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Read MoreHide Full Article’s (SOHU - Free Report) subsidiary Sogou recently commenced its Initial Public Offering (IPO) process by filing regulatory F-1 form with the Securities and Exchange Commission (SEC).

The company intends to raise $600 million through issue of American Depository Shares (ADS) on the NYSE with the ticker “SOGO”. However, the exact number of ADS to be offered, representing Class A ordinary shares, has not been determined.

JPMorgan Chase & Co. (JPM - Free Report) , Credit Suisse Securities, Goldman Sachs and China International Capital Corporation Hong Kong Securities will serve as the underwriters for the deal.

Sogou – A Key Driver for Sohu

Sogou search engine forms an important part of Sohu’s online advertising business. Search and search-related advertising services accounted for 90.4% and 88.1%, respectively, of Sohu’s total revenue in fiscal 2016 and first half of 2017.

Sogou continues to gain popularity and market share driven by increased product quality and effective marketing campaigns. In the last reported quarter, Sogou’s revenues grew 20% year over year and 30% from the previous quarter to $211 million, driven by an increase in mobile and search traffic.

We believe its partnership with Tencent has helped the company gain traction. It has also improved its competitive position against market leader Baidu (BIDU - Free Report) and peer Qihoo.

Sohu expects Sogou to grow at a faster rate based on the synergies from the Tencent partnership. We believe that this partnership will improve Sohu’s liquidity, which will help it to invest further in developing video and other services going forward.

The company launched a novel service, Sogou Wise Doctor, designed to offer reliable healthcare search results in China. In addition, the company had also partnered with Microsoft (MSFT - Free Report) Bing to enhance its search feature for English and academic content.

Further, Sohu is also leveraging artificial intelligence (AI) to enhance its offerings. The company added a new voice input feature, Sogou Mobile Keyboard, which uses AI to enable users to correct input mistakes through voice commands. Per the company, the usage of the feature  has increased 60% year over year.

Currently, Sogou is co-owned by Sohu, Tencent and Sohu’s CEO Zhang Chaoyang, with 37.8%, 43.7% and 9.2% stake, respectively.

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