A month has gone by since the last earnings report for Sohu.com (SOHU Quick QuoteSOHU - Free Report) . Shares have added about 2.3% 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 catalysts.

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

Sohu 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

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. Revenues reported in the quarter were $193.4 million, beating the Zacks Consensus Estimate of $173 million. 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 totaled $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.

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.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 38.89% due to these changes.

VGM Scores

At this time, Sohu.com has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Sohu.com has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.