Sohu.com(US:SOHU)2023-05-15 13:42Financial Performance and Key Metrics - In Q1 2023, total revenue was $162 million, down 16% year-over-year but up 1% quarter-over-quarter [7] - Brand advertising revenue was $23 million, down 5% year-over-year and 22% quarter-over-quarter [7] - Online game revenues were $129 million, down 18% year-over-year but up 7% quarter-over-quarter [7] - GAAP net loss attributable to Sohu.com Limited was $80 million, compared to a net income of $3 million in Q1 2022 [8] - Non-GAAP net loss was $13 million, compared to a net income of $9 million in the same quarter last year [8] Business Line Performance - Sohu Media Portal revenues were $18 million, unchanged from the same quarter last year, with an operating loss of $35 million [14] - Sohu Video revenues were $30 million, down from $50 million in the same quarter last year, with an operating loss of $32 million [14] - Changyou's online game business revenues were $131 million, down from $160 million in the same quarter last year, with an operating profit of $55 million [14] Market Data and Key Metrics - The advertising industry outlook for 2023 shows top categories as auto (25%), FMCG (15%), and internet service (15%) [18] - The advertising market is expected to recover moderately, with small-ticket items showing signs of recovery [19][25] Company Strategy and Industry Competition - The company is focusing on enhancing user experience and operational efficiency through product and algorithm refinements [6] - Sohu Video is developing both long-form and short-form original content under a Twin Engine strategy, consolidating resources for diverse monetization opportunities [6][10] - The online game business aims to maintain stability while introducing new games and updates to engage players [13][21] Management Comments on Operating Environment and Future Outlook - Management noted that the advertising market is showing signs of recovery, particularly in small-ticket items, while large-ticket items remain weak [19][25] - The company anticipates a potential recovery in the auto industry advertising in Q3 due to increased competition, especially in the electric vehicle sector [18][26] - For the gaming segment, the company expects a sequential bounce in Q3 following the launch of new games [24][28] Other Important Information - The company expects brand advertising revenues for Q2 2023 to be between $23 million and $26 million, and online game revenues to be between $112 million and $122 million [15] - Non-GAAP net loss for Q2 is expected to be between $15 million and $25 million, while GAAP net loss is projected to be between $80 million and $28 million [15] Q&A Session Summary Question: Advertising industry outlook and spending budget among various sectors - Management indicated that the auto industry is expected to recover in Q2 or Q3, while FMCG shows some recovery in small items [18][19] Question: Online game outlook and game pipelines for 2023 - Management confirmed the release of new TLBB Mobile in Q3 and other projects pending license approval [20][21] Question: Overall advertising sentiment and potential for big-ticket item spending - Management noted that while big-ticket items remain weak, there is potential for recovery in small-ticket items and FMCG [25][26] Question: Guidance for gaming in Q2 and expectations for Q3 - Management acknowledged a weaker guidance for Q2 due to fewer promotions but expects a meaningful bounce in Q3 with new game launches [24][28]