Sohu.com Limited

Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining ZOHU's fourth quarter 2021 earnings conference call. At this time, all participants are in a 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. And I'd like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, Supervisor. Thank you for joining us today to discuss first quarter 2021 results. On the call are Chairman and Chief Executive Officer, Dr. Charles Zhang, CFO, Joanna Liu, and Vice President of Finance, James Dunn. Also with us today are Chang You, CEO, Duan Wenquan, and CFO, Yao Bingwang. Before management begins their prepared remarks, I would like to remind you of the common statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this conference call may contain full-looking statements. These statements are based on current plans, estimates, and projections. And therefore, you should not place undue reliance on them. Full-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ maturely from those contained in any forelooking statement. For more information about potential risks and uncertainties, please refer to the company's findings with the Security and Exchange Commission, including the most recent annual report on Form 20-F. Please also be reminded that following the completion of the transaction with Tencent related to Sogo, Sogo no longer has any ownership interest in Sogo. As indicated otherwise, the results that we are talking about exclude results from SOGO operations. For historical statements, the results of operations for SOGO and the gain from its disposal have been classified as discontinued operations. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thanks, and thank you everyone for joining our call. During the fourth quarter of 2021 and the whole year, we faced ongoing significant challenges from the macroeconomic environment and uncertainties of the COVID-19 pandemic. Despite these headwinds, we were proactive in refining our technology, developing product innovations, improving operating efficiency, and exploring differentiated monetization opportunities. In the fourth quarter, we were ahead of our guidance in brand advertising revenue and achieved profitability for the full year and every quarter in 2021. For Suhu Media and Suhu Video, we provided better user experience through improvements in products and social interaction features. we applied advanced live broadcasting technologies to large and unique content marketing events. Based on the competitive advantages of the SOHO product matrix, these live broadcasting events helped us to generate a high volume of premium content and wide social distribution. We were able to further consolidate our influence as a mainstream media platform and better capture advertisers' attention and budgets. For Changyou, its online game business delivered inline quarterly results, while its overall revenue of 2021 continued to grow year-over-year. Let me go through details about each of these businesses in a moment, but first, a quick overview of our financial performance. For the fourth quarter of 2021, total revenues, $193 million, down 24% year-over-year and 11% quarter-over-quarter. Brand advertising revenue, $34 million, down 20% year-over-year, and a flat quarter-over-quarter. Game revenue, $144 million, down 27% year-over-year, and 14% quarter-over-quarter. Gap net income attributable to Soho.com Limited, $4 million, compared with the net income of $47 million in the first quarter of 2020, and net income of $12 million in the third quarter of 2021. Non-gas income attributable to Soho.com Limited was $200,000 compared with the net income of $53 million in the fourth quarter of 2020 and net income of $17 million in the third quarter of 2021. For the whole year of 2021, total revenues $836 million, up 11% compared with 2020. Brand advertising revenue, $135 million, down 8% compared with 2020. Online game revenues, $638 million, up 19% compared with 2020. Gap net income attributable to Soul.com Limited was $69 million compared with a net income of $33 million in 2020, excluding the impact of an additional $1. accrual of withholding income tax recognized by Changyu in the second quarter of 2020. Non-GAAP net income attributable to Solve.com Limited was $79 million, compared with a net income of $51 million in 2020, excluding the impact of the additional accrual of withholding income tax described above. Now I will go through some of our key businesses. first media portal and video. At Soho Media Portal during 2021, when we continued to refine our products, we developed and upgraded the audio function of our news app. We continuously enhanced the user experience by extending the app application scenarios and enriching our content presentation format. And also refined the apps' social network distribution features by providing greater motivation for user interactions with other users. We are able to further strengthen our differentiated advantages as a mainstream media platform. For Soho Video, we have a twin-engine strategy that we are executing with a focus on both high-quality original dramas and reality shows and steady development of social distribution of short-form video content. Leveraging our advanced live broadcasting technology, we were able to further accelerate the layout of value live broadcasting and extend it to scientific knowledge courses. We have attracted scholars and scientists in a number of fields to share their knowledge and interact with our users on the platform, which has strengthened our reputation in the field of scientifically and knowledge-based learning, focused learning. On the monetization side, we comprehensively integrated our live broadcasting technology with a number of innovative content marketing campaigns. Despite the weak macroeconomic environment, we have developed attractive marketing strategies to gain attention from advertisers and secure their advertising budgets. In December, we successfully hosted several flagship events such as 2021 Soho Fashion Awards and the Soho Finance Annual Conference. These events have generated an array of premium content and created social distribution across both media and video platforms. Through the application of our library testing technology and the synergies with the Sohu product, we attracted not only audiences, but also advertisers by providing these unique marketing opportunities to them. And we're better able to meet advertisers' demand and capture their advertising dollars. Now for Changyou, during the fourth quarter of 2021, Changyou's online games revenue declined on a sequential basis in line with our prior guidance due to the natural decline of TLBB Vintage and the licensed game Little Red Corn Heroes. In our PC games business lines, we improved player experience by reducing the number of repetitive daily quests for regular TLBB PC. We also introduced a skill enhancement system and corresponding quest line for TLBB Vintage to keep the game fresh. For mobile games, we launched an expansion pack of Legacy TLBB Mobile, featuring the addition of a new clan and various events for the National Day and New Year holidays. Next quarter, we'll roll out new expansion packs and make adjustments to game content for TLBB PC, Legacy TLBB Mobile, little raccoon heroes and other games to sustain their vitality in terms of the game pipeline several key games are under development and we are now in the process of fine-tuning them we look forward to bringing them to players soon in the year ahead the channel will execute its top game strategy and by promoting innovation giving the capacity of its team and rolling out more high-quality mobile games, including MMORPGs and other diversified products. Before I pass the call to Joanna to go through the financial results in detail, we'd like to give you an update on the share repurchase program of up to $100 million announced on November 13, 2021. As of February 18, 2020, 2022, Soho had repurchased $3,079,064 ADS shares under the Shared Purchase Program for an aggregate cost of approximately $53 million. So basically half, yeah, $100 million. With that, I will now turn the call to Joanna.