Sohu.com Limited

Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining SOHO's second quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to hand the conference over to your host for today's conference call, Quang Tu. Investor Relations Director of Soho. Please go ahead.

Thanks, operator. Thank you for joining us today to discuss Soho's second quarter 2020 results. On the call are Chairman and Chief Executive Officer, Dr. Charles Zhang, CFO, Joanna Li, and Vice President of Finance, James Dunn. Also with us today are Chang-Yu CEO, Derwen Chen, and CFO, Yao-Bing Wang. Before management begins their prepared remarks, I would like to remind you of the Commercive Harbor Statement. in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forelooking statements. These statements are based on current plans, estimates, and projections, and therefore, you should not place undue reliance on them. Forelooking statements involve inherent risks and uncertainties. We caution you that a number of important factors may cause actual results to differ materially from those contained in any forelooking statement. For more information about the potential risks and uncertainties, please refer to the company's findings with the Securities and Exchange Commission, including the most recent annual report on Form 20F. Please also be reminded that SOGO's results of operations have been excluded from our results from continuing operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. unless indicated otherwise. The results that we talk about are related to continued operations only. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thank you, everyone, for joining our call. For the second quarter of 2021, despite the negative impact of COVID-19, we kept exploring new monetization opportunities while deeply controlling the budget. Thanks to the outperformance of our online game business, our profitability exceeded the prior guidance. For Sohu Media, we focused on innovating our products and technology and effectively promoting the generation and distribution of high-quality content. of our Sohu video, we continue to execute our TuneEngine strategy of developing high-quality long-form and short-form content, while at the same time refining our advanced live broadcasting technology and moving them out to various applications. We're also able to diversify our revenue sources and better capture advertising budgets by integrating our live broadcasting technologies into our unique events. For Changyong, online games performed well during the quarter, and its revenue exceeded the high end of our prior guidance. Let me now go into more details about each business in a moment, but now let me first look at the quick overview of financial performance. For the second quarter of this year, total revenues $204 million, up 28% year over year, and down 8% quarter over quarter. Brand advertising revenues, $37 million, down 3% year over year, and up 20% quarter over quarter. Online game revenues, $151 million, up 43% year over year, and down 14% quarter over Gap net income from continuing operations attributable to SOHO.com Limited was $22 million, compared with the net income of $11 million in the same quarter last year, and the income of $32 million in the first quarter of this year, 21. Non-gap net income from continuing operations attributable to SOHO.com Limited was $25 million, compared with net income of $12 million in the second quarter last year and a $37 million in the first quarter of this year. Lastly, please be noted that for the gap and non-gap net income for the second quarter of last year mentioned above, additional withholding income tax accrual of $88 million of Chang You has been excluded. Now let me go through some of our key presenters. First, Media Portal and Sohu Video. For Sohu Media Portal, we continue to innovate our products and technologies. We stimulated the organic generation of convenient content and further enhanced our social network distribution features. We kept extending the presentation form of our content and introduced audio feature in this quarter. On the Soho Tech 5G and AI conference we launched, we hosted in May, we rolled out an exclusive new feature called Soho AI Anchor. By integrating Sogo's advanced technology, AI technology, we can synthesize the image and the voice of a well-known celebrity. using artificial intelligence, AI. We've embedded the AI anchor in a certain channel with a 24-hour channel with the social news app where viewers can catch up with real-time news and hot events. And also added an audio function into the news feed and into each article, enabling users to listen to articles and updates of their choice at any time. And these initiatives have comprehensively improve the audio-video experience of the SOFU News app and allow users to more easily consume our news and premium content with a limited time. For SOFU Video, we continue to develop compelling long-form and short-form content with the Twin Engine strategy. For original content, we launched the Mysterious Love, an original drama combining idle romance and crime scenes, and became a big hit during the quarter, attracting a lot of public attention and further boosting our subscriber base and revenues. For the short-form content and live broadcasting, we kept optimizing our advanced live broadcasting technologies and these operations, and we consolidated our strengths in value by broadcasting and committed to us reporting The reporting of major breaking news events and emergencies witnessed live streaming in real time, which further reinforced our brand's advantage and influence as a mainstream media platform. Moreover, we also combined the advantages of both our Sohu media and Sohu video platforms kept exploring new monetization opportunities by integrating advanced live broadcasting technologies into our unique and creative content marketing campaigns. For example, in July, we successfully hosted the Sohu News Snow Mountain Expedition. which immersed the users in a unique and visually spectacular mountaineering experience over a five-day period of non-stop live broadcasting. The participants, including pop stars and celebrities, shared their feelings, interacting with the audience throughout the live streaming on their platforms during the climbing. The live streaming content allowed us to create a huge amount of great derivative content, all of which turned the expedition into an eye-catching event, a real-time event for audiences and advertisers. By creating and providing these unique marketing opportunities, we were able to better meet advertisers' demands and capture their budgets. So next, turning to Changyou. For the second quarter of 2021, Changyou launched new expansion packs of both TLBB PC and Alexa TLBB Mobile. These updates proved to be well received by players and helped the overall performance of our online games to remain stable, which is better than we expected. As a result, revenue from our online game business exceeded the high end of our prior guidance. For PC games, we launched a series of in-game events for regular TLBB PC to celebrate its anniversary. We also launched a new dungeon for TLBB Vintage and improved the game based on player feedback. For mobile games, we launched an expansion pack for the anniversary of Legacy TLBB Mobile with some holiday events and upgraded its graphics. Thanks to these efforts, both user engagement and payments remained stable and revenue was broadly flat on a sequential basis Next quarter, we'll continue to roll out new content for TLBB PC and Alexa TLBB Mobile to sustain the vitality of these games. For new games, Changyong launched a licensed card game called Little Raccoon Heroes on August 4th, two days ago. It performed well so far. In terms of pipelines, several key games are being developed and fine-tuned, and we'll introduce them to players later. Looking ahead, we'll continue to execute our top game strategy, promote innovation, and roll out more high-quality mobile games, including MMORPGs and games in other genres. Now let me turn the call to Joanna, our CFO, who will walk you through our financial results.