Asia
Sohu.com Reports Second Quarter 2020 Unaudited Financial Results
Sohu.com Limited, China’s leading online media, video, search and gaming business group, reported unaudited financial results for the second quarter ended June 30, 2020.
Second Quarter Highlights[1]
The privatization of Changyou was completed on April 17, 2020. After the effectiveness of the transaction, Changyou’s net income/loss was wholly attributable to Sohu.com Limited. For the second quarter of 2020, Changyou recognized an additional accrual of withholding income tax of US$88 million, as Changyou changed its policy for its PRC subsidiaries with respect to distribution of cash dividends after the completion of the privatization.
Total revenues were US$421 million[2], down 9% year-over-year and 3% quarter-over-quarter.
Brand advertising revenues were US$38 million, down 14% year-over-year and up 48% quarter-over-quarter.
Search and search related advertising revenues[3] were US$241 million, down 13% year-over-year and up 1% quarter-over-quarter.
Online game revenues were US$106 million, up 4% year-over-year and down 21% quarter-over-quarter.
GAAP net loss attributable to Sohu.com Limited was US$80 million. Excluding the impact of the additional accrual of withholding income tax described above, GAAP net income attributable to Sohu.com Limited was US$8 million, compared with a net loss of US$35 million in the second quarter of 2019 and a net loss of US$20 million in the first quarter of 2020.
Excluding the impact of the additional accrual of withholding income tax described above, non-GAAP net income attributable to Sohu.com Limited was US$11 million. Further excluding the loss generated by Sogou, non-GAAP net income attributable to Sohu.com Limited was US$12 million, compared with a net loss of US$41 million in the second quarter of 2019 and a net loss of US$8 million in the first quarter of 2020.
Dr. Charles Zhang, Chairman and CEO of Sohu.com Limited, commented, “In the second quarter of 2020, our brand advertising business performed well, the brand advertising revenue had a decent increase, up 48% quarter-over-quarter. Both the brand advertising revenue and bottom line exceeded our prior guidance. During the quarter, we integrated our Media Portal’s brand advantage and influence with Sohu Video’s advanced broadcast technologies. These initiatives allowed us to more effectively generate and distribute our high-quality original content, and further enhanced our credibility by reflecting the attitude and values of Sohu. For Changyou, the privatization was completed on April 17, 2020, and after that Changyou’s net income/loss was wholly attributable to Sohu.com Limited. During the second quarter of 2020, online game revenues met our prior guidance and declined quarter-over-quarter, mainly due to the resumption of work following the easing of COVID-19 restrictions. For Sogou, it delivered in-line results in the second quarter with Search maintaining a steady share of traffic and Mobile Keyboard further expanding its DAU base.”
[1] As Changyou’s cinema advertising business ceased operations during the third quarter of 2019, its results of operations have been excluded from the Company’s results from continuing operations in the condensed consolidated statements of operations and are presented in separate line items as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Unless indicated otherwise, results presented in this release are related to continuing operations only, and exclude results from the cinema advertising business.
[2] On a constant currency (non-GAAP) basis, if the exchange rate in the second quarter of 2020 had been the same as it was in the second quarter of 2019, or RMB6.81=US$1.00, US$ total revenues in the second quarter of 2020 would have been US$438 million, or US$17 million more than GAAP total revenues, and down 5% year-over-year.
[3] Search and Search related advertising revenues exclude intra-Group transactions.
Second Quarter Financial Results
Revenues
Total revenues for the second quarter of 2020 were US$421 million, down 9% year-over-year and 3% quarter-over-quarter.
Total online advertising revenues, which include revenues from the brand advertising and search and search-related advertising businesses, for the second quarter of 2020 were US$279 million, down 13% year-over-year and up 6% quarter-over-quarter.
Brand advertising revenues for the second quarter of 2020 totaled US$38 million, down 14% year-over-year and up 48% quarter-over-quarter. The year-over-year decrease was mainly due to the continuous negative impact on the brand advertising industry from the outbreak of the COVID-19 in the first quarter of 2020. The quarter-over-quarter increase was mainly due to the increased revenues in our portal and video advertising businesses as a result of our continuing efforts to boost our revenues and the easing of the impact of COVID-19.
Search and search-related advertising revenues for the second quarter of 2020 were US$241 million, down 13% year-over-year and up 1% quarter-over-quarter.
Online game revenues for the second quarter of 2020 were US$106 million, up 4% year-over-year and down 21% quarter-over-quarter. The quarter-over-quarter decrease was mainly due to a decrease in player engagement as a result of work resumption during the quarter following the easing of COVID-19 restrictions in China.
Gross Margin
Both GAAP and non-GAAP[4] gross margin was 41% for the second quarter of 2020, compared with 46% in the second quarter of 2019 and 37% in the first quarter of 2020.
Both GAAP and non-GAAP gross margin for the online advertising business for the second quarter of 2020 was 23%, compared with 33% in the second quarter of 2019 and 10% in the first quarter of 2020.
Both GAAP and non-GAAP gross margin for the brand advertising business in the second quarter of 2020 were 40%, compared with 28% in the second quarter of 2019 and nil in the first quarter of 2020. The year-over-year margin improvement was mainly due to decreased video content cost. The quarter-over-quarter margin improvement was mainly due to increased revenues in the portal and video advertising businesses.
Both GAAP and non-GAAP gross margin for the search and search-related advertising business in the second quarter of 2020 were 21%, compared with 34% in the second quarter of 2019 and 11% in the first quarter of 2020. The year-over-year decrease primarily resulted from an increase in traffic acquisition cost as a percentage of search and search related advertising revenues. The quarter-over-quarter increase was due to a decrease in traffic acquisition cost as a percentage of search and search related advertising revenues due to normalized user traffic following the easing of COVID-19 restrictions in China.
GAAP gross margin for online games in the second quarter of 2020 was 77%, compared with 82% in the second quarter of 2019 and 79% in the first quarter of 2020. Non-GAAP gross margin for online games in the second quarter of 2020 was 78%, compared with 82% in the second quarter of 2019 and 79% in the first quarter of 2020. The year-over-year decrease in gross margin was mainly due to an increase in revenue-sharing payments related to TLBB Honor, which was launched during the third quarter of 2019.
[4] 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; a one-time impairment charge recognized for an investment unrelated to the Company’s core businesses; 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 second quarter of 2020, GAAP operating expenses totaled US$194 million, down 13% year-over-year and up 4% quarter-over-quarter. Non-GAAP operating expenses were US$187 million, down 14% year-over-year and up 3% quarter-over-quarter. The year-over-year decrease in operating expenses was mainly due to decreased marketing expenses.
Operating Loss
GAAP operating loss for the second quarter of 2020 was US$23 million, compared with an operating loss of US$11 million in the second quarter of 2019 and an operating loss of US$24 million in the first quarter of 2020.
Non-GAAP operating loss for the second quarter of 2020 was US$16 million, compared with an operating loss of US$7 million in the second quarter of 2019 and an operating loss of US$20 million in the first quarter of 2020.
Income Tax Expense
GAAP income tax expense was US$85 million for the second quarter of 2020, compared with income tax expense of US$4 million in the second quarter of 2019 and income tax expense of US$14 million in the first quarter of 2020. Non-GAAP income tax expense was US$82 million for the second quarter of 2020, compared with income tax expense of US$2 million in the second quarter of 2019 and income tax expense of US$11 million in the first quarter of 2020. For the second quarter of 2020, Changyou recognized an additional accrual of withholding income tax of US$88 million, as Changyou changed its policy for its PRC subsidiaries with respect to distribution of cash dividends after the completion of the privatization of Changyou.
Net Income/(Loss)
GAAP net loss attributable to Sohu.com Limited for the second quarter of 2020 was US$80 million, or a net loss of US$2.04 per fully-diluted ADS. Non-GAAP net loss attributable to Sohu.com Limited for the second quarter of 2020 was US$77 million, or a net loss of US$1.96 per fully-diluted ADS.
Excluding the impact of the additional accrual of withholding income tax described above, GAAP net income attributable to Sohu.com Limited for the second quarter of 2020 was US$8 million, or a net income of US$0.20 per fully-diluted ADS; non-GAAP net income attributable to Sohu.com Limited for the second quarter of 2020 was US$11 million, or a net income of US$0.27 per fully-diluted ADS.
Liquidity
As of June 30, 2020, cash and cash equivalents and short-term investments held by the Sohu Group, minus short-term bank loans, were US$1.35 billion, compared with US$1.51 billion as of December 31, 2019.
Supplementary Information for Changyou Results
Second Quarter 2020 Operational Results
For PC games, total average monthly active accounts[5] were 1.9 million, a decrease of 5% year-over-year and 10% quarter-over-quarter. Total quarterly aggregate active paying accounts[6] were 0.9 million, flat year-over-year and a decrease of 10% quarter-over-quarter. The quarter-over-quarter decreases were mainly due to a decrease in player engagement as a result of the resumption of work during the quarter following the easing of COVID-19 restrictions in China.
For mobile games, total average monthly active accounts were 3.1 million, an increase of 15% year-over-year and a decrease of 9% quarter-over-quarter. The year-over-year increase was mainly due to the contribution of TLBB Honor, which was launched during the third quarter of 2019. Total quarterly aggregate active paying accounts were 0.6 million, flat year-over-year and a decrease of 40% quarter-over-quarter. The quarter-over-quarter decreases were mainly due to a decrease in player engagement as a result of the resumption of work during the quarter following the easing of COVID-19 restrictions in China.
[5] Monthly active accounts refers to the number of registered accounts that are logged in to these games at least once during the month.
[6] Quarterly aggregate active paying accounts refers to the number of accounts from which game points are utilized at least once during the quarter.
Second Quarter 2020 Unaudited Financial Results
Total revenues for the second quarter of 2020 were US$109 million, an increase of 3% year-over-year and a decrease of 20% quarter-over-quarter. Online game revenues were US$106 million, an increase of 4% year-over-year and a decrease of 21% quarter-over-quarter. Online advertising revenues were US$3 million, a decrease of 16% year-over-year and an increase of 23% quarter-over-quarter.
GAAP and non-GAAP gross profit for the second quarter of 2020 were both US$85 million, a decrease of 2% year-over-year and 21% quarter-over-quarter.
GAAP operating expenses for the second quarter were US$51 million, an increase of 10% year-over-year and a decrease of 6% quarter-over-quarter. The year-over-year increase in operating expenses was mainly due to an increase in share-based compensation expenses as new share-based awards took effect in the fourth quarter of 2019. The quarter-over-quarter decrease was mainly due to a decrease in marketing and promotional spending for TLBB Honor.
Non-GAAP operating expenses for the second quarter were US$48 million, a decrease of 1% year-over-year and 6% quarter-over-quarter.
GAAP operating profit for the second quarter of 2020 was US$33 million, compared with an operating profit of US$40 million in the second quarter of 2019 and US$52 million in the first quarter of 2020.
Non-GAAP operating profit for the second quarter of 2020 was US$37 million, compared with a non-GAAP operating profit of US$38 million in the second quarter of 2019 and US$56 million in the first quarter of 2020.
Recent Developments
On July 27, 2020, Sohu’s subsidiary Sogou announced that its board of directors (the “Sogou Board”) received a letter containing a preliminary non-binding proposal (the “Proposal”) from Tencent Holdings Limited (including its affiliates, “Tencent”) for Tencent to acquire all of the outstanding ordinary shares, including ordinary shares represented by ADSs, of Sogou that are not already owned by Tencent for US$9.00 in cash per ordinary share or ADS (as the same may be amended from time to time, a “Proposed Transaction”). The Proposed Transaction, if completed, would result in Sogou becoming a privately-held, indirect wholly-owned subsidiary of Tencent, and Sogou’s ADSs would be delisted from the New York Stock Exchange.
On July 31, 2020, the Sogou Board established a special committee of the Sogou Board, composed solely of independent directors, to consider the Proposal.
Sohu’s board of directors has not had an opportunity to review and evaluate the Proposal in detail, or to make a determination as to how to respond to the Proposal or as to whether or not the proposed acquisition of Sogou would be in the best interests of Sohu, in its capacity as Sogou’s controlling shareholder, and Sohu’s shareholders for Sohu to approve or reject the Proposal or a Proposed Transaction.
Business Outlook
For the third quarter of 2020, Sohu estimates:
Brand advertising revenues to be between US$37 million and US$42 million; this implies an annual decrease of 9% to 20% and a sequential decrease of 3% to a sequential increase of 11%.
Online game revenues to be between US$85 million and US$95 million; this implies an annual decrease of 12% to 21% and a sequential decrease of 10% to 20%.
Excluding the profit/loss generated by Sogou, non-GAAP net loss attributable to Sohu.com Limited to be between US$10 million and US$20 million; and GAAP net loss attributable to Sohu.com Limited to be between US$15 million and US$25 million.
For the third quarter 2020 guidance, the Company has adopted a presumed exchange rate of RMB7.00=US$1.00, as compared with the actual exchange rate of approximately RMB6.99=US$1.00 for the third quarter of 2019, and RMB7.08=US$1.00 for the second quarter of 2020.
This forecast reflects Sohu’s management’s current and preliminary view, which is subject to substantial uncertainty, particularly in view of the potential ongoing impact of the COVID-19 virus, which remains difficult to predict.
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 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 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 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, established by Dr. Charles Zhang, one of China’s internet pioneers, is in its twenty-fourth year of operation.
SOURCE Sohu.com Ltd.
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Galaxy Entertainment Group (GEG) has opened a new overseas office in Singapore. This strategic initiative marks a new chapter in GEG’s growth trajectory and underscores its commitment to promoting Macau as the “World Centre of Tourism and Leisure” to a broader audience across Southeast Asia.
Singapore, one of Asia’s most vibrant and cosmopolitan countries, has long been a key source market for Macau. The new office, located in the heart of Singapore’s Central Business District, will serve as a dedicated hub to enhance connections with the Singaporean business community, as well as showcasing to Singapore and the broader Southeast Asian Region Macau’s dynamic evolving tourism landscape-highlighting its rich cultural heritage, luxury hospitality and increasingly diverse world-class leisure and entertainment experience offering.
The opening of Galaxy’s Lion City office is closely aligned with the Macao SAR Government’s vision to diversify tourism offerings and expand visitor demographics. Through its ramped-up Singapore presence, GEG aims to curate bespoke travel experiences tailored to the preferences of Singaporean and regional travelers, ensuring seamless journeys from planning to arrival.
GEG’s new office will support tourism, meetings, incentives, conferences and exhibitions (MICE) inquiries, reinforcing its role as a versatile hospitality leader and a trusted partner for business tourism.
In addition, GEG’s Singapore office reflects the Group’s forward-thinking approach to innovation, customer-centricity and regional collaboration. It also signals GEG’s intent to enhance brand visibility and foster meaningful connections with travelers and stakeholders across Asia.
To celebrate the grand opening, GEG hosted an elegant gala dinner at JW Marriott Singapore, welcoming distinguished guests, business partners and media representatives. Mr. Elmen Lee, Director of Integrated Resort Services at GEG, introduced to the guests the Group’s three flagship properties in Macau-Galaxy Macau and Galaxy International Convention Center, Broadway Macau and StarWorld Hotel.
Mr. Lee said: “Singapore has always been an important source market for Macau. The taste and sophistication of Singaporean travelers naturally align with Macau’s experiential tourism offering. We firmly believe that Galaxy Entertainment Group’s diverse offerings will attract more Singaporean visitors to visit us and explore more. In support of the Macao SAR Government’s vision to promote tourism diversification, Galaxy Entertainment Group is continuing to expand its international visitor base to inject more vitality into Macau.”
Galaxy Macau, Broadway Macau and StarWorld Hotel bring together luxurious accommodations, award-winning dining, premium shopping and world-class entertainment facilities; each with its own unique character. With Galaxy Macau home to nine of the world’s leading luxury hospitality brands under one roof, catering to the diverse needs of international travelers; the Galaxy trio collectively showcases the excellence of Macau’s hospitality industry.
The post Galaxy Entertainment Opens New Overseas Office in Singapore appeared first on European Gaming Industry News.
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Kazakhstan’s Financial Monitoring Agency (FMA) has identified 34 bloggers promoting online casinos on social media, with 11 already facing administrative penalties. The agency has stated that fines alone are not deterring repeat offenders and is now considering introducing criminal liability for such activities.
A law passed in 2024 strictly prohibits outdoor advertising for bookmakers, online casinos and betting pools, as well as their promotion in media, films and video content. According to the FMA, over the past two and a half years, more than 200 illegal gambling operations have been dismantled, and 224 individuals have been held criminally accountable. However, the agency notes that the primary threat now stems from online casinos based abroad.
Since the beginning of this year, authorities have blocked more than 17,000 links, mostly mirror sites for foreign platforms. Despite these efforts, some Kazakhstani payment service providers continue to facilitate transactions linked to such websites. The FMA has pledged to intensify investigations into these financial intermediaries.
Influencer marketing remains a key channel for online gambling promotion. In the first half of the year alone, 34 influencers were identified as advertising gambling services, with 11 fined. But according to the FMA, revenues from such promotions far exceed the cost of the fines, creating incentives for repeated violations.
In response, the agency is exploring whether bloggers’ actions could be legally interpreted as aiding and abetting illegal gambling, a charge similar to promoting financial pyramid schemes, which already carries criminal penalties under Kazakhstani law. Currently, fines for illegal advertising on social media start at 200,000 KZT (approximately $420).
The post Kazakhstan Considers Criminal Penalties for Promoting Online Casinos appeared first on European Gaming Industry News.
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Skyesports, the premier global IP and community builder, has successfully wrapped up the first-ever edition of Gaming Thiruvizha at the Chennai Trade Centre on August 30–31, bringing together more than 17,000 fans across two unforgettable days of gaming, anime, stand-up comedy, cosplay, music, and culture.
Gaming Thiruvizha turned out to be more than an event as it became a two-day carnival. From esports showdowns at LAN zones to cosplay walks, live stand-up, and Tamil cultural showcases, the Chennai crowd transformed the Trade Centre into a festival that truly belonged to them. Fans didn’t just attend; they stayed, celebrated, and created memories together.
The audience mix was as vibrant as the festival itself: college students, families, and kids all came together, proving that gaming and anime are no longer niche hobbies, but shared cultural movements.
Powered by AMD, with ticketing exclusively on KYN, Gaming Thiruvizha was hosted in association with the Sports Development Authority of Tamil Nadu (SDAT) and supported by AGS Cinemas as the Chennai Edition Theatre Partner.
Commenting on the conclusion of the Gaming Thiruvizha, Shiva Nandy, Founder and CEO, Skyesports, said, “We couldn’t have asked for a better first edition of the Gaming Mahotsav. The energy of the crowd and the diversity of the audience reminded us why we built this IP — to bridge the gap between casual gamers and esports, and to create a space where gaming, anime, and culture thrive together. Next up, we will be bringing the concept to Bangalore in late September,” said Shiva Nandy, Founder and CEO of Skyesports.
The festival also welcomed dignitaries including Meghantha Reddy (Sports Development Authority of Tamil Nadu), Darez A. (MD, Guidance Tamil Nadu), and Gayathri Thyagarajan (Founder & CEO, Kynhood Technologies), underlining the growing recognition of gaming and esports as part of Tamil Nadu’s cultural and creative economy.
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Highlights of the event include:
- LAN tournaments across BGMI, Valorant, and other titles, with fans cheering players on in true stadium style.
- A pan-India Cosplay competition bringing cosplayers from across the country with stunning costumes judged by top creators and anime experts.
- Red Bull Armageddon, India’s first all-Armageddon format chess tournament, brought together over 350 players in Chennai with International Master Tania Sachdev and Grandmaster M. Shyam Sundar leading the action.
- Merch alleys buzzing with anime and gaming collectibles alongside local Tamil art.
- Stand-out experiential booths and meet-and-greets with Team Tamilas, Autobotz Esports, and Welt Esports.
- PVR Cinemas set up local food experience stalls for attendees
With India on track to reach 700 million gamers by 2027, and anime/cosplay engagement skyrocketing across social media, Gaming Thiruvizha demonstrated that hyperlocal, immersive festivals are the way forward.
Gaming Thiruvizha is the first chapter of Skyesports’ Gaming Mahotsav, a six-city touring pop culture festival with regional editions in Bengaluru, Hyderabad, Mumbai, Kochi, and Pune. Each stop blends gaming, anime, music, comics, and local culture into one cohesive community celebration.
The post Skyesports Wraps Up Gaming Thiruvizha – Chennai Edition With 17,000+ Fans in Attendance appeared first on European Gaming Industry News.
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