Sohu.com Limited

Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining SOHO's first quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be the question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at any time. I would now like to turn the conference over to our host for today's conference call, Juan Poo, Investor Relations Director of Soho. Please go ahead.

Thanks, operator. Thank you for joining us to discuss Soho's first quarter 2022 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 are Chang-Yu CEO, Du Wen Chen, and CFO, Yao Bing Wang. Before management begins their preparatory remarks, I would like to remind you of the Company Safe Harbor Statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this 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 materially from those contained in any forelooking statements. 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. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thanks, Huangpu. Thank you, everyone, for joining our call. In the first quarter of 2022, despite the negative impact of COVID-19 and the challenging microeconomic environment, we continue to focus on product requirements and improving optional efficiency. Thanks to the excellent performance of our online game business, we delivered better than expected bottom line performance and achieved profitability for the quarter. For SOHO Media Portal, we carried out product upgrades and improvements in the overall quality of our news and content, all of which continued to draw users to our platforms and keep them engaged. For SOHO Video, continuous execution of our Twin Engine strategy. We proactively extended our live broadcasting to a greater number of scientific fields, We also focused on user acquisition for our key mobile products and explored ways to improve monetization for both Soho Media Portal and Soho Video. For Changyou, our online games performed well during the quarter, with revenue exceeding the high end of our prior guidance. I'll go into details about each of these businesses in a moment, but first let us look at a quick review of our financial performance. For the first quarter of 2022, total revenues were $193 million, down 13% year over year and a flat quarter over quarter. Brand advertising revenues $24 million, down 23% year-over-year, and 29% quarter-over-quarter. Online game revenues, $158 million, down 11% year-over-year, and up 10% quarter-over-quarter. Gap net income attributable to Suhu.com Limited was $3 million, compared with $32 million in the first quarter of 2021, and $4 million in the fourth quarter of 2021. Non-GAAP net income attributable to Sohu.com Limited was $9 million, compared with $37 million in the first quarter of 2021 and $200,000 in the fourth quarter of 2021. Now I'll go through some of our key businesses. First, Media Portal and Sohu Video. For Sohu Media Portal, in order to strengthen our visibility and influence, As a mainstream media platform, we provided real-time breaking news and hot social topics to users, as well as optimizing algorithms and adding features to provide better user experience and increased user engagement and enhanced social distribution. For Soho Video, we continue to execute our 10-engine strategy The product differentiation and competitive advantages of our live broadcasting have enabled us to extend its scope. For example, in late 2021, we launched Charles John's physics class. I opened and started teaching physics online, live broadcasting, since late 2021. Now I have already more than 40 online episodes since the initial launch. Starting this March this year, we also introduced the offline classes as well with also live broadcasting. Young audience were enthusiastic and generated robots online conversations. The recognition given to this IT supported by our advanced live broadcasting technologies attracted broadcasters in a variety of scientific fields ranging from physics, mathematics, chemistry, and aerospace, et cetera, to our platform to engage in scientific live broadcasting. As a result, we have built a solid and credible reputation as a live broadcasting platform in the field of science and basically a knowledge-based platform. We will continue to explore innovative ways to create and distribute high-quality content. We also have some new wins with our new own production house for our episodes and reality shows. For original dramas, following the successful broadcast of Mysterious Love, 她在你光中告白, this quarter we started shooting this sequel, Mysterious Love 2, and also have several original dramas in our pipeline that will be rolled out steadily in 2022, this year. For reality shows, we saw the successful release of the fifth season of On Her Way Home, 送一百位女孩回家第五季. On Her Way Home was designed to be more inclusive and to include training which led to lively conversations with high visibility. We believe the success of the fifth season demonstrated by our ability to create a robust and sustainable IP, which also attracts advertising dollars. On the monetizing side, the first quarter tends to be a soft period for seasonal reasons. Advertising spending was affected also by macro uncertainties and Omicron-driven lockdowns. Despite these headwinds, we took advantage of the dual platform advantages of Soho Media Portal and Soho Video, as well as our advanced live broadcasting technologies, and this gave us the opportunity to explore the promotional needs and advertisers and work closely with them on their marketing plans in order to attract and capture their advertising dollars. Next, turning to game business, Changyou. During the first quarter of 2022, ChangYu's online games revenue exceeded our prior guidance. This was thanks to the sound performance of TLBB PC. In our business line for PC games, looking first at regular TLBB PC, we launched a variety of holiday-related quests and promotional events, and adjusted the relative strength of different clans based on player feedback. With TLBB Vintage, We launched rich content around the time of New Year and Spring Festival. We continue to optimize the game based on player feedback to increase the player's satisfaction. With mobile games, we launched a variety of holiday events and promotional events for Legacy TLBB Mobile, whose revenue remained steady on a sequential basis. Next quarter, we'll roll out new content or TLBB PC, Legacy TLBB Mobile, Little Raccoon, Heroes, and other games. We'll also launch TLBB Vintage on the WayGame platform as we look to bring more back long-time TLBB players by way of new channels. In our game pipeline, several key games are under development. and we are in the process of fine-tuning them. We look forward to bringing them to players soon. Against an ever-changing environment, Changyou will stick to his top-game strategy by promoting innovation, building the capacity of his team, and rolling out more high-quality mobile games in a variety of categories. Now I'll turn to Joanna of CFO, who will walk you through our financial results. Joanna.