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Sohu.com (SOHU) Q2 Earnings Beat Estimates, Revenues Rise Y/Y

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Sohu.com (SOHU - Free Report) reported second-quarter 2021 adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate by a wide margin of 125%. The company had reported a loss of $1.92 per share in the year-ago quarter.

Revenues increased 27.8% year over year to $204.4 million.

Top Line Details

In the second quarter, Brand advertising revenues decreased 3.1% year over year to $36.8 million.

Online game revenues of $151.3 million jumped 42.8% year over year, driven by strong demand for TLBB Vintage.
 

Sohu.com Inc. Price, Consensus and EPS Surprise

Sohu.com Inc. Price, Consensus and EPS Surprise

Sohu.com Inc. price-consensus-eps-surprise-chart | Sohu.com Inc. Quote

 

For PC games, total average monthly active user (MAU) accounts were 2.1 million, up 9% year over year. Total quarterly aggregate active paying accounts (APA) were 0.9 million, down 3% year over year.

For mobile games, total average MAU were 1.9 million, down 39% year over year primarily due to lower demand for Legacy TLBB Mobile and TLBB Honor. Total quarterly APA were 0.5 million, down 21% year over year.

Other revenues increased 1.7% year on year to $16.3 million.

Operating Details

Non-GAAP gross margin in second-quarter 2021 increased to 76% from 67% reported in the year-ago quarter.

Brand advertising business margin decreased to 28% from the year-ago quarter’s 40%. The year-over-year decrease was mainly due to increases in costs of events hosted in the second quarter of 2021.

Online games’ non-GAAP gross margin was 89%, up from the year-ago quarter’s 78%.

Non-GAAP operating expenses were $127.2 million, up 25% year over year due to higher marketing expenses as well as salary and benefits expenses.

Sohu’s non-GAAP operating profit was $28 million, significantly up from the year-ago quarter’s $5.2 million.

Balance Sheet

As of Jun 30, 2021, Sohu’s cash and cash equivalents (including restricted cash and short-term investments) came in at $874.4 million compared with $335 million as of Mar 31, 2021.

Q3 Guidance

For third-quarter 2021, Brand advertising revenues are anticipated in the range of $35-$39 million, down 5% to 15%.

Online game revenues are expected in the band of $145-$155 million, which indicates a year-over-year increase of 43-53%.

Zacks Rank & Stocks to Consider

Sohu.com currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Avnet (AVT - Free Report) , CyberArk Software (CYBR - Free Report) and Agilent Technologies (A - Free Report) . While Avnet sports a Zacks Rank #1 (Strong Buy), both CyberArk and Agilent carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet, CyberArk and Agilent are set to report their earnings results on Aug 11, 12 and 17, respectively.