP net income for the third quarter of 2009 was US$47.1 million, up 11% quarter-on-quarter and 17% year-on-year. Non-GAAP net income for the third quarter of 2009 was US$51.6 million, up 5%
quarter-on-quarter and 21% year-on-year, in line with the Company's guidance.
After deducting the share of net income pertaining to the Non-Controlling Interest in Changyou, GAAP net income for the third quarter of 2009 was US$34.4 million, or US 88 cents per fully diluted share. Non-GAAP net income for the third quarter of 2009 was US$37.4 million, or US 96 cents per fully diluted share, an increase of 6% quarter-on-quarter, in line with the Company's guidance.
Cash Balance
The Company continued to maintain a debt-free balance sheet and a strong cash position of US$596.4 million as of September 30, 2009.
Stock Repurchase Program
For the third quarter of 2009, no shares were repurchased under the US$150 million share repurchase program approved by the Company's Board of Directors in October 2008. As of September 30, 2009, approximately 500,000 shares had been repurchased under this program for a total consideration of US$20 million.
Supplementary Metrics for the Company's Third Quarter Online Game Results
Operations
Aggregate registered accounts for Changyou's games as of September 30, 2009 increased 9% quarter-on-quarter and 46% year-on-year to 75.1 million.
Aggregate active paying accounts ("APA") for Changyou's games increased 1% quarter-on-quarter and 20% year-on-year to 2.4 million.
Average revenue per active paying account ("ARPU") for Changyou's games increased 2% quarter-on-quarter and 7% year-on-year to RMB190, which Changyou believes is within a range that is affordable for the majority of Chinese game players.
Aggregate peak concurrent users ("PCU") for Changyou's games was approximately 910,000, a decrease of 4% quarter-on-quarter and an increase of 18% year-on-year.
Revenue
Total online game revenues for the third quarter of 2009 increased 3% quarter-on-quarter and 26% year-on-year to US$68.7 million.
Revenues from game operations for the third quarter of 2009 increased 3% quarter-on-quarter and 29% year-on-year to US$66.9 million. The increases were mainly due to increased popularity of Changyou's flagship game, TLBB.
Overseas licensing revenues for the third quarter of 2009 increased 9% quarter-on-quarter and decreased 33% year-on-year to US$1.8 million. The sequential increase was mainly due to increased momentum of TLBB in Vietnam and Malaysia. The year-on-year decrease was largely the result of greater competition in mature online game markets abroad.
Ms. Carol Yu, Co-President and CFO of Sohu.com, commented, "Our complementary businesses generated record total revenues for the tenth out of the past eleven quarters as our leading mainstream media platform captures increasing market share. By remaining focused on our key strategies, we have been able to maintain our growth momentum over the first nine months of 2009, an impressive accomplishment given our very strong results in 2008 due to the Beijing Olympic Games. We are confident in the future of our business and we continue to actively pursue effective ways to leverage our strong balance sheet and leading market position to provide additional long-term value to our shareholders."
Business Outlook
Sohu estimates total revenues for the fourth quarter of 2009 to be between US$134.5 million and US$138.5 million, with advertising revenues of US$48.0 million to US$50.0 million.
Sohu estimates brand advertising revenues for the fourth quarter of 2009 to be between US$45.0 million and US$47.0 million.
Sohu estimates online game revenues for the fourth quarter of 2009 to be between US$69.0 million and US$71.0 million.
Sohu estimates non-GAAP net income for the fourth quarter of 2009, before deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest in Changyou, to be between US$49.5 million to US$51.5 million. After deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest in Changyou, Sohu estimates non-GAAP net income for the fourth quarter of 2009 to be between US$35.0 million to US$37.0 million and non-GAAP fully diluted earnings per share for the fourth quarter of 2009 to be between US 90 cents and US 95 cents.
Assuming no new grants of share-based awards, Sohu estimates share-based compensation expense for the fourth quarter of 2009 to be between US$3.5 million and US$4.5 million, which includes Changyou's share-based compensation expense for the fourth quarter of 2009 estimated to be between US$3.0 million and US$3.5 million. Considering Sohu's share in Changyou, the estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the fourth quarter of 2009 under US GAAP by US 6 cents to US 8 cents.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Sohu's management uses non-GAAP measures of cost of revenues, operating expenses, net income and net income per share, which are adjusted from results based on GAAP to exclude the compensation cost of share-based awards granted to employees. 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 the share-based compensation expense from its non-GAAP financial measure is useful for itself and investors. Further, the amount of share-based compensation expense cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts, which 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 any upfront or subsequent cash outflow, Sohu does not factor this in when evaluating and approving expenditures or when determining the allocation of its resources to its business segments. As a result, the monthly financial results for internal reporting and any performance measure 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 cost of revenues, operating expenses, net income and net income per share, excluding share-based compensation expense, is that the share-based compensation charge has been and will continue to be a significant recurring expense in Sohu's business for the foreseeable future. In order to mitigate these limitations we have 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 we have presented.
Notes to Financial Information
Financial information in this press release other than the information indicated as being non-GAAP is extracted from Sohu's unaudited interim financial statements prepared in accordance with GAAP.
On June 20, 2006, Sohu discontinued its own e-commerce platform of physical consumer goods. While processing the disposal of its e-commerce business, Sohu is reporting the related business activities as discontinued operations. Sohu's income statement separates out discontinued operations for both current and prior periods in order to focus on continuing operations and provide a consistent basis for comparing financial performance over time.
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, the current global financial and credit markets crisis and its potential impact on the Chinese economy, the slower growth the Chinese economy experienced during the latter half of 2008, and first three quarters of 2009, which could continue through the remainder of 2009, the uncertain regulatory landscape in the People's Republic of China, fluctuations in Sohu's quarterly operating results, EPS dilution resulting from Changyou's initial public offering, Sohu's historical and possible future losses, and its reliance on online advertising sales, online games and wireless services (most wireless revenues are collected from a few mobile network operators) for its revenues. Further information regarding these and other risks is included in Sohu's annual report on Form 10-K for the year ended December 31, 2008, and other filings with the Securities and Exchange Commission.
Conference Call and Webcast
Sohu's management team will host a conference call at 8:30 a.m. ET, October 26, 2009 (8:30 p.m. October 26, 2009 Beijing/Hong Kong time). To listen to the conference call, please use the dial in numbers below:
US: +1-800-901-5248
Hong Kong: +852-3002-1672
International: +1-617-786-4512
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "SOHU."
A replay of the conference call may be accessed by phone at the following number until November 2, 2009:
International: +1-617-801-6888
Passcode: 69550498
The conference call will be available on webcast live and available for replay at: http://corp.sohu.com/ .
About Sohu.com
Sohu.com Inc. (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 http://www.sohu.com ; interactive search engine http://www.sogou.com ; #1 games information portal http://www.17173.com; the top real estate website http://www.focus.cn; #1 online alumni club http://www.chinaren.com ; wireless value-added services provider http://www.goodfeel.com.cn ; leading online mapping service provider http://www.go2map.com ; and developer and operator of online games http://www.changyou.com .
Sohu corporate services consist of brand advertising on its matrix of websites as well as paid listing and bid listing on its in-house developed search directory and engines. Sohu also offers wireless value-added services such as news, information, music, ringtone and picture content sent over mobile phones. The Company's massively multiplayer online role-playing game (MMORPG) subsidiary, Changyou.com (NASDAQ: CYOU), currently operates three MMORPGs, Tian Long Ba Bu, Blade Online and Blade Hero 2. Sohu.com, established by Dr. Charles Zhang, one of China's internet pioneers, is in its thirteenth year of operation.
SOHU.COM INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
2009 2009 2008 2009 2008
Revenues:
Advertising
Brand
advertising $48,502 $43,621 $49,398 $131,197 $124,244
Sponsored
search 2,292 1,769 1,737 5,623 5,044
Subtotal of
advertising
revenues 50,794 45,390 51,135 136,820 129,288
Online games 68,684 66,596 54,604 196,887 143,455
Wireless and
others 17,107 15,099 14,937 45,701 34,736
Total
revenues 136,585 127,085 120,676 379,408 307,479
Cost of revenues:
Advertising
Brand
advertising
(includes
share-based
compensation
expense of
$149, $261,
$288, $646
and $892,
respectively) 15,418 14,065 19,018 43,213 44,177
Sponsored search
(includes share-
based compen-
sation expense
of $19, $3, $4,
$25 and $16,
respectively) 2,728 2,265 1,775 7,291 4,900
Subtotal of
cost of
advertising
revenues 18,146 16,330 20,793 50,504 49,077
Online games
(includes
share-based
compensation
expense of $169,
$90, $0, $267
and $10,
respectively) 4,713 3,937 3,480 12,086 10,193
Wireless and
others (includes
share-based
compensation
expense of $11,
$1, $0, $12
and $4,
respectively) 10,331 8,512 7,641 26,972 17,811
Total cost
of revenues 33,190 28,779 31,914 89,562 77,081
Gross profit 103,395 98,306 88,762 289,846 230,398
Operating
expenses:
Product
development
(includes
share-based
compensation
expense of
$2,204, $3,299,
$1,678, $6,777
and $5,169,
respectively) 14,531 14,637 13,012 42,482 35,289
Sales and
marketing
(includes
share-based
compensation
expense of $152,
$214, $214,
$651 and $722,
respectively) 25,457 25,810 27,643 68,093 65,191
General and
administrative
(includes
share-based
compensation
expense of
$1,780, $2,746,
$377, $5,007
and $1,416,
respectively) 10,721 9,208 4,148 27,823 15,160
Amortization of
intangible assets 93 128 201 295 596
Total operating
expenses 50,802 49,783 45,004 138,693 116,236
Operating profit 52,593 48,523 43,758 151,153 114,162
Other income
(expense) 40 62 51 103 (481)
Interest income
and exchange
difference 1,469 1,274 1,421 3,865 3,067
Income before
income tax
expense 54,102 49,859 45,230 155,121 116,748
Income tax expense 7,022 7,969 4,992 21,577 14,754
Income from
continuing
operations 47,080 41,890 40,238 133,544 101,994
Gain (Loss) from
discontinued
e-commerce
operations -- 446 1 446 (0)
Net income 47,080 42,336 40,239 133,990 101,994
Less: Net income
attributable
to the
noncontrolling
interest 9,726 8,801 (22) 18,506 (18)
Net income
attributable to
Sohu.com Inc. 37,354 33,535 40,261 115,484 102,012
Basic net income
per share
attributable to
Sohu.com Inc. $0.97 $0.88 $1.05 $3.02 $2.68
Shares used in
computing basic
net income per
share attributable
to Sohu.com Inc. 38,410 38,284 38,496 38,286 38,121
Diluted net income
per share
attributable to
Sohu.com Inc. $0.88 $0.79 $1.02 $2.82 $2.61
Shares used in
computing diluted
net income per
share attributable
to Sohu.com Inc. 39,082 39,018 39,321 38,985 39,126
SOHU.COM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS)
As of Sep. 30, As of Dec. 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $596,353 $314,425
Accounts receivable, net 60,153 36,869
Prepaid and other current assets 18,451 27,551
Total current assets 674,957 378,845
Fixed assets, net 76,885 76,237
Goodwill 55,555 55,555
Intangible assets, net 4,982 5,654
Restricted cash -- 2,671
Other assets, net 3,141 2,914
Total assets $815,520 $521,876
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,824 $4,339
Accrued liabilities to suppliers and
agents 39,044 33,054
Receipts in advance and deferred
revenue 35,544 31,446
Tax payables 21,573 18,892
Other accrued liabilities 45,451 43,051
Total current liabilities 148,436 130,782
Shareholders' equity
Sohu.com Inc. shareholders' equity 612,260 385,946
Noncontrolling interest 54,824 5,148
Total shareholders' equity 667,084 391,094
Total liabilities and shareholders'
equity $815,520 $521,876
SOHU.COM INC.
RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NON-GAAP NET INCOME EXCLUDING SHARE-BASED COMPENSATION EXPENSE
Three Months Ended Sep. 30, 2009
Non-GAAP
GAAP Adjustments(a) Non-GAAP
Advertising revenues $50,794 $-- $50,794
Less: Cost of advertising
revenues 18,146 (168) 17,978
Advertising gross profit $32,648 $168 $32,816
Advertising gross margin 64% 65%
Online games revenues $68,684 $-- $68,684
Less: Cost of online games
revenues 4,713 (169) 4,544
Online games gross profit $63,971 $169 $64,140
Online games gross margin 93% 93%
Wireless and others revenues $17,107 $-- $17,107
Less: Cost of wireless and others
revenues 10,331 (11) 10,320
Wireless and others gross profit $6,776 $11 $6,787
Wireless and others gross margin 40% 40%
Total revenues $136,585 $-- $136,585
Less: Total cost of revenues 33,190 (348) 32,842
Gross profit $103,395 348 $103,743
Gross margin 76% 76%
Operating expenses $50,802 $(4,136) $46,666
Operating profit 52,593 4,484 57,077
Operating margin 39% 42%
Net income attributable to
Sohu.com Inc. $37,354 $3,567 $40,921
Diluted net income per share
attributable to Sohu.com Inc. $0.88 $0.96
Shares used in computing diluted
net income per share
attributable to Sohu.com Inc. 39,082 39,129
Three Months Ended Jun. 30, 2009
Non-GAAP
GAAP Adjustments(a) Non-GAAP
Advertising revenues $45,390 $-- $45,390
Less: Cost of advertising revenues 16,330 (264) 16,066
Advertising gross profit $29,060 $264 $29,324
Advertising gross margin 64% 65%
Online games revenues $66,596 $-- $66,596
Less: Cost of online games
revenues 3,937 (90) 3,847
Online games gross profit $62,659 $90 $62,749
Online games gross margin 94% 94%
Wireless and others revenues $15,099 $-- $15,099
Less: Cost of wireless and others
revenues 8,512 (1) 8,511
Wireless and others gross profit $6,587 $1 $6,588
Wireless and others gross margin 44% 44%
Total revenues $127,085 $-- $127,085
Less: Total cost of revenues 28,779 (355) 28,424
Gross profit $98,306 $355 $98,661
Gross margin 77% 78%
Operating expenses $49,783 $(6,259) $43,524
Operating profit 48,523 6,614 55,137
Operating margin 38% 43%
Net income attributable to
Sohu.com Inc. $33,535 $5,162 $38,697
Diluted net income per share
attributable to Sohu.com Inc. $0.79 $0.90
Shares used in computing diluted
net income per share
attributable to Sohu.com Inc. 39,018 39,092
Three Months Ended Sep. 30, 2008
Non-GAAP
GAAP Adjustments(a) Non-GAAP
Advertising revenues $51,135 $-- $51,135
Less: Cost of advertising
revenues 20,793 (292) 20,501
Advertising gross profit $30,342 $292 $30,634
Advertising gross margin 59% 60%
Online games revenues $54,604 $-- $54,604
Less: Cost of online games
revenues 3,480 -- 3,480
Online games gross profit $51,124 $-- $51,124
Online games gross margin 94% 94%
Wireless and others revenues $14,937 $-- $14,937
Less: Cost of wireless and
others revenues 7,641 -- 7,641
Wireless and others gross profit $7,296 $-- $7,296
Wireless and others gross margin 49% 49%
Total revenues $120,676 $-- $120,676
Less: Total cost of revenues 31,914 (292) 31,622
Gross profit $88,762 $292 $89,054
Gross margin 74% 74%
Operating expenses $45,004 $(2,269) $42,735
Operating profit 43,758 2,561 46,319
Operating margin 36% 38%
Net income attributable to
Sohu.com Inc. $40,261 $2,561 $42,822
Diluted net income per share
attributable to Sohu.com Inc. $1.02 1.08
Shares used in computing diluted
net income per share
attributable to Sohu.com Inc. 39,321 39,626
Note:
(a) To eliminate share-based compensation expense as measured using the
fair value method.
(b) Certain amounts from prior periods have been reclassified to conform
with current period presentation.
SOHU.COM INC.
RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NON-GAAP NET INCOME EXCLUDING SHARE-BASED COMPENSATION EXPENSE
Nine Months Ended Sep. 30, 2009
Non-GAAP
GAAP Adjustments(a) Non-GAAP
Advertising revenues $136,820 $-- $136,820
Less: Cost of advertising
revenues 50,504 (671) 49,833
Advertising gross profit $86,316 $671 $86,987
Advertising gross margin 63% 64%
Online games revenues $196,887 $-- $196,887
Less: Cost of online games
revenues 12,086 (267) 11,819
Online games gross profit $184,801 $267 $185,068
Online games gross margin 94% 94%
Wireless and others revenues $45,701 $-- $45,701
Less: Cost of wireless and
others revenues 26,972 (12) 26,960
wireless and others gross
profit $18,729 $12 $18,741
wireless and others gross
margin 41% 41%
Total revenues $379,408 $-- $379,408
Less: Total cost of revenues 89,562 (950) 88,612
Gross profit $289,846 $950 $290,796
Gross margin 76% 77%
Operating expenses $138,693 $(12,435) $126,258
Operating profit 151,153 $13,385 164,538
Operating margin 40% 43%
Net income attributable to
Sohu.com Inc. $115,484 $11,016 $126,500
Diluted net income per share
attributable to Sohu.com Inc. $2.82 $3.06
Shares used in computing
diluted net income per share
attributable to Sohu.com Inc. 38,985 39,082
Nine Months Ended Sep. 30, 2008
Non-GAAP
GAAP Adjustments(a) Non-GAAP
Advertising revenues $129,288 $-- $129,288
Less: Cost of advertising
revenues 49,077 (908) 48,169
Advertising gross profit $80,211 $908 $81,119
Advertising gross margin 62% 63%
Online games revenues $143,455 $-- $143,455
Less: Cost of online games
revenues 10,193 (10) 10,183
Online games gross profit $133,262 $10 $133,272
Online games gross margin 93% 93%
Wireless and others revenues $34,736 $-- $34,736
Less: Cost of wireless and
others revenues 17,811 (4) 17,807
wireless and others gross
profit $16,925 $4 $16,929
wireless and others gross
margin 49% 49%
Total revenues $307,479 $-- $307,479
Less: Total cost of revenues 77,081 (922) 76,159
Gross profit $230,398 $922 $231,320
Gross margin 75% 75%
Operating expenses $116,236 $(7,307) $108,929
Operating profit 114,162 8,229 122,391
Operating margin 37% 40%
Net income attributable to
Sohu.com Inc. $102,012 $8,229 $110,241
Diluted net income per share
attributable to Sohu.com Inc. $2.61 $2.79
Shares used in computing
diluted net income per share
attributable to Sohu.com Inc. 39,126 39,462
Note:
(a) To eliminate share-based compensation expense as measured using the
fair value method.
(b) Certain amounts from prior periods have been reclassified to conform
with current period presentation.
For investor and media inquiries, please contact:
In China:
Mr. James Deng
Senior Finance Director
Sohu.com Inc.
Tel: +86-10-6272-6596
Email: ir@contact.sohu.com
Ms. Cathy Li
Ogilvy Financial, Beijing
Tel: +86-10-8520-6104
Email: cathy.li@ogilvy.com
In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: jessica.cohen@ogilvypr.com
