Sohu.com(US:SOHU)2019-02-01 18:15Financial Data and Key Metrics Changes - Total revenues for Q4 2018 were $482 million, down 5% year-over-year but up 5% quarter-over-quarter [8] - Net brand advertising revenue was $57 million, down 20% year-over-year and flat quarter-over-quarter [8] - Search and search-related advertising revenues were $277 million, up 12% year-over-year and 8% quarter-over-quarter [8] - Online games revenue was $94 million, down 14% year-over-year and 2% quarter-over-quarter [9] - GAAP net income attributable to Sohu.com Limited was $15 million compared to a net loss of $295 million in Q4 2017 [9] - Non-GAAP net loss attributable to Sohu.com Limited was $59 million, improved from a loss of $78 million in Q4 2017 [9] - Full year 2018 total revenue was $1.8 billion, up 1% from 2017 [10] Business Line Data and Key Metrics Changes - Sohu Media Portal revenues for Q4 were $33 million, down 10% year-over-year, with a quarterly loss of $36 million [22] - Sohu Video revenues for Q4 were $26 million, down 34% year-over-year, with a quarterly loss of $13 million [23] - Sogou's quarterly revenues were $298 million, up 7% year-over-year, with net income of $27 million [23] - Changyou's quarterly revenues were $180 million, down 18% year-over-year, with net income of $11 million [24] Market Data and Key Metrics Changes - Daily active users of Sohu News app doubled in December 2018, with page views tripling from the previous year [12] - Sogou Mobile Keyboard reached 430 million daily active users, an increase of 28% from the prior year [18] Company Strategy and Development Direction - The company focused on key mobile products and improving operating efficiencies in a challenging macroeconomic environment [6] - Sohu Video plans to enhance original content production while acquiring low-cost TV programs to improve its content library [17] - Sogou aims to integrate AI technologies into its products and services, enhancing search quality and user engagement [18] - Changyou will prioritize developing high-quality MMORPG mobile games and exploring opportunities in strategy games [21] Management Comments on Operating Environment and Future Outlook - Management noted that the slowdown in China's economic growth negatively impacted advertising revenues, particularly in the auto and IT sectors [13] - Despite macro headwinds, management is confident that Sohu Media will achieve positive growth in 2019 through increased content marketing efforts [13] - The company is optimistic about Sohu Video reaching profitability within the year due to a better content mix and improved monetization strategies [37] Other Important Information - Changyou recognized a $60 million charge for goodwill impairment related to a one-time announcement, affecting non-GAAP net loss figures [9] - The company plans to enhance its advertising system to improve conversions and attract more budgets from small and medium enterprises [13] Q&A Session Summary Question: Impact of negative seasonality on brand advertising - Management indicated that the decline in brand advertising metrics is primarily due to seasonality related to the Chinese New Year, with macroeconomic conditions having a secondary impact [30] Question: Comparison of current macro softness to previous cycles - Management noted that traditional sectors like auto and IT are facing challenges, but emphasized the need to diversify the client base to mitigate risks [33] Question: Update on Sohu Video's path to breakeven - Management expressed confidence in reaching profitability for Sohu Video within the year, citing a successful mix of in-house produced content and cost-cutting measures [37] Question: Current state of video regulation in China - Management acknowledged tightening regulations in the online video industry but stated that the impact is less severe compared to the media side [37]