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Sohu.com (SOHU) Up 10% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Sohu.com (SOHU - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sohu.com due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Sohu Q4 Loss Narrower Than Expected Despite Revenue Decline
Sohu reported mixed fourth-quarter 2023 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. Despite increasing user engagement and innovative strategic investments in its platform, the leading provider of online advertising, media and gaming services in China recorded year-over-year lower revenues owing to the adverse impact of rigid government regulations and macroeconomic headwinds.
Net Income
On a GAAP basis, the company incurred a net loss of $12.6 million or a loss of 37 cents per American Depository Share (ADS) compared with a net loss of $7.1 million or a loss of 21 cents per ADS in the prior-year quarter. An increase in operating expenses and a decrease in revenues led to the wider loss during the quarter.
Non-GAAP net loss was $10.8 million or a loss of 32 cents per ADS compared with a net loss of $2.2 million or a loss of 6 cents per ADS in the year-ago quarter. Non-GAAP net loss for the reported quarter was narrower than the Zacks Consensus Estimate of a loss of 40 cents.
For 2023, the company witnessed a net loss of $65.8 million or a loss of $1.93 per ADS from continuing operations compared with a net loss of $17.3 million or a loss of 50 cents per ADS in 2022. On a non-GAAP basis, it registered a net loss of $51.4 million or a loss of $1.51 per ADS from continuing operations against a net income of $2.4 million or 7 cents per ADS in 2022.
Revenues
Revenues in the reported quarter declined to $141.4 million from $160.4 million in the year-ago quarter. The decrease in net sales in its major business verticals impeded the top line during the quarter. The top line missed the consensus estimate of $160 million.
Brand advertising revenues declined 30% year over year to $20.2 million from $28.8 million in the prior-year quarter. Revenues from Online Game totaled $114.8 million, down 5% year over year. A decline in portal, video and real estate advertising revenues and growing competition in the online video market led to the downside. Other revenues totaled $6.5 million, down from $10.3 million in the year-ago quarter.
For 2023, revenues were $600.7 million compared with $733.9 million in 2022.
For PC games, the total average monthly active user accounts (MAU) were 2.3 million, up 2% year over year. Total quarterly aggregate active paying accounts (APA) were 0.9 million, down 4%. The decline was primarily due to a lack of in-game promotional activities for TLBB PC during the quarter.
For mobile games, the total average MAU was 1.7 million, down 4% year over year and the total quarterly APA was 0.3 million, down 14% year over year. The launch of New TLBB Mobile was attributed to the downturn as older games became inessential.
Other Details
Quarterly GAAP gross profit was $107.5 million compared with the year-ago quarter’s figure of $124.6 million, with a respective gross margin of 76% and 78%. Non-GAAP gross margin for brand advertising business decreased to 16% from 51% in the prior-year quarter owing to a waiver of unpaid long-term accounts payable of approximately $10 million. Non-GAAP gross margin for online games was 87%, up from 84% in the year-ago quarter.
Non-GAAP operating expenses were $133.8 million, up 3% year over year.
Liquidity
As of Dec 31, 2023, the company had $362.5 million in cash and cash equivalents with $474.4 million of long-term tax liabilities compared with respective tallies of $697.8 million and $448 million in 2022.
Outlook
For the first quarter of 2024, Brand Advertising revenues are estimated to be in the range of $15-$17 million, which indicates a decrease of 25% to 33% year over year. Online game revenues are estimated in the band of $110-$120 million, which indicates a decrease of 7% to 15% year over year. Sohu’s non-GAAP net loss is likely to be between $23 million and $33 million. GAAP net loss is projected between $26 million and $36 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Sohu.com has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Sohu.com has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Sohu.com (SOHU) Up 10% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Sohu.com (SOHU - Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sohu.com due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Sohu Q4 Loss Narrower Than Expected Despite Revenue Decline
Sohu reported mixed fourth-quarter 2023 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. Despite increasing user engagement and innovative strategic investments in its platform, the leading provider of online advertising, media and gaming services in China recorded year-over-year lower revenues owing to the adverse impact of rigid government regulations and macroeconomic headwinds.
Net Income
On a GAAP basis, the company incurred a net loss of $12.6 million or a loss of 37 cents per American Depository Share (ADS) compared with a net loss of $7.1 million or a loss of 21 cents per ADS in the prior-year quarter. An increase in operating expenses and a decrease in revenues led to the wider loss during the quarter.
Non-GAAP net loss was $10.8 million or a loss of 32 cents per ADS compared with a net loss of $2.2 million or a loss of 6 cents per ADS in the year-ago quarter. Non-GAAP net loss for the reported quarter was narrower than the Zacks Consensus Estimate of a loss of 40 cents.
For 2023, the company witnessed a net loss of $65.8 million or a loss of $1.93 per ADS from continuing operations compared with a net loss of $17.3 million or a loss of 50 cents per ADS in 2022. On a non-GAAP basis, it registered a net loss of $51.4 million or a loss of $1.51 per ADS from continuing operations against a net income of $2.4 million or 7 cents per ADS in 2022.
Revenues
Revenues in the reported quarter declined to $141.4 million from $160.4 million in the year-ago quarter. The decrease in net sales in its major business verticals impeded the top line during the quarter. The top line missed the consensus estimate of $160 million.
Brand advertising revenues declined 30% year over year to $20.2 million from $28.8 million in the prior-year quarter. Revenues from Online Game totaled $114.8 million, down 5% year over year. A decline in portal, video and real estate advertising revenues and growing competition in the online video market led to the downside. Other revenues totaled $6.5 million, down from $10.3 million in the year-ago quarter.
For 2023, revenues were $600.7 million compared with $733.9 million in 2022.
For PC games, the total average monthly active user accounts (MAU) were 2.3 million, up 2% year over year. Total quarterly aggregate active paying accounts (APA) were 0.9 million, down 4%. The decline was primarily due to a lack of in-game promotional activities for TLBB PC during the quarter.
For mobile games, the total average MAU was 1.7 million, down 4% year over year and the total quarterly APA was 0.3 million, down 14% year over year. The launch of New TLBB Mobile was attributed to the downturn as older games became inessential.
Other Details
Quarterly GAAP gross profit was $107.5 million compared with the year-ago quarter’s figure of $124.6 million, with a respective gross margin of 76% and 78%. Non-GAAP gross margin for brand advertising business decreased to 16% from 51% in the prior-year quarter owing to a waiver of unpaid long-term accounts payable of approximately $10 million. Non-GAAP gross margin for online games was 87%, up from 84% in the year-ago quarter.
Non-GAAP operating expenses were $133.8 million, up 3% year over year.
Liquidity
As of Dec 31, 2023, the company had $362.5 million in cash and cash equivalents with $474.4 million of long-term tax liabilities compared with respective tallies of $697.8 million and $448 million in 2022.
Outlook
For the first quarter of 2024, Brand Advertising revenues are estimated to be in the range of $15-$17 million, which indicates a decrease of 25% to 33% year over year. Online game revenues are estimated in the band of $110-$120 million, which indicates a decrease of 7% to 15% year over year. Sohu’s non-GAAP net loss is likely to be between $23 million and $33 million. GAAP net loss is projected between $26 million and $36 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Sohu.com has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Sohu.com has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.