Sohu.com Inc. (SOHU - Free Report) reported results for first-quarter 2018. While the top line recorded a significant year-over-year improvement, bottom-line comparisons were unfavorable.
The company reported non-GAAP loss of $2.50 per share, which was wider than the year-ago quarter’s loss of $1.75.
Sohu’s revenues of $455 million were up 21.6% year over year but declined 10.7% on a sequential basis.
Quarter Details
Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) increased 23.8% year over year to $276.6 million.
Brand advertising revenues in the reported quarter fell 30.9% on a year-over-year basis to $56.3 million, mainly due to decrease in video and real estate advertising.
Search and search-related revenues increased 55.1% year over year to $220.3 million driven by growth in mobile search traffic and improved monetization.
Online game revenues of $105.5 million were up 23.6% from the year-ago quarter mainly on strong performance of the Legacy TLBB mobile game.
Sohu Video revenues decreased 16% from the year-ago quarter to $31 million. Decline in video advertising has been a concern. Sohu Media Portal revenues fell 18% to $31 million on a year-over-year basis owing to intense competition in the online media industry.
Sogou’s revenues surged 53% year over year but declined 11% from the previous quarter to $248 million. The number of daily average users of Sogou Mobile Keyboard increased 30 million to $362 million.
Changyou’s revenues grew 20% year over year but declined 5% sequentially to $137 million.
Margins
Non-GAAP gross margin in the quarter expanded 100 basis points (bps) on a year-over-year basis to 43%.
Non-GAAP gross margin of the company’s online advertising business was 29%, up from 27% in the prior-year quarter.
Brand advertising business margin of 9% expanded 700 bps. Non-GAAP gross margin of the search and search-related business in the quarter contracted 800 bps to 34%.
Non-GAAP gross margin of the online game business increased 300 bps to 84%, driven by growth in Legacy TLBB game.
Sohu’s non-GAAP operating loss was $33.8 million compared with a loss of $40.1 million in the year-ago quarter.
Balance Sheet
Sohu exited the quarter with cash and cash equivalents (and short-term investments) of $3.31 billion compared with $2.19 billion as of Dec 31, 2017.
Outlook
For the second quarter of 2018, Sohu expects total revenues in the range of $485–$510 million.
Brand Advertising revenues are anticipated to be in the range of $65-$70 million, indicating a year-over-year decrease of 19-24%.
Online game revenues are expected in the band of $85-$95 million, marking a decline of 22-31% from the year-ago quarter.
Sogou revenues are projected to be in the range of $295-$305 million, indicating a year-over-year increase of 40-45%
Non-GAAP net loss is anticipated to be in the range of $55-$65 million. Non-GAAP loss per share is projected to be between $1.40 and $1.65.
Zacks Rank & Stock to Consider
Sohu.com carries a Zacks Rank #4 (Sell).
A better-ranked stock in the broader technology sector is Lam Research Corporation (LRCX - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Lam Research is projected to be 17.7%.
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Sohu.com Inc. (SOHU - Free Report) reported results for first-quarter 2018. While the top line recorded a significant year-over-year improvement, bottom-line comparisons were unfavorable.
The company reported non-GAAP loss of $2.50 per share, which was wider than the year-ago quarter’s loss of $1.75.
Sohu’s revenues of $455 million were up 21.6% year over year but declined 10.7% on a sequential basis.
Quarter Details
Total online advertising revenues (inclusive of revenues from brand advertising, search and search related businesses) increased 23.8% year over year to $276.6 million.
Brand advertising revenues in the reported quarter fell 30.9% on a year-over-year basis to $56.3 million, mainly due to decrease in video and real estate advertising.
Search and search-related revenues increased 55.1% year over year to $220.3 million driven by growth in mobile search traffic and improved monetization.
Online game revenues of $105.5 million were up 23.6% from the year-ago quarter mainly on strong performance of the Legacy TLBB mobile game.
Sohu Video revenues decreased 16% from the year-ago quarter to $31 million. Decline in video advertising has been a concern. Sohu Media Portal revenues fell 18% to $31 million on a year-over-year basis owing to intense competition in the online media industry.
Sogou’s revenues surged 53% year over year but declined 11% from the previous quarter to $248 million. The number of daily average users of Sogou Mobile Keyboard increased 30 million to $362 million.
Changyou’s revenues grew 20% year over year but declined 5% sequentially to $137 million.
Margins
Non-GAAP gross margin in the quarter expanded 100 basis points (bps) on a year-over-year basis to 43%.
Non-GAAP gross margin of the company’s online advertising business was 29%, up from 27% in the prior-year quarter.
Brand advertising business margin of 9% expanded 700 bps. Non-GAAP gross margin of the search and search-related business in the quarter contracted 800 bps to 34%.
Non-GAAP gross margin of the online game business increased 300 bps to 84%, driven by growth in Legacy TLBB game.
Sohu’s non-GAAP operating loss was $33.8 million compared with a loss of $40.1 million in the year-ago quarter.
Balance Sheet
Sohu exited the quarter with cash and cash equivalents (and short-term investments) of $3.31 billion compared with $2.19 billion as of Dec 31, 2017.
Outlook
For the second quarter of 2018, Sohu expects total revenues in the range of $485–$510 million.
Brand Advertising revenues are anticipated to be in the range of $65-$70 million, indicating a year-over-year decrease of 19-24%.
Online game revenues are expected in the band of $85-$95 million, marking a decline of 22-31% from the year-ago quarter.
Sogou revenues are projected to be in the range of $295-$305 million, indicating a year-over-year increase of 40-45%
Non-GAAP net loss is anticipated to be in the range of $55-$65 million. Non-GAAP loss per share is projected to be between $1.40 and $1.65.
Zacks Rank & Stock to Consider
Sohu.com carries a Zacks Rank #4 (Sell).
A better-ranked stock in the broader technology sector is Lam Research Corporation (LRCX - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Lam Research is projected to be 17.7%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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