GAAP operating expenses were US$45 million, a decrease of 12% year-over-year and
43% quarter-over-quarter. The year-over-year decrease was mainly due to a decrease in outsourcing and licensing fees related to product development. The quarter-over-quarter decrease was mainly due to a decrease in marketing and promotional spending
for online games.
Non-GAAP operating expenses were US$45 million, a decrease of 11%
year-over-year and 43% quarter-over-quarter.
GAAP operating profit was US$62 million, compared with US$51 million for the
third quarter of 2023 and US$32 million for the second quarter of 2024.
Non-GAAP operating
profit was US$62 million, compared with US$52 million for the third quarter of 2023 and US$32 million for the second quarter of 2024.
Recent Development
Sohu today announced that on
November 9, 2024 its board of directors authorized an additional one year to the period of Sohu’s previously-announced share repurchase program, from the previous end date of November 10, 2025 to November 10, 2026. As previously
announced, Sohu may purchase up to US$150 million of the outstanding ADSs of Sohu from time to time under the program at Sohu’s management’s discretion at prevailing market prices in accordance with Rule
10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934. Sohu’s management will continue to determine the timing and amount of any purchases of ADSs based
on their evaluation of market conditions, the trading price of ADSs and other factors. The share repurchase program may be suspended or discontinued at any time. Sohu plans to continue to fund repurchases from its existing cash balance. As of
November 7, 2024, Sohu had repurchased 3,380,361 ADSs under the share repurchase program for an aggregate cost of approximately US$42 million.
Business Outlook
For the fourth quarter of 2024, Sohu
estimates:
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Brand advertising revenues to be between US$17 million and US$19 million; this implies an annual
decrease of 6% to 16%, and a sequential decrease of 9% to a sequential increase of 2%. |
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Online game revenues to be between US$97 million and US$107 million; this implies an annual decrease of
7% to 15%, and a sequential decrease of 16% to 24%. |
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Non-GAAP net loss attributable to Sohu.com Limited to be between
US$26 million and US$36 million; and GAAP net loss attributable to Sohu.com Limited to be between US$30 million and US$40 million. |
For the fourth quarter 2024 guidance, the Company has adopted a presumed exchange rate of RMB7.10=US$1.00, as compared with the actual exchange rate of
approximately RMB7.15=US$1.00 for the fourth quarter of 2023, and RMB7.12=US$1.00 for the third quarter of 2024.
This forecast reflects Sohu’s
management’s current and preliminary view, which is subject to substantial uncertainty.
Non-GAAP
Disclosure
To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in 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 ADS, which are adjusted from results based on GAAP to exclude the impact of share-based compensation expense; changes in fair value recognized in the Company’s consolidated statements of operations with
respect to the Company’s investments; and interest expense recognized in connection with the Toll Charge imposed by the U.S. TCJA. 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 the Company’s investments; and interest expense recognized in connection with the Toll Charge from its non-GAAP
financial measure is useful for itself and investors. Further, the impact of share-based compensation expense; changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s
investments; 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 share-based compensation expense and changes in fair value recognized in the Company’s consolidated statements of operations with respect
to the Company’s investments do not involve subsequent cash outflow or are reflected in the cash flows at the equity transaction level, Sohu does not factor in their impact when evaluating and approving expenditures or when determining the
allocation of its resources to its business segments. As a result, in general, the monthly financial results for internal reporting and any performance measures for commissions and bonuses are based on
non-GAAP financial measures that exclude share-based compensation expense, changes in fair value recognized in the Company’s consolidated statements of operations with respect to the Company’s
investments, and interest expense recognized in connection with the Toll Charge.
