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SOHU's Q1 Earnings Beat Estimates, Revenues Decline Y/Y

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Sohu.com Limited (SOHU - Free Report) reported relatively soft first-quarter 2022 results with a year-over-year decrease in revenues and net income due to lower contribution from both the brand advertising sector and the online games sector. The company aims to focus on refining its products and improving its operational efficiency in the impending quarters.

Quarter Details

Revenues reported in the quarter were $193.4 million, beating the Zacks Consensus Estimate of $173 million. Net Income reported in the quarter was $2.7 million or 7 cents per share, beating the Zacks Consensus Estimate of a loss of 31 cents. In the quarter, Brand advertising revenues declined 22.7% year over year to $23.8 million. Online games revenues of $157.8 million fell 10.6%. Other revenues totalled $11.8 million, down 20.6%.

Despite a year-over-year decrease, the online games sector reported better-than-expected results, primarily driven by product upgrades and refinement in the quality in the news and overall content.

For PC games, total average monthly active user accounts (MAU) were 2 million, down 13% year over year, due to the decline of Changyou’s older games. Total quarterly aggregate active paying accounts (APA) were 1 million, up 4%.

For mobile games, total average MAU was 2.4 million, up 16% year over year, which was driven by Bright Stars, a game launched for the women during the quarter. Total quarterly APA was 0.5 million, up 14%, again driven by Bright Stars.

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

Operating Details

Quarterly GAAP operating profit was reported at $12.7 million, down 75.1% from the year-ago quarter. Operating expenses increased 6% year over year due to an increase in traffic and user acquisition cost. However, top-line contraction led to lower operating profit in the quarter.

Liquidity

As of Mar 31 2022, Sohu had $534.2 million in cash and cash equivalents with $450.3 million of long-term tax liabilities.

Q2 Outlook

For the second quarter of 2022, Brand advertising revenues are estimated to be in the range of $22-$25 million, which implies an decrease of 32% to 40% year over year. Online game revenues are expected in the band of $150-$160 million, which indicates an annual decrease of 1% to increase of 6%. Sohu’s non-GAAP net loss is likely to be between $15 million and $5 million. GAAP net loss is projected between $18 million and $8 million.

Zacks Rank & Stocks to Consider

Sohu currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Duck Creek Technologies, Inc. (DCT - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. Current-year estimates have been revised up by 400% over the past year, while that for the next year is up by 40%.

The long-term earnings growth expectations for Duck Creek is 50%.

SAP SE (SAP - Free Report) , carrying a Zacks Rank #2 (Buy), is a key pick for stock investors. SAP has a long-term earnings growth rate expectation of 5.89%

SAP, with its Rise with SAP solution, was adopted by clients, including Accenture, Canon Production Printing, Exide Industries Limited, NEC Corporation, Qinqin Food, Rising Auto and TELUS.

Silicon Motion Technology (SIMO - Free Report) , carrying Zacks Rank #2, is another great pick for stock investors. It has a long-term earnings growth rate of 9%, with an earnings surprise of 0.96% on average.

Silicon Motion has established itself as the leading merchant supplier of client SSD controller to module makers, including most leaders in the United States.