Fourth Quarter of 2009:
Total Revenues of US$135.8 Million; Up 12% Year-over-Year;
Non-GAAP Fully Diluted EPS of US$0.92, Within Group Guidance
Fiscal Year 2009:
Record Total Revenues of US$515.2 Million; Up 20% Year-over-Year;
Non-GAAP Net Income before Non-Controlling Interest of US$197.7 Million; Up 17% Year-over-Year;
Cash Balance of US$563.8 Million; An Increase of US$249.4 Million from Fiscal Year 2008
BEIJING, Feb. 1 /PRNewswire-Asia/ -- Sohu.com Inc. (Nasdaq: SOHU), China's leading online media, communications, search, online games and mobile value-added services group, today reported unaudited financial results for the fourth quarter and fiscal year ended December 31, 2009.
(Logo: http://www.prnasia.com/sa/2010/02/01/20100201632607.jpg )
Fourth Quarter Highlights
-- Total revenues were US$135.8 million, up 12% year-over-year, in line
with the Group's guidance.
-- Brand advertising revenues were US$45.9 million, up 2% year-over-year
and in line with the Group's guidance.
-- Online game revenues reached a record US$70.7 million, up 21% year-
over-year and 3% quarter-over-quarter, in line with the Group's
guidance.
-- Before deducting the share of net income pertaining to the Non-
Controlling Interest in the Group's online game subsidiary Changyou,
non-GAAP net income for the fourth quarter of 2009 was US$50.3 million,
in line with the Group's guidance.
-- After deducting the share of net income pertaining to the Non-
Controlling Interest in Changyou, on a fully diluted basis, non-GAAP
net income for the fourth quarter of 2009 was US$35.8 million, or US 92
cents per fully diluted share, in line with the Group's guidance.
Fiscal Year 2009 Highlights
-- Record total revenues and record revenues for each category.
-- Total revenues reached US$515.2 million, up 20% compared to 2008.
-- Brand advertising revenues were US$177.1 million, up 5% compared to
2008.
-- Online game revenues reached US$267.6 million, up 33% compared to
2008.
-- Before deducting the share of net income pertaining to the Non-
Controlling Interest in Changyou, non-GAAP net income was US$197.7
million, up 17% compared to 2008.
-- After deducting the share of net income pertaining to the Non-
Controlling Interest in Changyou, on a fully diluted basis, non-GAAP
net income was US$155.3 million, or US$3.98 per fully diluted share.
Explanation of the Group'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, commented, "We are pleased to report another quarter of solid financial results built on the accomplishments of an exceptional year which saw us deliver record results along with an enormously successful listing of our MMORPG subsidiary Changyou. Effective business strategies and high-quality products have allowed Sohu to overcome the sluggish economy of 2009 and gain market share in many of our key business segments.
"We continue to position ourselves for long-term and sustainable growth through ongoing investments in our two complementary core businesses, namely our portal business and online game business. We believe our emphasis on securing and developing leading internet video content and technologies will drive impressive growth in both users and advertising revenues in 2010. Our persistent efforts in fighting online video piracy have started to bear fruit and have made Sohu the partner of choice for leading global and local media companies. Our online game business also continues to deliver impressive results and progress. While our three healthy and growing existing games continue to deliver solid revenues, our highly anticipated and diverse 2010 pipeline of five games will bring us increasing momentum in the coming quarters. Our second in-house developed game Duke of Mount Deer, one of the most anticipated online games in China, is progressing smoothly."
Commenting on Sohu's brand advertising business, Ms. Belinda Wang, Co-President and COO, added, "Brand advertising revenues were relatively modest during the fourth quarter, up 2% year-over-year. We expect advertisers to increase their marketing activities in 2010 with events such as the World Cup, Asian Games and World Expo, providing new opportunities for us to showcase our well-established media platform. We are well-positioned to capitalize on the online advertising recovery as brands continue to turn to us for new advertising solutions."
Fourth Quarter Financial Results
Revenues
Total revenues for the fourth quarter ended December 31, 2009 were US$135.8 million, representing a decrease of 1% sequentially and an increase of 12% year-over-year.
Brand advertising revenues for the fourth quarter of 2009 totaled US$45.9 million, representing a sequential decrease of 5% and an increase of 2% year-over-year. Gross brand advertising revenues before business tax for the fourth quarter were US$50.2 million.
Online game revenues for the fourth quarter of 2009 were US$70.7 million, representing increases of 3% sequentially and 21% year-over-year.
Wireless revenues for the fourth quarter of 2009 were US$15.7 million, representing a decrease of 7% sequentially and an increase of 6% year-over-year. The quarter-over-quarter decrease was mainly attributable to China Mobile discontinuing the billing for WAP services in late November.
Gross Margin
Both GAAP and non-GAAP gross margin were 75% in the fourth quarter of 2009, compared with 76% in the third quarter of 2009 and 75% in the fourth quarter of 2008.
Brand advertising gross margin for the fourth quarter of 2009 was 65%, compared with 68% in the third quarter of 2009 and 66% in the fourth quarter of 2008. Non-GAAP brand advertising gross margin for the fourth quarter of 2009 was 65%, compared with 69% in the third quarter of 2009 and 67% in the fourth quarter of 2008.
Both GAAP and non-GAAP online game gross margin in the fourth quarter of 2009 were 92%, compared with 93% in the third quarter of 2009 and 93% in the fourth quarter of 2008.
Both GAAP and non-GAAP wireless gross margin for the fourth quarter of 2009 were 44%, compared with 43% in the third quarter of 2009 and 46% in the fourth quarter of 2008.
Operating Expenses
For the fourth quarter of 2009, Sohu's operating expenses totaled US$48.8 million. Non-GAAP operating expenses totaled US$45.0 million, down 4% sequentially from US$46.7 million and up 14% year-over-year. The year-on-year increase primarily reflects an increase in marketing expenses.
Operating Margin
Non-GAAP operating profit margin was 42% for the fourth quarter of 2009, compared with 42% in the previous quarter and 43% in the fourth quarter of 2008.
Income Tax Expense
For the fourth quarter of 2009, excluding non-cash income tax expense of US$3.9 million recorded for the tax benefits from share-based awards, non-GAAP income tax expense was US$8.2 million, compared with US$7.0 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 fourth quarter of 2009 was US$42.4 million, down 10% quarter-over-quarter and 25% year-over-year. Non-GAAP net income for the fourth quarter of 2009 was US$50.3 million, down 2% quarter-over-quarter and 15% year-over-year, in line with the Group's guidance.
After deducting the share of net income pertaining to the Non-Controlling Interest in Changyou, GAAP net income attributable to Sohu for the fourth quarter of 2009 was US$29.4 million, or US 76 cents per fully diluted share. Non-GAAP net income attributable to Sohu for the fourth quarter of 2009 was US$35.8 million, or US 92 cents per fully diluted share, a decrease of 4% quarter-over-quarter, in line with the Group's guidance.
Cash Balance
The Group continued to maintain a debt-free balance sheet and a strong cash position of US$563.8 million as of December 31, 2009.
Fiscal Year 2009 Financial Results
Revenues
Total revenues for the fiscal year 2009 were US$515.2 million, up 20% compared to 2008.
Brand advertising revenues for the fiscal year 2009 were US$177.1 million, up 5% compared to 2008. Gross brand advertising revenues before business tax for the fiscal year 2009 were US$193.8 million.
Online game revenues for the fiscal year 2009 were US$267.6 million, up 33% compared to 2008. Revenues from game operations for the fiscal year 2009 were US$259.8 million, up 33% compared to 2008. Overseas licensing revenues for the fiscal year 2009 were US$7.8 million, up 8% compared to 2008.
Wireless revenues for the fiscal year 2009 were US$60.8 million, up 29% compared to 2008.
Gross Margin
Both GAAP and non-GAAP gross margin were 76% for the fiscal year 2009, compared to 75% in 2008.
Brand advertising gross margin was 66% for the fiscal year 2009, compared to 65% in 2008. Brand advertising non-GAAP gross margin was 67% for the fiscal year 2009, compared to 66% in 2008.
Online game gross margin was 93% for the fiscal year 2009, compared to 93% in 2008. Online game non-GAAP gross margin was 94% for the fiscal year 2009, compared to 93% in 2008.
Both GAAP and non-GAAP wireless gross margin were 43% for the fiscal year 2009, compared to 48% in 2008.
Operating Expenses
For the fiscal year 2009, Sohu's operating expenses totaled US$187.5 million. Non-GAAP operating expenses for the fiscal year 2009 increased 15% to US$171.3 million. The year-over-year increase primarily reflects an increase in head count and related costs, as well as an increase in marketing expenses.
Operating Margin
Non-GAAP operating profit margin for the fiscal year 2009 was 43%, compared to 41% in 2008.
Income Tax Expense
For the fiscal year of 2009, excluding non-cash income tax expense of US$3.9 million recorded for the tax benefits from share-based awards, non-GAAP income tax expense was US$29.8 million, compared with US$9.0 million in the previous year.
Net Income
Before deducting the share of net income pertaining to the Non-Controlling Interest in Changyou, GAAP net income for the fiscal year 2009 was US$176.4 million, up 11% compared to 2008; non-GAAP net income for the fiscal year 2009 was US$197.7 million, up 17% compared to 2008.
After deducting the share of net income pertaining to the Non-Controlling Interest in Changyou, GAAP net income for the fiscal year 2009 was US$139.3 million, or US$3.57 per fully diluted share. Non-GAAP net income attributable to Sohu for the fiscal year 2009 was US$155.3 million, or US$3.98 per fully diluted share.
Supplementary Metrics for the Group's Online Game Results
Fourth Quarter 2009 Operational Results
Aggregate registered accounts for Changyou's games as of December 31, 2009 increased 8% quarter-over-quarter and 41% year-over-year to 80.9 million.
Aggregate peak concurrent users ("PCU") for Changyou's games was approximately 990,000, an increase of 9% quarter-over-quarter and an increase of 19% year-over-year.
Aggregate active paying accounts ("APA") for Changyou's games was flat quarter-over-quarter and increased 21% year-over-year to 2.4 million.
Average revenue per active paying account ("ARPU") for Changyou's games increased 3% quarter-over-quarter and 1% year-over-year to RMB196, which Changyou believes is within a range that is affordable for the majority of Chinese game players.
Fourth Quarter and Fiscal Year 2009 Revenues
Total revenues for the fourth quarter of 2009 increased 3% quarter-over-quarter and 21% year-over-year to US$70.7 million. Total revenues for the fiscal year 2009 were US$267.6 million, an increase of 33% from US$201.8 million for the fiscal year 2008.
Revenues from game operations for the fourth quarter of 2009 increased 3% quarter-over-quarter and 22% year-over-year to US$68.6 million. The sequential increase primarily reflects the growing popularity of Changyou's games. The year-over-year increase was mainly due to increased popularity of Changyou's flagship game, TLBB. Revenues from game operations for the fiscal year 2009 were US$259.8 million, an increase of 33% from US$194.6 million for the fiscal year 2008. The increase was mainly due to increased popularity of Changyou's flagship game, TLBB.
Overseas licensing revenues for the fourth quarter of 2009 increased 15% quarter-over-quarter and 5% year-over-year to US$2.1 million. Overseas licensing revenues for the fiscal year 2009 were US$7.8 million, an increase of 8% from US$7.2 million for the fiscal year 2008. The increase was mainly due to increased momentum of TLBB in Vietnam and Malaysia.
Stock Repurchase Program
During the fourth quarter of 2009, under the stock repurchase program approved by Board in the third quarter of 2008, Sohu repurchased 751,224 shares common stock at an average price of US$53.26, for total consideration of US$40.0 million.
As of December 31, 2009, Sohu had purchased 1,252,910 Sohu shares in the open market, at an average price of US$47.89 for a total consideration of US$60.0 million.
Ms. Carol Yu, Co-President and CFO of Sohu, commented, "Including our fourth quarter results, Sohu has generated record total revenues in eleven out of the past twelve quarters; an impressive accomplishment considering the challenging economic environment of 2009. We are very pleased with our results in 2009 as we consistently achieved balanced growth across our key businesses. Going forward into 2010, we are confident in our ability to leverage our strong balance sheet and sound business strategies to achieve sustainable growth that will deliver long-term value to our shareholders."
Business Outlook
Sohu estimates total revenues for the first quarter of 2010 to be between US$123.0 million and US$128.0 million, with advertising revenues of US$40.0 million to US$42.0 million.
Sohu estimates brand advertising revenues for the first quarter of 2010 to be between US$38.0 million and US$40.0 million.
Sohu estimates online game revenues for the first quarter of 2010 to be between US$70.0 million and US$73.0 million.
Sohu estimates non-GAAP net income for the first quarter of 2010, before deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest in Changyou, to be between US$45.0 million to US$47.5 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 first quarter of 2010 to be between US$31.0 million to US$33.0 million and non-GAAP fully diluted earnings per share for the first quarter of 2010 to be between US 78 cents and US 83 cents.
Taking into consideration impact of the recent new grants of share-based awards, Sohu estimates compensation expense and income tax expense related to share-based awards for the first quarter of 2010 to be between US$6.5 million and US$7.5 million, which includes Changyou's share-based compensation expense for the first quarter of 2010 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 first quarter of 2010 under US GAAP by US 14 cents to US 16 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 impact of share-based awards granted to employees on the consolidated statements of operations, which consists mainly of share-based compensation expense and non-cash tax benefits from excess tax deductions related to share-based awards. 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 impact of share-based awards from its non-GAAP financial measure is useful for itself and investors. Further, the impact of share-based awards 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 the impact of share-based awards 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, in general, the monthly financial results for internal reporting and any performance measure for commissions and bonuses are based on non-GAAP financial measures that exclude the impact of share-based awards.
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 the impact of share-based awards, is that the impact of share-based awards have been and will continue to be a significant recurring expense in Sohu's business for the foreseeable future. In order to mitigate these limitations Sohu has 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 that have been 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. Sohu cautions 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 in 2009, which could continue through 2010, the uncertain regulatory landscape in the People's Republic of China, fluctuations in Sohu's quarterly operating results, 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, February 1, 2010 (9:30 p.m. February 1, 2010 Beijing/Hong Kong time). To listen to the conference call, please use the dial in numbers below:
US: +1-480-629-9724
International: +852-3009-5027
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 February 8, 2010:
International: +852-3056-2777
Passcode: 4201220#
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 www.sohu.com; interactive search engine www.sogou.com; #1 games information portal www.17173.com; the top real estate website www.focus.cn; #1 online alumni club www.chinaren.com; wireless value-added services provider www.goodfeel.com.cn; leading online mapping service provider www.go2map.com; and developer and operator of online games 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 Group'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 fourteenth year of operation.
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
SOHU.COM INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Twelve Months Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2009 2009 2008 2009 2008
Revenues:
Advertising
Brand
advertising $ 45,876 $ 48,502 $ 45,024 $ 177,073 $ 169,268
Sponsored
search 2,929 2,292 1,625 8,552 6,669
Subtotal of
advertising
revenues 48,805 50,794 46,649 185,625 175,937
Online games 70,698 68,684 58,390 267,585 201,845
Wireless and
others 16,328 17,107 16,533 62,029 51,269
Total
revenues 135,831 136,585 121,572 515,239 429,051
Cost of revenues:
Advertising
Brand
advertising
(includes
share-based
compensation
expense of $141,
$149, $308, $787
and $1,200,
respectively) 16,238 15,418 15,266 59,451 59,443
Sponsored search
(includes
share-based
compensation
expense of $1,
$19, $3, $26
and $19,
respectively) 3,079 2,728 1,916 10,370 6,816
Subtotal of
cost of
advertising
revenues 19,317 18,146 17,182 69,821 66,259
Online games
(includes share-
based compensation
expense of $57,
$169, $4, $324
and $14,
respectively) 5,419 4,713 4,374 17,505 14,567
Wireless and others
(includes share-
based compensation
expense of $0, $11,
$1, $12 and $5,
respectively) 9,097 10,331 8,677 36,069 26,488
Total cost of
revenues 33,833 33,190 30,233 123,395 107,314
Gross profit 101,998 103,395 91,339 391,844 321,737
Operating expenses:
Product development
(includes share-
based compensation
expense of $1,952,
$2,204, $1,580,
$8,729 and $6,749,
respectively) 14,461 14,531 14,424 56,943 49,713
Sales and marketing
(includes share-
based compensation
expense of $96,
$152, $174, $747
and $896,
respectively) 25,405 25,457 19,500 93,498 84,691
General and
administrative
(includes
share-based
compensation
expense of
$1,687, $1,780,
$321, $6,694 and
$1,737,
respectively) 8,801 10,721 7,535 36,624 22,695
Amortization of
intangible assets 93 93 200 388 796
Total operating
expenses 48,760 50,802 41,659 187,453 157,895
Operating profit 53,238 52,593 49,680 204,391 163,842
Other income (expense) 239 40 (54) 342 (535)
Interest income and
exchange difference 1,136 1,469 1,221 5,001 4,288
Income before
income tax expense 54,613 54,102 50,847 209,734 167,595
Income tax expense
(benefit) 12,168 7,022 (5,745) 33,745 9,009
Income from
continuing
operations 42,445 47,080 56,592 175,989 158,586
Gain (Loss) from
discontinued
e-commerce
operations -- -- (0) 446 (0)
Net income 42,445 47,080 56,592 176,435 158,586
Less: Net
income(loss)
attributable to
the noncontrolling
interest 10,096 9,726 (33) 28,602 (51)
Net income
attributable to
Sohu.com Inc. 32,349 37,354 56,625 147,833 158,637
Basic net income
per share
attributable to
Sohu.com Inc. $ 0.84 $ 0.97 $ 1.48 $ 3.86 $ 4.16
Shares used in
computing basic
net income
per share
attributable to
Sohu.com Inc. 38,317 38,410 38,311 38,294 38,168
Diluted net income
per share
attributable to
Sohu.com Inc. $ 0.76 $ 0.88 $ 1.45 $ 3.57 $ 4.06
Shares used in
computing diluted
net income
per share
attributable to
Sohu.com Inc. 38,920 39,082 39,090 38,969 39,117
SOHU.COM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
As of Dec. 31, As of Dec. 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 563,782 $ 314,425
Accounts receivable, net 46,610 36,869
Prepaid and other current assets 10,781 27,551
Total current assets 621,173 378,845
Fixed assets, net 115,088 76,237
Goodwill 55,555 55,555
Intangible assets, net 7,933 5,654
Restricted cash -- 2,671
Other assets, net 28,524 2,914
Total assets $ 828,273 $ 521,876
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,602 $ 4,339
Accrued liabilities to suppliers and
agents 41,103 33,054
Receipts in advance and deferred
revenue 36,944 31,446
Tax payables 21,953 18,892
Other accrued liabilities 45,895 43,051
Total current liabilities 150,497 130,782
Shareholders' equity:
Sohu.com Inc. shareholders' equity 609,781 385,946
Noncontrolling interest 67,995 5,148
Total shareholders' equity 677,776 391,094
Total liabilities and
shareholders' equity $ 828,273 $ 521,876
SOHU.COM INC.
RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NON-GAAP NET INCOME EXCLUDING SHARE-BASED COMPENSATION EXPENSE
Three Months Ended Dec. 31, 2009
Non-GAAP
GAAP Adjustments (a) Non-GAAP
Advertising revenues $48,805 $-- $48,805
Less: Cost of advertising revenues 19,317 (142) 19,175
Advertising gross profit $29,488 $142 $29,630
Advertising gross margin 60% 61%
Online games revenues $70,698 $-- $70,698
Less: Cost of online games revenues 5,419 (57) 5,362
Online games gross profit $65,279 $57 $65,336
Online games gross margin 92% 92%
Wireless and others revenues $16,328 $-- $16,328
Less: Cost of wireless and others
revenues 9,097 -- 9,097
Wireless and others gross profit $7,231 $-- $7,231
Wireless and others gross margin 44% 44%
Total revenues $135,831 $-- $135,831
Less: Total cost of revenues 33,833 (199) 33,634
Gross profit $101,998 $199 $102,197
Gross margin 75% 75%
Operating expenses $48,760 $(3,735) $45,025
Operating profit $53,238 $3,934 $57,172
Operating margin 39% 42%
Income tax expense(benefit) $12,168 $(3,927) $8,241
Net income before Non-Controlling
Interest $42,445 $7,861 $50,306
Net income attributable to Sohu.com
Inc. $32,349 $6,996 $39,345
Diluted net income per share
attributable to Sohu.com Inc. $0.76 $0.92
Shares used in computing diluted net
income per share attributable to
Sohu.com Inc. 38,920 38,957
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%
Income tax expense(benefit) $7,022 $-- $7,022
Net income before Non-Controlling
Interest $47,080 $4,484 $51,564
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 Dec. 31, 2008
Non-GAAP
GAAP Adjustments (a) Non-GAAP
Advertising revenues $46,649 $-- $46,649
Less: Cost of advertising revenues 17,182 (311) 16,871
Advertising gross profit $29,467 $311 $29,778
Advertising gross margin 63% 64%
Online games revenues $58,390 $-- $58,390
Less: Cost of online games revenues 4,374 (4) 4,370
Online games gross profit $54,016 $4 $54,020
Online games gross margin 93% 93%
Wireless and others revenues $16,533 $-- $16,533
Less: Cost of wireless and others
revenues 8,677 (1) 8,676
Wireless and others gross profit $7,856 $1 $7,857
Wireless and others gross margin 48% 48%
Total revenues $121,572 $-- $121,572
Less: Total cost of revenues 30,233 (316) 29,917
Gross profit $91,339 $316 $91,655
Gross margin 75% 75%
Operating expenses $41,659 $(2,075) $39,584
Operating profit $49,680 $2,391 $52,071
Operating margin 41% 43%
Income tax expense(benefit) $(5,745) $-- $(5,745)
Net income before Non-Controlling
Interest $56,592 $2,391 $58,983
Net income attributable to Sohu.com
Inc. $56,625 $2,391 $59,016
Diluted net income per share
attributable to Sohu.com Inc. $1.45 $1.5
Shares used in computing diluted net
income per share attributable to
Sohu.com Inc. 39,090 39,281
Note:
(a) To eliminate the impact of share-based awards 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
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NON-GAAP NET INCOME EXCLUDING SHARE-BASED COMPENSATION EXPENSE
Twelve Months Ended Dec. 31, 2009
Non-GAAP
GAAP Adjustments (a) Non-GAAP
Advertising revenues $185,625 $-- $185,625
Less: Cost of advertising revenues 69,821 (813) 69,008
Advertising gross profit $115,804 $813 $116,617
Advertising gross margin 62% 63%
Online games revenues $267,585 $-- $267,585
Less: Cost of online games revenues 17,505 (324) 17,181
Online games gross profit $250,080 $324 $250,404
Online games gross margin 93% 94%
Wireless and others revenues $62,029 $-- $62,029
Less: Cost of wireless and others
revenues 36,069 (12) 36,057
Wireless and others gross profit $25,960 $12 $25,972
Wireless and others gross margin 42% 42%
Total revenues $515,239 $-- $515,239
Less: Total cost of revenues 123,395 (1,149) 122,246
Gross profit $391,844 $1,149 $392,993
Gross margin 76% 76%
Operating expenses $187,453 $(16,170) $171,283
Operating profit $204,391 $17,319 $221,710
Operating margin 40% 43%
Income tax expense $33,745 $(3,927) $29,818
Net income before Non-Controlling
Interest $176,435 $21,246 $197,681
Net income attributable to Sohu.com
Inc. $147,833 $18,012 $165,845
Diluted net income per share
attributable to Sohu.com Inc. $3.57 $3.98
Shares used in computing diluted net
income per share attributable to
Sohu.com Inc. 38,969 39,051
Twelve Months Ended Dec. 31, 2008
Non-GAAP
GAAP Adjustments (a) Non-GAAP
Advertising revenues $175,937 $-- $175,937
Less: Cost of advertising revenues 66,259 (1,219) 65,040
Advertising gross profit $109,678 $1,219 $110,897
Advertising gross margin 62% 63%
Online games revenues $201,845 $-- $201,845
Less: Cost of online games revenues 14,567 (14) 14,553
Online games gross profit $187,278 $14 $187,292
Online games gross margin 93% 93%
Wireless and others revenues $51,269 $-- $51,269
Less: Cost of wireless and others
revenues 26,488 (5) 26,483
Wireless and others gross profit $24,781 $5 $24,786
Wireless and others gross margin 48% 48%
Total revenues $429,051 $-- $429,051
Less: Total cost of revenues 107,314 (1,238) 106,076
Gross profit $321,737 $1,238 $322,975
Gross margin 75% 75%
Operating expenses $157,895 $(9,382) $148,513
Operating profit $163,842 $10,620 $174,462
Operating margin 38% 41%
Income tax expense $9,009 $-- $9,009
Net income before Non-Controlling
Interest $158,586 $10,620 $169,206
Net income attributable to Sohu.com
Inc. $158,637 $10,620 $169,257
Diluted net income per share
attributable to Sohu.com Inc. $4.06 $4.29
Shares used in computing diluted net
income per share attributable to
Sohu.com Inc. 39,117 39,417
Note:
(a) To eliminate the impact of share-based awards as measured using the
fair value method.
(b) Certain amounts from prior periods have been reclassified to conform
with current period presentation.
