Sohu.com Limited Q2 FY2025 earnings call

• Sohu media platform continued to focus on refining products, enhancing social network operation, and improving synergies. It hosted differentiated events to increase user engagement, consolidate brand influence, and capture monetization opportunities. For example, it hosted K-pop and Hanfu events, as well as outdoor explorer events. The Physics Class continued to deliver physics knowledge and promoted brand influence.
• Online game revenues hit the high end of guidance. PC game businesses launched expansion packs and events, upgraded skill systems, and celebrated anniversaries. The company will continue to launch content updates and advance a top games strategy, exploring IP potential and diversifying game types.
• Sohu has repurchased 6.6 million ADS for an aggregate cost of approximately $83 million, which is more than half of the total commitment.

In the second quarter of 2025, total revenues were $126 million, down 27% year-over-year and 7% quarter-over-quarter. Marketing services revenues were $16 million, down 21% year-over-year and up 14% quarter-over-quarter. Online game revenues were $106 million, down 28% year-over-year and 10% quarter-over-quarter. For Sohu media platform, quarterly revenues were $19 million compared with $24 million in the same quarter last year, and quarterly operating loss was $69 million compared with an operating loss of $72 million in the same quarter last year. For Changyou, quarterly revenues were $107 million compared with $148 million in the same quarter last year, and quarterly operating profit was $51 million compared with operating profit of $32 million in the same quarter last year.

• For the third quarter of 2025, marketing services revenues are expected to be between $40 million and $50 million, implying an annual decrease of 20% to 25% and a sequential decrease of 4% to 10%.
• Online game revenues are expected to be between $107 million and $117 million, implying an annual decrease of 8% to 16% and a sequential increase of 1% to 10%.
• Both non-GAAP and GAAP net loss attributable to Sohu.com Limited are expected to be between $25 million and $35 million.

• Macro economic uncertainties affect advertising spending as companies are more cautious due to lower profit margins and less disposable income.
• Intensifying market competition and growing user demand for quality and innovation pose challenges.

Q: About the forecast of future Q3 advertising situation, AI application in operations, and share buyback program.

A: Macro economic situation is not good, affecting advertising spending. Sectors include auto, FMCG, IT services. AI is used in online games to improve efficiency and in media platforms for search capability. Using open source language models. Share buyback is halfway done with no plan for other capital returns currently.

Q: When will the loss from marketing service revenue last, reason for sequential improvement in game revenue, and revenue implication from events.

A: It's hard to say when the loss will end as user base growth is nonlinear. Old games are stable, new game version rolled out will bring additional revenue. There are sponsorships for K-pop and Hanfu events, but goal is to develop users and market brand.