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Sohu.com (SOHU) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
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Sohu.com Limited (SOHU - Free Report) reported soft second-quarter 2023 results, with the bottom and the top line missing the respective Zacks Consensus Estimate. Weak demand trends across all the verticals and declining trends in older games led to lower revenues year over year.
Net Income
On a GAAP basis, Sohu reported a net loss of $21.2 million or a loss of 62 cents per ADS against a net income of $8.7 million or 25 cents per ADS in the year-earlier quarter. The decline was primarily attributed to top-line contraction year over year and higher income tax.
Non-GAAP net loss was $17.9 million or a loss of 52 cents per ADS against a net income of $12.4 million or 36 cents per ADS in the year-ago quarter. Non-GAAP net loss for the June quarter was wider than the consensus estimates of a loss of 44 cents.
Quarterly net sales declined to $152.1 million from $194.8 million in the prior-year quarter, owing to weakness in online games and lower brand advertising revenues. The top line missed the consensus estimate of $154 million.
Revenues from brand advertising totaled $23.9 million, down 4% year over year. The segment’s top line marginally fell short of our estimate of $24 million.
Net sales from Online Game stood at $118.4 million, down 25% year over year. The top line surpassed our estimate of $116.8 million. Declining trends for the company’s older games impacted the sales.
Other revenues were $9.8 million, down from $12.6 million in the year-ago quarter. Net sales fell short of our estimate of $13.2 million.
Total average monthly active user accounts (MAU) for PC games were 2.2 million, down 4% year over year. The figure fell short of our estimate of 2.5 million. Total quarterly aggregate active paying accounts (APA) were 0.9 million, down 12% year over year. Decline of TLBB PC led to a year-over-year reduction in APA.
For mobile games, the total average MAU recorded a sharp decline of 35% year over year to $1.3 million. The MAU fell short of our estimated figure of 2.2 million. Weakness in older games affected the MAU. The total quarterly APA was 0.3 million, down 35% year over year.
Other Details
Non-GAAP gross profit was $115.1 million compared with $141.8 million in the prior year quarter with respective margins of 76% and 73%. Non-GAAP gross margin for the brand advertising segment rose to 30% from 4% in the year-ago quarter. Non-GAAP gross margin for online games improved to 87% from 84% a year ago.
The company reported a non-GAAP operating loss of $22.7 million against an operating profit of $11.5 million in the prior-year quarter, with respective margins of -15% and 6%. Higher operating expenditure due to Changyou’s product development expenses negatively impacted the operating profit.
Cash Flow & Liquidity
As of Jun 30, 2023, the company had $482.6 million in cash and cash equivalents with $451.9 million of long-term tax liabilities.
Outlook
For the third quarter of 2023, revenues from brand advertising are estimated in the range of $21-$24 million, indicating a 7-18% year-over-year decline. Online game revenues are projected in the band of $108-$118 million, which implies a decrease of 21% to 27% year over year. The company expects a non-GAAP net loss between $20 million and $30 million. GAAP net loss is estimated between $23 million and $33 million.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #2, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 18.02%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Meta Platforms Inc. (META - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 18.99%, on average, in the trailing four quarters. Meta is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like the photo and video-sharing app, Instagram, and the WhatsApp messaging app, owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first-mover advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.
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Sohu.com (SOHU) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
Sohu.com Limited (SOHU - Free Report) reported soft second-quarter 2023 results, with the bottom and the top line missing the respective Zacks Consensus Estimate. Weak demand trends across all the verticals and declining trends in older games led to lower revenues year over year.
Net Income
On a GAAP basis, Sohu reported a net loss of $21.2 million or a loss of 62 cents per ADS against a net income of $8.7 million or 25 cents per ADS in the year-earlier quarter. The decline was primarily attributed to top-line contraction year over year and higher income tax.
Non-GAAP net loss was $17.9 million or a loss of 52 cents per ADS against a net income of $12.4 million or 36 cents per ADS in the year-ago quarter. Non-GAAP net loss for the June quarter was wider than the consensus estimates of a loss of 44 cents.
Sohu.com Inc. Price, Consensus and EPS Surprise
Sohu.com Inc. price-consensus-eps-surprise-chart | Sohu.com Inc. Quote
Revenues
Quarterly net sales declined to $152.1 million from $194.8 million in the prior-year quarter, owing to weakness in online games and lower brand advertising revenues. The top line missed the consensus estimate of $154 million.
Revenues from brand advertising totaled $23.9 million, down 4% year over year. The segment’s top line marginally fell short of our estimate of $24 million.
Net sales from Online Game stood at $118.4 million, down 25% year over year. The top line surpassed our estimate of $116.8 million. Declining trends for the company’s older games impacted the sales.
Other revenues were $9.8 million, down from $12.6 million in the year-ago quarter. Net sales fell short of our estimate of $13.2 million.
Total average monthly active user accounts (MAU) for PC games were 2.2 million, down 4% year over year. The figure fell short of our estimate of 2.5 million. Total quarterly aggregate active paying accounts (APA) were 0.9 million, down 12% year over year. Decline of TLBB PC led to a year-over-year reduction in APA.
For mobile games, the total average MAU recorded a sharp decline of 35% year over year to $1.3 million. The MAU fell short of our estimated figure of 2.2 million. Weakness in older games affected the MAU. The total quarterly APA was 0.3 million, down 35% year over year.
Other Details
Non-GAAP gross profit was $115.1 million compared with $141.8 million in the prior year quarter with respective margins of 76% and 73%. Non-GAAP gross margin for the brand advertising segment rose to 30% from 4% in the year-ago quarter. Non-GAAP gross margin for online games improved to 87% from 84% a year ago.
The company reported a non-GAAP operating loss of $22.7 million against an operating profit of $11.5 million in the prior-year quarter, with respective margins of -15% and 6%. Higher operating expenditure due to Changyou’s product development expenses negatively impacted the operating profit.
Cash Flow & Liquidity
As of Jun 30, 2023, the company had $482.6 million in cash and cash equivalents with $451.9 million of long-term tax liabilities.
Outlook
For the third quarter of 2023, revenues from brand advertising are estimated in the range of $21-$24 million, indicating a 7-18% year-over-year decline. Online game revenues are projected in the band of $108-$118 million, which implies a decrease of 21% to 27% year over year. The company expects a non-GAAP net loss between $20 million and $30 million. GAAP net loss is estimated between $23 million and $33 million.
Zacks Rank & Stocks to Consider
Sohu currently carries a Zacks Rank #3 (Hold).
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 168.01%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 7.44%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #2, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 18.02%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Meta Platforms Inc. (META - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 18.99%, on average, in the trailing four quarters. Meta is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like the photo and video-sharing app, Instagram, and the WhatsApp messaging app, owing to acquisitions.
Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first-mover advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.