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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JBO, a well-established online gaming and entertainment platform, has announced an exciting new promotion tailored for the highly anticipated Esports World Cup 2025. Esports enthusiasts in Thailand now have a compelling opportunity to win up to 30,000 Jcoin by placing wagers on the thrilling “World Cup Qualifiers” matches. This shows JBO Thailand’s commitment to giving great value and fun experiences to all its players.
This exclusive event is ongoing and will conclude on August 24, 2025, at 23:59 (GMT+8). This period strategically aligns with the intensified global esports calendar, leading up to the Esports World Cup and its critical qualifying rounds. JBO Thailand is actively creating an immersive environment that allows fans to engage more deeply with preferred teams and competitive events. Participation in the promotion is straightforward. Players are simply required to place bets on eligible “Esports World Cup Qualifiers” matches through JBO’s designated esports betting providers, IM Esports and TF Esports. The promotion is conveniently accessible via the “Reward Corner” section on the JBO platform, ensuring a seamless and intuitive user experience for all participants.
At the core of this attractive offer is JBO’s innovative Jcoin reward system. Players who log in to JBO and achieve a weekly turnover exceeding 3000 in the Esports category will automatically qualify for Jcoin rewards. The reward system gives bigger prizes as you play more, with up to 30,000 Jcoin available each week.
JBO also ensures a smooth and secure experience through the easy-to-use JBO app available for both Android and iOS devices. With fast withdrawals and smooth gameplay, the platform is ideal for esports fans to enjoy and earn real rewards. JBO is trusted across Asia and has Dimitar Berbatov as its brand ambassador, showing it as a top sportsbook and esports operator.
The post JBO Thailand Launches Esports World Cup Promotion appeared first on European Gaming Industry News.
Uzbekistan has introduced strict penalties for illegal gambling operations as the country prepares to launch its regulated betting market on October 9, 2025.
The new penalties target both domestic and foreign operators offering gambling services without a license. The new rules authorise fines indexed to the Uzbek Base Calculation Unit (BRV), a fiscal benchmark used for administrative penalties.
Foreign firms face fines of up to 25,000 Base Calculation Units, around US$882,000. Authorities can also seize illegal earnings, block access to banking and internet services, and ban repeat offenders from the Uzbek financial system. Unauthorised physical casinos, betting shops and mobile terminals will face the same sanctions.
Violations of anti-money laundering rules or personal data misuse carry fines of 15,000 BRV (about US$529,200), and unlicensed deposit-taking could result in penalties of up to US$352,900.
The changes were drafted by the National Agency for Perspective Projects (NAPP), which is overseeing the rollout of Uzbekistan’s new gambling law. NAPP will act as the interim regulator until a permanent authority is established.
Licensed operators must meet strict financial requirements. Online gambling firms need authorised capital of $4.57 million and a $2.05 million reserve fund. Lottery providers must show at least $1.64 million in capital and $1.11 million in reserves.
“This is not a pay-to-play regime. It’s a compliance-first market that will reward transparency and capital discipline,” NAPP has clarified in communications with potential applicants.
Gambling has been banned in Uzbekistan since 2007, except for limited state-run lotteries. The new system marks a shift from prohibition to strict regulation. A centralised system, the Unified State Register of Bets and Players (USRBP), will track all wagers and enforce ID checks and monthly betting limits.
Sanctions will be issued by NAPP’s director after internal review. Offending companies will have 15 days to appeal through NAPP or the courts. Half of all fines will go to the state budget; the rest will fund regulatory operations. Paying fines does not shield companies from further legal action.
President Shavkat Mirziyoyev approved the new framework in 2024, requiring that gambling revenue be used to fund national sports programmes. Licensing guidelines will be released soon, with applications opening before the October launch.
The post Uzbekistan Introduces Penalties for Illegal Gambling Operations appeared first on European Gaming Industry News.
NODWIN Gaming, South Asia’s leading esports and gaming company, has announced that Sony LIV has acquired the Hindi and English language media rights for select matches of the Esports World Cup (EWC) 2025, further amplifying the tournament’s reach and representation across India.
As part of the partnership, Sony LIV will stream select matches from the Esports World Cup in India, bringing the action to millions of fans in languages they resonate with. The Hindi-language broadcast will be available exclusively on the Sony LIV app and official website.
In addition, Sony LIV will also stream the weekly shows, behind-the-scenes features and player interactions spotlighting EWC athletes and teams, curated for both core and casual esports audiences. This collaboration follows NODWIN Gaming’s recent partnership with the Esports World Cup Foundation (EWCF) to manage media rights and regional distribution across South Asia.
Akshat Rathee, Co-Founder and Managing Director of NODWIN Gaming, said: “Our goal is to bring the Esports World Cup to as many passionate fans across South Asia as possible, and this partnership with Sony LIV is a major step in that direction. It combines Sony LIV’s incredible reach with NODWIN’s focus on building localized, fan-first esports experiences. With both Hindi and premium English content, we are creating a viewing experience that feels personal, immersive, and truly regional.”
With the addition of Sony LIV as the exclusive Hindi broadcast partner and NODWIN Gaming as the strategic regional media and marketing partner, the EWC is poised to reach unprecedented heights in South Asia. This aligns with the mission of making esports more inclusive, accessible and locally relevant.
With top-tier Indian talent competing across multiple titles, the Esports World Cup 2025 presents a unique opportunity to showcase India’s growing presence in global esports and to unite audiences around a shared national dream.
The post NODWIN Gaming Partners with Sony LIV for Streaming Rights of Esports World Cup 2025 appeared first on European Gaming Industry News.
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