2014-2015 Sohu sales Revenue and future Outlook survey report

Sohu today announced the unaudited 2015 fourth quarter and full-year financial report as at December 31, 2015. The results show that Sohu Q4 total revenue of $466 million, down 2% from a year earlier, the net loss attributable to Sohu was $31 million, a net loss of $20 million in the same period last year, an increase of 55%.

key results for the fourth quarter

• Total revenue was $466 million, down 2% from the same period in 2014, down 11% from the previous quarter.

• Brand advertising revenue was $141 million, down 5% from the same period in 2014, down 7% from a quarter earlier. Among them, Sohu media platform, that does not include video services, other Sohu media business revenue of $49 million, and the same period in 2014, down 4% compared with the previous quarter. Sohu Video advertising revenue was $51 million, an increase of 1% over the same period in 2014, down 8% from the previous quarter. Sogou income was $166 million, an increase of 39% compared with the same period in 2014, up 2% from the previous quarter.

• Online gaming revenue was $127 million, down 31% from the same period in 2014, down 17% from the previous quarter.

• The US GAAP net loss to Sohu was $31 million, US GAAP net loss of $0.80 per share, and a net loss of $13 million to Sohu's non-US GAAP, and non-US GAAP net loss of $0.34 per share.

- key achievements of the year

• Total revenue amounted to $1.9 billion, an increase of 16% over 2014, creating a record of Sohu history.

• Brand advertising revenue of $577 million, an increase of 7% compared with 2014. Among them, Sohu media platform, that does not include video business, other Sohu media business revenue of $198 million, and 2014 flat. Sohu Video advertising revenue was $213 million, an increase of 21% from 2014. Sogou income was $592 million, an increase of 53% from 2014.

• Online gaming revenue was $637 million, down 2% from 2014.

• The US GAAP net loss to Sohu was $51 million, US GAAP net loss of $1.32 per share, and the non-US GAAP net loss to Sohu was $4 million, and non-US GAAP diluted net loss of 9 cents per share.

"Sohu's performance in the fourth quarter of 2015 was robust and its financial performance was better than we had expected. Throughout 2015, we have maintained steady growth despite the adverse effects of macroeconomic weakness and exchange rate factors. Total revenue exceeded $1.9 billion, an increase of 16% from a year earlier, the best level in history. On the Sohu media platform, the rapid growth in revenue from SME customers has offset the negative impact, despite slowing economic growth that has led to tighter budgets for traditional brand advertisers. Sohu Video 2015 total revenue increased by 33% year on year, in which the rapid growth of non-advertising business is encouraging. Sogou annual income reached a record high, and achieved considerable profits. With a total revenue of $762 million and a record high in 2015, profits also rebounded sharply under effective cost control measures. "Sohu Chairman and Chief Executive Officer Charles Zhang said.

"On the business side, Sohu's main products have maintained a strong momentum," Charles Zhang said. By improving product design and enriching content, the number of daily active users in Sohu news client increased by nearly 50% in 2015. Sohu Video has increased investment in PGC content with better input-output ratios, and PGC traffic has grown nearly one times in the past year. 2015, Sogou all the operating indicators of a comprehensive refresh history. In particular, sogou overall search traffic growth of 34%, which is mainly due to its mobile search traffic to achieve three-digit growth. Sogou mobile phone Input method to consolidate its dominant position in the market. Eric data show that by daily active users count, Sogou mobile phone input method stable in China's third largest mobile phone applications. ”

Sogou CEO Wang Xiaochuan said: "2015 Sogou further establish the advantages of differentiation of search content." In the exclusive search and QQ group content based on, we also with the largest online quiz community in the search field to achieve exclusive cooperation. Rich unique and high-quality content to enhance the Sogou search in the user's word of mouth, and improve the user's search experience. ”

Fourth quarter group performance

Income

Total revenue in the fourth quarter of 2015 was $466 million, down 2% from a 2014 earlier, down 11% from the previous quarter.

Total online advertising revenue in the fourth quarter of 2015 was $292 million, up 13% from a 2014 earlier, down 2% from the previous quarter. Total online advertising revenue includes brand advertising and search and search-related business revenues.

Brand advertising revenue was $141 million in the fourth quarter of 2015, down 5% from a 2014 earlier, down 7% from the previous quarter. The decline was mainly due to the decline in property and 17173 per cent of advertising revenue. The decline was mainly due to the decline in online video and 17173 of advertising business revenue. Sohu Media platform, which does not include video services, other Sohu media business revenue of $49 million, and the same period in 2014, down 4% compared with the previous quarter. Sohu Video advertising revenue was $51 million, an increase of 1% over the same period in 2014, down 8% from the previous quarter.

In the fourth quarter of 2015, search and search related revenues were $151 million, an increase of 37% over the same period of 2014, up 2% from the previous quarter. The increase was mainly due to the increase in pay-per-click to drive search business growth.

Online gaming revenue was $127 million in the fourth quarter of 2015, down 31% from a 2014 earlier, down 17% from the previous quarter. And the decline is mainly due to old games, such as "Tianlong eight 3D" and "Tianlong eight" the natural decay of income, as well as the Seventh Avenue transactions in the third quarter of 2015 to complete the delivery of the page tour revenue decreased.

Gross margin

In the fourth quarter of 2015, U.S. GAAP and non-US GAAP gross profit margins were 57%, compared with 59% in the same period in 2014, 59% in the previous quarter.

In the fourth quarter of 2015, the US GAAP gross profit margin was 47%, compared with 52% in 2014 and 49% in the previous quarter. 2015 fourth quarter online advertising business non-GAAP gross profit margin was 47%, 2014 the same period was 53%, the previous quarter was 49%.

In the fourth quarter of 2015, the U.S. GAAP and non-GAAP gross profit margins were 38%, compared with 48% in 2014 and 40% in the previous quarter. The decline was mainly due to the increase in video content costs.

Search and search related business in the fourth quarter of 2015 both GAAP and non-GAAP gross profit margins were 55%, compared with 59% in 2014 and 58% in the previous quarter. Gross profit margin is mainly due to the higher ratio of purchasing cost to search and search related business revenue.

In the fourth quarter of 2015, the U.S. GAAP and non-GAAP gross profit margins were 78%, compared with 72% in 2014 and 77% in the previous quarter. Gross margin growth is mainly due to changes in the composition of the income, usually more than the PC-side games need higher income into the cost of mobile game revenue reduction.

operating expenses

US GAAP operating expenses were $246 million in the fourth quarter of 2015, down 22% from a 2014 earlier, down 7% from the previous quarter. Non-GAAP operating expenses were $221 million, down 23% from the same period in 2014, down 17% from a quarter earlier. In the fourth quarter of 2014, we confirmed the impairment of goodwill and the cost of acquisition-related intangible assets of $52 million, mainly in connection with the RAID call business. In the third quarter of 2015, we identified $40 million in the value of goodwill impairment and acquisition-related intangible assets impairment fees related to the Dolphin browser business. Excluding the impact of these non-recurrent costs, operating expenses for non-US GAAP fell by 6% compared with the same period in 2014, down 3% from the previous quarter.

Operating profit

In the fourth quarter of 2015, the US GAAP operating profit was $19 million, operating loss of $34 million in the same period in 2014, and operating profit of $43 million in the previous quarter.

Non-GAAP operating profit was $44 million in the fourth quarter of 2015, operating loss of $6 million in the same period in 2014, and operating profit of $41 million in the previous quarter.

Income tax expense

In the fourth quarter of 2015, U.S. GAAP and non-GAAP income tax costs were $20 million, and income tax costs were $9 million in the same period in 2014.

Net profit

Before the net profit attributable to minority shareholders, the US GAAP net profit of $9 million in the fourth quarter of 2015, a net loss of $33 million in the same period in 2014 and a net profit of $93 million in the previous quarter. Prior to deducting the net profit attributable to minority shareholders, the non-GAAP net profit in the fourth quarter of 2015 was $34 million, with a net loss of $5 million in the same period in 2014 and a net profit of $91 million in the previous quarter.

In the fourth quarter of 2015, the US GAAP net loss to Sohu was $31 million, the US GAAP net loss of $0.80 per share, a net loss of $20 million in the same period in 2014, and a net profit of $39 million in the previous quarter. In the fourth quarter of 2015, Sohu's non-US GAAP net loss was $13 million, non-GAAP net loss of $0.34 per share, net loss of $14 million in the same period in 2014, and net profit of $49 million in the previous quarter.

Capital Liquidity

As of December 31, 2015, Sohu Group's cash and cash equivalents and short-term investments totalled $1.42 billion, with a balance of $1.07 billion as at December 31, 2014.

- Annual Group Performance

Income

Total revenue in 2015 was $1.9 billion, an increase of 16% over 2014.

The total online advertising revenue for 2015 was $1.1 billion, an increase of 24% compared to 2014. Total online advertising revenue includes brand advertising and search and search-related business revenues.

The 2015 brand advertising revenue was $577 million, an increase of 7% from 2014. Growth is mainly due to the increase in revenue from online video services. Sohu Media platform, which does not include video services, other Sohu media business revenue of $198 million, flat with 2014. Sohu Video advertising revenue of $213 million, an increase of 21% compared with 2014

In 2015, search and search related business revenue was $540 million, an increase of 51% from 2014. Growth is driven primarily by the growth of paid clicks and the higher average single-click cost that drives search business growth.

Online gaming revenue for 2015 was $637 million, down 2% from 2014.

Gross margin

2015 US GAAP and non-GAAP gross profit margins were both 56% and 2014 were 59%.

In 2015, the U.S. GAAP and non-GAAP gross profit margins for the online advertising business were 44% and 2014 were 48%.

The 2015 brand advertising business in the United States GAAP and non-U.S. GAAP gross margin of 34%, 2014 are 43%. The decrease in gross margin is mainly due to the increase in video content costs.

2015 Search and search related Business US GAAP and non-US GAAP gross profit margins were both 56% and 2014 of 54%. Gross margin growth is mainly attributable to increased revenue and lower costs as a percentage of search and search-related business income.

2015 online gaming Business US GAAP and non-GAAP gross profit margins are both 75% and 2014 are 78%.

operating expenses

The US GAAP operating expenses were $996 million in 2015, down 17% compared with 2014. Non-US GAAP operating expenses were $944 million, down 16% from 2014. The decline was mainly due to the cost of compensation and benefits and the decline in marketing costs for mobile internet products.

Operating profit

The US GAAP operating profit in 2015 was $82 million, with a 2014-year operating loss of $205 million.

2015 non-GAAP operating profit of $136 million, 2014 year operating loss of US $131 million

Other benefits

Other gains in 2015 were $75 million, while other gains in 2014 were $10 million. Other gains were attributable to a one-off gain in the third quarter of 2015, which included the disposal of the Seventh avenue for surfing the web game business.

Income tax expense

The 2015 U.S. GAAP and non-GAAP income tax costs are $77 million, and 2014-year income tax costs are $6 million. The increase was mainly due to a $52 million increase in the cost of income tax on swimming.

Net profit

Before the net profit attributable to minority shareholders and the apparent dividend attributable to sogou a preferred shareholders, the United States GAAP net profit in 2015 was $109 million, with a net loss of $171 million in 2014. Before the net profit attributable to minority shareholders, the 2015 non-GAAP net profit was $162 million, with a net loss of US $97 million in 2014.

The US GAAP net loss to Sohu in 2015 was $51 million, the US GAAP net loss of $1.32 per share, and a net loss of $171 million in 2014. The non-US GAAP net loss to Sohu in 2015 was $4 million, with non-GAAP net losses of 9 cents per share and a net loss of $120 million in 2014.

Yuchuyan, president and chief financial officer of Sohu, said, "I am gratified to see that 2015 Sohu's main lines of business broadly achieved the financial goals set at the beginning of the year." And more importantly, we can have a team that is very talented in each line of business. Today, when faced with the challenges of rapid changes in the industry, I believe that this cohesive team will ensure the future success of the Sohu group. ”

Business Outlook

Sohu expects . first quarter of the year:

The total income is between $390 million and $420 million. Brand advertising revenue rose from $125 million to $135 million, down 4% to 11% from four in the quarter of 2015, down 7% to 1% from the same period in 2015. Sohu Media platform revenue accounted for 35% to 37% of total brand advertising revenue. Sohu Video advertising revenue accounted for 31% to 33% of total brand advertising revenue. Sogou income rose from $135 million to $145 million, down 12% to 19% from the fourth quarter of 2015, up 16% to 25% from the same period in 2015. Online games earned between $95 million to $105 million, down 17% to 25% from the fourth quarter of 2015, down 43% to 49% from the same period in 2015. The non-GAAP net profit was between $0 and $10 million before deducting the net profit from the non-US GAAP attributable to minority shareholders. The non-GAAP net loss attributable to Sohu is between $15 million and $25 million. Non-GAAP net losses per share were between $0.40 to $0.65. Under the assumption that new equity incentives and stock prices do not change, Sohu expects equity incentive costs to be between $9.5 million and $10.5 million. The US GAAP net loss to Sohu was between $25 million and $35 million, with the US GAAP net loss of $0.65 to $0.90 per share.

2014-2015 Sohu sales Revenue and future Outlook survey report