Sohu.com(US:SOHU)2024-03-18 10:21Financial Performance - For the year ended December 31, 2023, total revenues were approximately $600.7 million, representing an 18% decrease compared to 2022[638]. - The brand advertising business generated revenues of $88.7 million, a 14% annual decrease, accounting for 15% of total revenues[638]. - The online game business generated revenues of $479.7 million, an 18% annual decrease, representing 80% of total revenues[638]. - The net loss from continuing operations was $66.1 million in 2023, compared to a net loss of $17.3 million in 2022[638]. - Revenues from Sohu Media Portal were $66.1 million for 2023, down from $76.8 million in 2022, with the number of advertisers decreasing to 1,400[658]. - Revenues from Sohu Video were $17.6 million for 2023, compared to $19.6 million in 2022, with the number of advertisers increasing to 93[658]. - Revenues from mobile games were $111.0 million for 2023, a decrease of $48.7 million from 2022, primarily due to a decline in older games[662]. - Revenues from other services were $32.3 million for 2023, down from $45.2 million in 2022, mainly due to a $12.3 million decrease in paid subscription services[666]. Game Business Insights - Revenues from the online game business were $479.7 million for 2023, with PC games generating $368.7 million, representing 77% of online game revenues[661]. - TLBB PC generated revenues of $321.4 million in 2023, accounting for approximately 67% of Changyou's online game revenues and 53% of the Sohu Group's total revenues[661]. - The mobile game Legacy TLBB Mobile generated revenues of $55.4 million in 2023, accounting for approximately 12% of Changyou's online game revenues and 11% of total revenues[662]. - The online game gross margin was 86% for 2023, consistent with 2021, while brand advertising gross margin improved to 20%[671]. - The average monthly active accounts for mobile games decreased to 1.6 million in 2023, down from 2.4 million in 2022[665]. - The company plans to continue enhancing its capabilities in game design and technology while expanding its game portfolio with new types of games[643]. Expenses and Costs - Total cost of revenues decreased to $145.8 million in 2023, down 24% from $191.6 million in 2022[669]. - Cost of online game revenues was $65.0 million for 2023, a decrease of $26.0 million from 2022, including a $22.0 million reduction in revenue-sharing payments[671]. - Product development expenses increased to $279.8 million in 2023, a 7% increase from 2022, driven by higher bandwidth service and salary expenses[676]. - Sales and marketing expenses were $213.4 million for 2023, a decrease of $12.1 million from 2022, primarily due to reduced advertising expenses[678]. - General and administrative expenses decreased to $48.9 million in 2023, down 14% from 2022, mainly due to lower salary and benefits expenses[679]. Cash Flow and Liquidity - The company had cash and cash equivalents of approximately $362.5 million as of December 31, 2023, with short-term investments totaling $597.8 million and long-term time deposits of $388.6 million[693]. - Net cash used in continuing operating activities was $25.6 million in 2023, primarily due to the net loss of $66.1 million, adjusted for non-cash items[698]. - Net cash used in continuing investing activities was $291.7 million in 2023, mainly due to $1.80 billion spent on short-term investments and time deposits[701]. - Net cash used in continuing financing activities was $6.6 million in 2023, primarily for share repurchases[703]. - The company expects its current liquidity and capital resources to be sufficient for at least the next twelve months[693]. Tax Liabilities and Regulatory Issues - As of December 31, 2023, the company accrued deferred tax liabilities of $253.5 million for withholding taxes related to dividends from its Chinese mainland-based WFOEs to its Hong Kong subsidiary[707]. - Long-term tax liabilities recorded were $212.9 million, primarily related to unrecognized tax benefits and potential additional tax obligations[714]. - The company is subject to a 10% withholding income tax on dividends distributed to foreign holding companies, which can be reduced to 5% under certain conditions[707]. - Regulatory restrictions in the Chinese mainland may limit the ability of the company’s subsidiaries to distribute dividends, affecting cash availability for the parent company[705]. - The RMB is not convertible into foreign currencies for capital account items without prior approval from SAFE, affecting the company's ability to repatriate investments[709]. Accounting Standards and Financial Reporting - Recent accounting standards adopted on January 1, 2023, did not significantly impact the company's consolidated financial statements[716]. - The company is evaluating the impact of new accounting standards related to segment reporting and income taxes, effective in 2024 and 2025 respectively[717][718].