Sohu.com Limited Q4 FY2025 earnings call

• In 2025, marketing services revenues exceeded previous guidance while online game revenues were in line with expectations. Non-GAAP bottom line performance was at the high end of prior guidance.
• Social media platform continued to refine products and enhance algorithms to address user needs, hosted innovative events to boost user engagement and monetization opportunities.
• Online game business remained committed to operational excellence, delivered high-quality content updates, and had game revenues in line with expectations in the quarter, with plans to continue launching expansion packs and content updates for TLBB series and other titles.
• On share repurchase, as of February 5, 2026, Sohu.com Limited had purchased 8,100,000 ADS for aggregate cost of approximately $150 million.

For the social media platform, quarterly revenues were $21 million compared with $24 million in the same quarter last year. Quarterly operating loss was $72 million compared with an operating loss of $69 million in the same quarter last year. For the full year 2025, revenues were $75 million compared with $91 million in 2024. The full-year operating loss was $283 million compared with an operating loss of $287 million in 2024. For Changyou, quarterly revenues were $121 million compared with $111 million in the same quarter last year. Quarterly operating profit was $45 million compared with an operating profit of $48 million in the same quarter last year. For the full year 2025, revenues were $509 million compared with $506 million in 2024. The full-year operating profit was $238 million compared with an operating profit of $196 million in 2024.

• 2026 marketing service revenues expected to be between $10 million and $11 million, implying annual decrease of 20% to 27% and sequential decrease of 35% to 41%.
• 2026 online game revenues expected to be between $123 million and $130 million, implying annual decrease of 4% to annual increase of 5% and sequential decrease of 6% to sequential increase of 2%.
• Both non-GAAP and GAAP net loss attributable to Sohu.com Limited expected to be between $10 million and $20 million.

Forward-looking statements involve key risks and uncertainties. A number of important factors could cause actual results to differ materially from those in forward-looking statements. For more information about potential risks and uncertainties, refer to the company's filings with the Securities and Exchange Commission.

Q: Hi. Good evening. Thanks, management, for taking my question. My first question is about advertising. When I look at the Q1 advertising guidance, it seems relatively soft on a sequential basis compared to historical Q1. So I just want to get some color. Is it due to macro uncertainties? And can we talk about the trend for categories like Auto and IT sectors in Q1? Also, on the gaming guidance, because when I look at the Q1 revenue guidance on gaming, it seems like a negative or positive 1-2. I just want to see what really drives the high end or the low end of the guidance and the trend we are seeing now. That's my first question. My second question is about AI. Given that, I think there's a lot of industry discussion in overseas markets regarding whether AI will disrupt the online gaming sector. Just want to get some thoughts from management about whether AI is a possibility tool in gaming, or are we actually seeing AI may disrupt the sector in the long term?

A: Okay, Thomas. The first question is about advertising. The question about Q1 and softness, right? So I think it's mainly due to the seasonality because this year, Chinese New Year is kind of late. I mean, two weeks late in February. So, you know, companies are not getting a lot of things done in January or February. The overall macroeconomic situation remains similar to Q4. So that's why. And then the next is about gaming, right? For gaming revenue. Yeah.

Q: Thank you. May I quickly also ask a follow-up question back to advertising? Charles, may I ask about how we are actually seeing the trend for different advertising categories such as auto and IT sectors? I remember in the last earnings call, we were actually seeing some softness. I'm not sure if there's any improvement for auto and IT sectors?

A: Yeah. There is some improvement in the auto sector. There's a higher percentage of the overall revenue split. So, yeah, because, yeah, the auto industry is doing better than the IT and other FMCG. They have a higher percentage of the total pie. I mean, the overall revenue.

Q: Hello. Thank you. Good evening, management. Thanks for taking my questions. I have a few questions. First, I wanted to follow up on the first quarter guidance and also the 4Q. Was there any one-off revenue that was recognized in the 4Q that led to the outperformance in the fourth quarter? Any special ad campaign by any industry vertical that outperformed during the quarter? Second question is on gaming. Can management share with us the game pipeline and also the major expansion pack that you plan to release for the remaining of 2026? So that we can better assess the game revenue trend for the next three quarters. Lastly, on your guidance, the net loss guidance seems like this quarter, the $10 million to $20 million net loss that you've guided is a much smaller number than previously. Usually, the loss is around the $20 million to $30 million range. Any particular reasons why the loss is narrower than previous quarters? Also, should we expect this trend to be consistent for the remaining of 2026?

A: So your first question is about understanding why Q4 had growth, right? And then Q1 has softness. You were thinking that there are reasons for this. Right?

Q: That's right. That's why Q4 is stronger than your guidance. Right? Any particular special events that happened in Q4?

A: Oh, I think Q4, we are just doing better overall. The Q1 softness or the Q1 lower forecast is purely due to the Chinese New Year's delayed timing this year. Chinese New Year is, you know, like, February 16. Right? So it's more than two weeks late than last year. So that, you know, advertisers, they just do not have much going on. Only after the Chinese New Year, after February and into March, they come back to work and start to plan for the year to add marketing campaigns. So it's purely due to Chinese New Year that our advertising is not doing that well in Q1, even compared with last year's first quarter, 2025. But the Q4 is not because there was a major event; it's just that we are doing better. The macroeconomic situation is still similar, not very good, with a lot of uncertainties. But we are just seeing a shift in the advertising industry. Traditional advertising on those media channels is not working now. People are not spending much on that, on brand marketing. But instead, we have innovative marketing solutions based on KOL or influencer marketing, online events, offline events, live streaming, all these that are consistent with our product development side, our user social media. So we have these innovative marketing solutions that differentiate us from others. So we are getting the advertising and brand marketing dollars. Especially in Q4, we had some major events, some offline events that attracted advertisers. Online KOL accounts and live streaming, all these things. So we are entering into a new age of marketing and social media time. So I hope I answered your question.

Q: Yes, you did. Thank you.

A: So next, regarding the game pipeline.

Q: First, regarding the game pipeline, we have a card-based RPG based on IP. It's a mobile game mixed with a hardpoint game. It is expected to launch in 2026 or early 2027, subject to its development process and testing results. Meanwhile, we also have several mini-program video games in development. We will decide if we will launch the games or when to launch the games based on their development and testing results. For the existing games, we will launch expansion packs in a similar cadence as previous years. As for the revenue trend for this coming quarter, we cannot forecast the trend right now. It depends on the performance of the expansion pack of our older games and also depends on whether we can launch new games and their performance. Thank you.

Q: Thank you. This is for Q4, right? We are talking about.

A: Yeah. Q4. Yes.