omniture

Sohu.com Reports First Quarter 2019 Unaudited Financial Results

2019-04-29 13:26 6371

BEIJING, April 29, 2019 /PRNewswire/ -- Sohu.com Limited (NASDAQ: SOHU), China's leading online media, video, search and gaming business group, today reported unaudited financial results for the first quarter ended March 31, 2019.

First Quarter Highlights

  • Total revenues were US$431 million[1], down 5% year-over-year and 11% quarter-over-quarter.
  • Brand advertising revenues were US$43 million, down 24% year-over-year and 25% quarter-over-quarter.
  • Search and search related advertising revenues[2] were US$234 million, up 6% year-over-year and down 15% quarter-over-quarter.
  • Online game revenues were US$99 million, down 6% year-over-year and up 5% quarter-over-quarter.
  • Excluding a US$6 million impairment of intangibles via acquisitions of businesses (net of tax effects) recognized in this quarter, operating loss for Sohu Video was US$27 million, compared with a loss of US$48 million in the first quarter 2018.
  • GAAP net loss attributable to Sohu.com Limited was US$57 million, compared with a net loss of US$93 million in the first quarter of 2018.
  • Non-GAAP net loss attributable to Sohu.com Limited was US$55 million. Excluding the effect of the aforementioned impairment of intangibles via acquisitions of businesses, net of tax effects, Non-GAAP net loss attributable to Sohu.com Limited was US$48 million, compared with a net loss of US$97 million in the first quarter of 2018.
  • Further excluding the profit/loss generated by Sogou and Changyou, the Non-GAAP net loss attributable to Sohu.com Limited was US$72 million, compared with a net loss of US$93 million in the first quarter of 2018.

 

[1] On a constant currency (non-GAAP) basis, if the exchange rate in the first quarter of 2019 had been the same as it was in the first quarter of 2018, or RMB6.36=US$1.00, US$ total revenues in the first quarter of 2019 would have been US$457 million, or US$26 million more than GAAP total revenues, and up 1% year-over-year.

[2] Search and Search related advertising revenues exclude intra-Group transactions.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Limited, commented, "In the first quarter, we delivered better-than-expected revenue, mainly driven by the solid performance of our search and game businesses. Sohu Media continued to make progress upgrading its products and content on our platform and we explored new ways to diversify revenue sources. Sohu Video consistently offered appealing self-developed dramas and its financial loss continued to narrow due to strict cost controls. For Sogou, the user base of its mobile search and keyboard products further expanded while its core search revenue grew faster than the industry. In the first quarter, Changyou's revenue and profit exceeded guidance as the TLBB PC game performed very well during the Chinese New Year holidays."

First Quarter Financial Results 

Revenues

Total revenues for the first quarter of 2019 were US$431 million, down 5% year-over-year and 11% quarter-over-quarter.

Total online advertising revenues, which include revenues from the brand advertising and search and search-related advertising businesses, for the first quarter of 2019 were US$277 million, flat year-over-year and down 17% quarter-over-quarter.

Brand advertising revenues for the first quarter of 2019 totaled US$43 million, down 24% year-over-year and 25% quarter-over-quarter. The decrease was mainly due to decreases in portal and video advertising revenues.

Search and search-related advertising revenues for the first quarter of 2019 were US$234 million, up 6% year-over-year and down 15% quarter-over-quarter.

Online game revenues for the first quarter of 2019 were US$99 million, down 6% year-over-year and up 5% quarter-over-quarter. The year-over-year decrease was due to the natural decline in revenue of Changyou's older games, including Legacy TLBB Mobile. The quarter-over-quarter increase was mainly due to the better-than-expected performance of TLBB PC, which resulted primarily from in-game promotional events around the Chinese Spring Festival in the first quarter of 2019.

Gross Margin

Both GAAP and non-GAAP[3] gross margin was 40% for the first quarter of 2019, compared with 43% in the first quarter of 2018 and 43% in the fourth quarter of 2018.

Both GAAP and non-GAAP gross margin for the online advertising business for the first quarter of 2019 was 23%, compared with 29% in the first quarter of 2018 and 32% in the fourth quarter of 2018.

GAAP gross margin for the brand advertising business in the first quarter of 2019 was 20%, compared with 10% in the first quarter of 2018 and 26% in the fourth quarter of 2018. Non-GAAP gross margin for the brand advertising business was 20%, compared with 9% in the first quarter of 2018 and 26% in the fourth quarter of 2018. The year-over-year margin improvement was mainly due to decreased video content cost. The quarter-over-quarter decrease was mainly due to decreased brand advertising revenue.

Both GAAP and non-GAAP gross margin for the search and search-related advertising business in the first quarter of 2019 was 24%, compared with 34% in the first quarter of 2018 and 34% in the fourth quarter of 2018. The year-over-year and quarter-over-quarter decrease primarily resulted from increases in traffic acquisition costs outpacing revenue growth.

Both GAAP and non-GAAP gross margin for online games in the first quarter of 2019 was 86%, compared with 84% in the first quarter of 2018 and 85% in the fourth quarter of 2018. 

[3] Non-GAAP results exclude share-based compensation expense; non-cash tax benefits from excess tax deductions related to share-based awards; changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values; income/expense from the adjustment of contingent consideration previously recorded for acquisitions; dividends and deemed dividends to non-controlling preferred shareholders of Sogou; a one-time income tax expense recognized in the fourth quarter of 2017 as a result of the one-time transition tax (the "Toll Charge") imposed by the U.S. Tax Cuts and Jobs Act signed into law on December 22, 2017 (the "TCJA"); the subsequent re-evaluation for the fourth quarter of 2018 and adjustment of the tax expense previously recognized for the Toll Charge; the resulting recognition of a previously unrecognized tax benefit and recording of an uncertain tax position related to the balance of the Toll Charge; and interest accrued in relation to the previously unrecognized tax benefit. 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."

Operating Expenses

For the first quarter of 2019, GAAP operating expenses totaled US$217 million, down 4% year-over-year and 15% quarter-over-quarter. Non-GAAP operating expenses were US$215 million, down 6% year-over-year and 15% quarter-over-quarter. The year-over-year decrease in operating expenses was mainly due to decreases in salary and benefit expenses. The quarter-over-quarter decrease was mainly due to decreased product development and marketing expenses at Sogou, and an impairment charge recognized by Changyou in the fourth quarter of 2018 related to its 17173.com website business.

Operating Loss

GAAP operating loss for the first quarter of 2019 was US$46 million, compared with an operating loss of US$31 million in the first quarter of 2018 and an operating loss of US$48 million in the fourth quarter of 2018.

Non-GAAP operating loss for the first quarter of 2019 was US$44 million, compared with an operating loss of US$34 million in the first quarter of 2018 and an operating loss of US$46 million in the fourth quarter of 2018. 

Income Tax Expense

GAAP income tax expense was US$11 million for the first quarter of 2019, compared with income tax expense of US$63 million in the first quarter of 2018 and income tax benefit of US$70 million in the fourth quarter of 2018. Non-GAAP income tax expense was US$9 million for the first quarter of 2019, compared with income tax expense of US$63 million in the first quarter of 2018 and income tax expense of US$5 million in the fourth quarter of 2018.

The income tax expense for the first quarter of 2018 included Changyou's accrual of additional withholding income taxes of US$47 million for the period before December 31, 2017 recognized in relation to a change in policy for Changyou's PRC subsidiaries with respect to their distribution of cash dividends.

The income tax benefit recognized in the fourth quarter of 2018 resulted from management's re-evaluation and adjustment of the tax expense previously recognized in the fourth quarter of 2017 for the one-time transition tax (the "Toll Charge") imposed by the U.S. Tax Cuts and Jobs Act (the "TCJA"), and interest accrued in relation to the unrecognized tax benefit[4].

[4] The tax benefit recognized and the unrecognized tax benefit in relation to the Toll Charge may be subject to further adjustment in subsequent periods based on future facts and circumstances and on management's further judgment and estimates.

Net Income/(Loss)

GAAP net loss attributable to Sohu.com Limited for the first quarter of 2019 was US$57 million, or US$1.44 loss per fully-diluted ADS, compared with a net loss of US$93 million in the first quarter of 2018 and a net income of US$15 million in the fourth quarter of 2018. Non-GAAP net loss attributable to Sohu.com Limited for the first quarter of 2019 was US$55 million, or US$1.39 loss per fully-diluted ADS, compared with a net loss of US$97 million in the first quarter of 2018 and a net loss of US$59 million in the fourth quarter of 2018. 

Liquidity

As of March 31, 2019, cash and cash equivalents and short-term investments held by the Sohu Group, minus short-term bank loans, were US$1.75 billion, compared with US$1.73 billion as of December 31, 2018.

Business Outlook

For the second quarter of 2019, Sohu estimates:

  • Total revenues to be between US$469 million and US$494 million.
  • Brand advertising revenues to be between US$47 million and US$52 million; this implies an annual decrease of 15% to 24% and a sequential increase of 9% to 21%.
  • Sogou revenues to be between US$303 million and US$313 million; this implies an annual increase of 1% to 4% and a sequential increase of 20% to 24%.
  • Online game revenues to be between US$90 million and US$100 million; this implies an annual decrease of 5% to an annual increase of 6% and a sequential decrease of 9% to a sequential increase of 1%.
  • Non-GAAP net loss attributable to Sohu.com Limited. to be between US$38 million and US$48 million, and non-GAAP loss per fully-diluted ADS to be between US$0.95 and US$1.20. GAAP net loss attributable to Sohu.com Limited to be between US$40 million and US$50 million, and GAAP loss per fully-diluted ADS to be between US$1.00 and US$1.25.
  • Excluding the profit/loss generated by Sogou and Changyou, Non-GAAP net loss attributable to Sohu.com Limited. to be between US$65 million and US$70 million, GAAP net loss attributable to Sohu.com Limited to be between US$67million and US$72 million.

For the second quarter 2019 guidance, the Company has adopted a presumed exchange rate of RMB6.80=US$1.00, as compared with the actual exchange rate of approximately RMB6.38=US$1.00 for the second quarter of 2018, and RMB6.74=US$1.00 for the first quarter of 2019. 

Non-GAAP Disclosure

To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"), Sohu's management uses non-GAAP measures of gross profit, operating profit, net income, net income attributable to Sohu.com Limited and diluted net income attributable to Sohu.com Limited per share, which are adjusted from results based on GAAP to exclude the impact of the share-based awards, which consist mainly of share-based compensation expenses and non-cash tax benefits from excess tax deductions related to share-based awards;  changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values; income/expense from the adjustment of contingent consideration previously recorded for acquisitions; dividend and deemed dividend to non-controlling preferred shareholders; the one-time income tax expense recognized in the fourth quarter of 2017 as a result of the Toll Charge imposed by the TCJA and the subsequent re-evaluation for the fourth quarter of 2018 and adjustment of the tax expense previously recognized for the Toll Charge; the resulting recognition of a previously unrecognized tax benefit and recording of an uncertain tax position related to the balance of the Toll Charge; and interest expense recognize in connection with the Toll Charge. 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 share-based compensation expense,  changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values; non-cash tax benefits from excess tax deductions related to share-based awards; income/expense from the adjustment of contingent consideration previously recorded for acquisitions; dividend and deemed dividend to non-controlling preferred shareholders; and income tax expense, income tax benefit, uncertain tax position, and interest recognized in relation to the Toll Charge from its non-GAAP financial measure is useful for itself and investors. Further, the impact of share-based compensation expense and  changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values; non-cash tax benefits from excess tax deductions related to share-based awards; income/expense from the adjustment of contingent consideration previously recorded for acquisitions; dividend and deemed dividend to non-controlling preferred shareholders; the one-time income tax expense recognized in the fourth quarter of 2017 as a result of the Toll Charge imposed by the TCJA and the subsequent re-evaluation for the fourth quarter of 2018 and adjustment of the tax expense previously recognized for the Toll Charge; the resulting recognition of a previously unrecognized tax benefit and recording of an uncertain tax position related to the balance of the Toll Charge; and interest expense recognized in connection with the Toll Charge cannot 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 the impact of share-based compensation expense and changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders does not involve subsequent cash outflow or is reflected in the cash flows at the equity transaction level, Sohu does not factor this impact 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 measures for commissions and bonuses are based on non-GAAP financial measures that exclude share-based compensation expense and  changes in fair value recognized in the Company's consolidated statements of operations with respect to equity investments with readily determinable fair values, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, and dividend and deemed dividend to non-controlling preferred shareholders, and also excluded the one-time income tax expense recognized in the fourth quarter of 2017 as a result of the Toll Charge imposed by the TCJA and the subsequent re-evaluation for the fourth quarter of 2018 and adjustment of the tax expense previously recognized for the Toll Charge, the resulting recognition of a previously unrecognized tax benefit and recording of an uncertain tax position related to the balance of the Toll Charge, and interest expense recognized in connection with the Toll Charge.

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, net income, net income attributable to Sohu.com Limited and diluted net income attributable to Sohu.com Limited per share, excluding share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards, income/expense from the adjustment of contingent consideration previously recorded for acquisitions, dividend, and deemed dividend to non-controlling preferred shareholders is that the impact of share-based awards and non-cash tax benefits from excess tax deductions related to share-based awards has been and will continue to be a significant recurring expense in Sohu's business for the foreseeable future, income/expense from the adjustment of contingent consideration previously recorded for acquisitions may recur in the future, and dividend and deemed dividend to non-controlling preferred shareholders may recur when Sohu and its affiliates enter into equity transactions. 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 derived from Sohu's unaudited interim 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 US dollar results; recent slow-downs in the growth of the Chinese economy; the uncertain regulatory landscape in the People's Republic of China; fluctuations in Sohu's quarterly operating results; Sohu's current and projected future losses due to increased spending by Sohu for video content; the possibilities that Sohu will be unable to recoup its investment in video content and that Changyou will be unable to develop a series of successful games for mobile platforms or successfully monetize mobile games it develops or acquires; Sohu's reliance on online advertising sales, online games and mobile services for its revenues; and the impact of the U.S. TCJA. Further information regarding these and other risks is included in Sohu's annual report on Form 20-F for the year ended December 31, 2018, 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. U.S. Eastern Time, April 29, 2019 (8:30 p.m. Beijing/Hong Kong time, April 29, 2019) following the quarterly results announcement.

The dial-in details for the live conference call are:

US Toll-Free:

+1-866-519-4004

International:

+65-6713-5090

Hong Kong:

+852-3018-6771

China Mainland

+86-800-819-0121 / +86-400-620-8038

Passcode:

SOHU

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call at 11:30 a.m. Eastern Time on April 29 through May 6, 2019. The dial-in details for the telephone replay are:

International:

+1-646-254-3697

Passcode:

8449498

The live Webcast and archive of the conference call will be available on the Investor Relations section of Sohu's Website at http://investors.sohu.com/.

About Sohu.com

Sohu.com Limited (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; developer and operator of online games www.changyou.com/en/ and leading online video website tv.sohu.com.

Sohu's corporate services consist of online brand advertising on Sohu's matrix of websites as well as bid listing and home page on its in-house developed search directory and engine. Sohu also provides multiple news and information services on mobile platforms, including Sohu News App and the mobile news portal m.sohu.com. Sohu's online game subsidiary, Changyou.com (NASDAQ: CYOU) develops and operates a diverse portfolio of PC and mobile games, such as Tian Long Ba Bu ("TLBB"), one of the most popular PC games in China. Changyou also owns and operates the 17173.com Website, a leading game information portal in China. Sohu's online search subsidiary Sogou (NYSE: SOGO) has grown to become the second largest search engine by mobile queries in China. It also owns and operates Sogou Input Method, the largest Chinese language input software. Sohu.com, established by Dr. Charles Zhang, one of China's internet pioneers, is in its twenty-third year of operation.

For investor and media inquiries, please contact:

In China:

Ms. Pu Huang

Sohu.com Limited

Tel:

+86 (10) 6272-6645

E-mail:

ir@contact.sohu.com

In the United States:


Ms. Linda Bergkamp

Christensen

Tel:

+1 (480) 614-3004

E-mail:

lbergkamp@christensenir.com

 

 


SOHU.COM LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)




Three Months Ended




Mar. 31, 2019


Dec. 31, 2018


Mar. 31, 2018


Revenues:








Online advertising








        Brand advertising

$

42,981

$

57,222

$

56,254


        Search and search-related advertising


234,130


276,666


220,301


             Subtotal


277,111


333,888


276,555


Online games


99,054


94,106


105,461


Others


55,215


54,204


72,979


                   Total revenues


431,380


482,198


454,995










Cost of revenues:








Online advertising








       Brand advertising (includes stock-based
compensation expense of $38, $-34, and $-657,
respectively)


34,305


42,485


50,611


Search and search-related (includes stock-based
compensation expense of $27, $$-48, and $219
respectively)


178,824


183,678


144,696


Subtotal


213,129


226,163


195,307


Online games (includes stock-based compensation
expense of $0, $7, and $-12, respectively)


14,362


14,499


17,119


Others


32,734


35,633


48,407


        Total cost of revenues


260,225


276,295


260,833










Gross profit


171,155


205,903


194,162










Operating expenses:








Product development (includes stock-based
compensation expense of $1,019, $919, and $715,
respectively)


100,434


108,611


111,543


Sales and marketing (includes stock-based
compensation expense of $120, $216, and $-89,
respectively)


85,454


102,112


90,273


General and administrative (includes stock-based
compensation expense of $911, $470, and $-2,520,
respectively)


23,833


26,828


23,836


Goodwill impairment and impairment of intangibles via
acquisitions of businesses


7,245


16,369[5]


-


       Total operating expenses


216,966


253,920


225,652










Operating loss


(45,811)


(48,017)


(31,490)










Other  income


14,215


13,073


12,281


Interest income


3,795


6,457


7,808


Interest expense


(5,501)


(5,279)


(3,081)


Exchange difference


(2,662)


(378)


(9,340)


Loss before income tax expense


(35,964)


(34,144)


(23,822)


 

Income tax expense/(benefit)


11,208


(69,557)


63,379


Net income/(loss)


(47,172)


35,413


(87,201)










Less: Net income attributable to the noncontrolling
interest shareholders


9,257


20,773


5,617


 

Net income/(loss) attributable to Sohu.com Limited


(56,429)


14,640


(92,818)










Basic net income/(loss) per ADS attributable to Sohu.com 
Limited

$

(1.44)

$

0.37

$

(2.39)


ADS used in computing basic net loss per ADS attributable
to Sohu.com Limited


39,236


39,069


38,904










Diluted net income/(loss) per ADS attributable to Sohu.com
Limited

$

(1.44)

$

0.37

$

(2.39)


ADS used in computing diluted net loss per ADS
attributable to Sohu.com Limited


39,236


39,234


38,904


 

[5] The impairment was mainly related to Changyou's 17173.com website business. The launch of new initiatives for the 17173.com website fell behind schedule in the fourth quarter of 2018, and the profit outlook of the business remained uncertain. In addition, due to more stringent regulations, there was a significant decline in the number of new game launches in the market, so the number of games marketed on 17173.com also fell. As a result, Changyou determined that the future performance of 17173.com would likely fall short of expectations, and that impairment charges were required.

 

SOHU.COM LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)




As of Mar. 31, 2019


As of Dec. 31, 2018

ASSETS





Current assets:





           Cash and cash equivalents

$

838,582

$

819,713

Restricted cash


6,096


5,974

Short-term investments


1,043,372


1,041,395

           Accounts receivable, net


186,112


242,361

           Prepaid and other current assets


203,960


207,117

                     Total current assets


2,278,122


2,316,560

Long-term investments


110,433


108,356

Fixed assets, net


511,235


504,998

Goodwill


53,666


53,263

Intangible assets, net


14,954


24,118

Restricted time deposits


178,483


244,179

Prepaid non-current assets


2,850


3,107

Other assets[6]


70,269


43,928

                         Total assets

$

3,220,012

$

3,298,509






LIABILITIES





Current liabilities:





           Accounts payable

$

337,962

$

295,954

           Accrued liabilities


288,273


301,915

           Receipts in advance and deferred revenue


120,168


124,782

           Accrued salary and benefits


92,488


112,898

           Taxes payable


89,119


93,569

           Short-term bank loans


132,175


129,677

           Other short-term liabilities[6]


135,530


124,085

                     Total current liabilities

$

1,195,715

$

1,182,880






Long-term accounts payable


766


752

Long-term Bank Loans 


223,889


302,323

Long-term tax liabilities


263,432


259,603

Other long-term liabilities[6]


12,395


-

Total long-term liabilities

$

500,482

$

562,678

                         Total liabilities

$

1,696,197

$

1,745,558






SHAREHOLDERS' EQUITY:





          Sohu.com Limited shareholders' equity


535,285


588,840

          Noncontrolling Interest


988,530


964,111

                     Total shareholders' equity

$

1,523,815

$

1,552,951






Total liabilities and shareholders' equity 

$

3,220,012

$

3,298,509

 

[6] We have adopted ASU No. 2016-02, "Leases," beginning January 1, 2019. As a result of adoption of the standard, we recognized a right-of-use asset of approximately $25 million in other assets, and a lease liability of approximately $10 million and $12 million in other short-term liabilities and other long-term liabilities, respectively, on our consolidated balance sheet as of March 31, 2019.

 

 

SOHU.COM LIMITED

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)




Three Months Ended Mar. 31, 2019


Three Months Ended Dec. 31, 2018


Three Months Ended Mar. 31, 2018



GAAP


Non-GAAP
Adjustments


Non-GAAP


GAAP


Non-GAAP
Adjustments


Non-GAAP


GAAP


Non-GAAP
Adjustments


Non-GAAP
























38

(a)





(34)

(a)





(657)

(a)


Brand advertising gross profit

$

8,676

$

38

$

8,714

$

14,737

$

(34)

$

14,703

$

5,643

$

(657)

$

4,986

Brand advertising gross
margin


20%




20%


26%




26%


10%




9%





27

(a)





(48)

(a)





219

(a)


Search and search-related 
advertising gross profit

$

55,306

$

27

$

55,333

$

92,988

$

(48)

$

92,940

$

75,605

$

219

$

75,824

Search and search-related 
advertising gross margin


24%




24%


34%




34%


34%




34%
























65

(a)





(82)

(a)





(438)

(a)


Online advertising gross profit

$

63,982

$

65

$

64,047

$

107,725

$

(82)

$

107,643

$

81,248

$

(438)

$

80,810

Online advertising gross
margin


23%




23%


32%




32%


29%




29%
























-

(a)





7

(a)





(12)

(a)


Online games gross profit

$

84,692

$

-

$

84,692

$

79,607

$

7

$

79,614

$

88,342

$

(12)

$

88,330

Online games gross margin


86%




86%


85%




85%


84%




84%







































Others gross profit

$

22,481

$

-

(a) $

22,481

$

18,571

$

-

(a) $

18,571

$

24,572

$

-

(a) $

24,572

Others gross margin


41%




41%


34%




34%


34%




34%











































65

(a)





(75)

(a)





(450)

(a)


Gross profit

$

171,155

$

65

$

171,220

$

205,903

$

(75)

$

205,828

$

194,162

$

(450)

$

193,712

Gross margin


40%




40%


43%




43%


43%




43%







































Operating expenses

$

216,966

$

(2,050)

(a) $

214,916

$

253,920

$

(1,605)

(a) $

252,315

$

225,652

$

1,894

(a) $

227,546











































2,115

(a)





1,530

(a)





(2,344)

(a)


Operating loss

$

(45,811)

$

2,115

$

(43,696)

$

(48,017)

$

1,530

$

(46,487)

$

(31,490)

$

(2,344)

$

(33,834)

Operating margin


-11%




-10%


-10%




-10%


-7%




-7%


























































Income tax benefit/(expense)

$

(11,208)

$

1,778

(c,d)$

(9,430)

$

69,557

$

(74,160)

(c,d)$

(4,603)

$

(63,379)

$

-

$

(63,379)

















































































2,115

(a)





1,530

(a)





(2,344)

(a)






(744)

(c)





267

(c)





-







1,531

(d)





(74,071)

(d)





-



Net income/(loss) before non-
controlling interest

$

(47,172)


2,902


(44,270)

$

35,413


(72,274)


(36,861)

$

(87,201)

$

(2,344)

$

(89,545)











































2,115

(a)





1,530

(a)





(2,344)

(a)






(798)

(b)





(976)

(b)





(2,102)

(b)






(744)

(c)





267

(c)





-







1,531

(d)





(74,071)

(d)





-

(d)


Net income/(loss) attributable
to Sohu.com Limited for
diluted net loss per ADS

$

(56,650)


2,104


(54,546)

$

14,511


(73,250)


(58,739)

$

(92,925)

$

(4,446)


(97,371)


Diluted net income/(loss) per
ADS attributable to Sohu.com
Limited

$

(1.44)




(1.39)

$

0.37




(1.50)

$

(2.39)




(2.50)

 

Shares used in computing
diluted net  loss  per ADS
attributable to Sohu.com
Limited


39,236




39,236


39,234




39,069


38,904




38,904







































Note:

(a)    To eliminate the impact of share-based awards as measured using the fair value method. This adjustment does not have an impact on income tax expense.

(b)   To adjust Sohu's economic interests in Changyou and Sogou attributable to the above non-GAAP adjustments. This adjustment does not have an impact on income tax expense.

(c)    To adjust for a change in the fair value of the Company's investment in Hylink and the income tax effect.

(d)   To adjust for the effect of the U.S. TCJA.

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/sohucom-reports-first-quarter-2019-unaudited-financial-results-300839564.html

Source: Sohu.com Ltd.
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