Sohu.com Limited

Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Soho's first quarter 2024 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. I'd now like to turn the conference over to your host for today's conference, Cole Wang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, Operator. Thank you for joining us to discuss Sohu's fourth quarter 2024 results. On the call are Chairman and Chief Executive Officer Dr. Charles Zhang, CFO Joanna Li, and Vice President of Finance James Dong. Also with us are Changyue CEO Deng Wenquan and CFO Bing Wang. Before management begins their preparatory remarks, I would like to remind you of the common safe harbor statement in connection with today's conference call. Except for the historical information contained here, the matters discussed on this call may contain forwarding statements. These statements are based on current plans, estimates, and projections. And therefore, you should not place undue reliance on them. Forwarding statements involve and uncertainties. We caution you that a number of important factors could cause actual results different materially from those containing any forwarding statements. For more information about the potential risks and uncertainties, please refer to the Commerce Files 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, and thank you everyone for joining our call. In the first quarter of 2024, our top-line performance was in line with our expectations. and our bottom line performance exceeded our guidance, despite the impact of seasonality. For Soho Media and Soho Video, we continue to enhance user experience by refining products and optimizing algorithms. We proactively integrated our product matrix and resources to stimulate content generation, consumption, and social distribution. Meanwhile, leveraging our unique IPs and differentiated advantages, we continued to host various events and campaigns, which not only stimulated users' interaction and content provision on our platforms, but also helped us gain more monetization opportunities. Online games delivered stable performance with revenues in line with our expectations. Before going through each business unit in more detail, let me first give you a quick review of our financial performance. For the first quarter of 2024, total revenues were $139 million, down 14% year-over-year and 1% quarter-over-quarter. Brand advertising revenues were $16 million, down 29% year-over-year and 20% quarter-over-quarter. Online game revenues, $118 million, down 9% year-over-year and up 3% quarter-over-quarter. Gap net loss attributable to SOVO.com Limited was $25 million compared with a net loss of $18 million in the first quarter of last year and a net loss of $30 million in the fourth quarter of last year. Non-gap net loss attributable to SOVO.com Limited was $22 million, compared with a net loss of $13 million in the first quarter of 2023, and a net loss of $11 million in the fourth quarter of 2023. Now, I will go through our key businesses in more detail. First, Sohu Media and Sohu Video. We continue to improve our products, upgrade algorithms, enhance the user experience during the quarter, We deeply integrated the Soho News and Soho Video apps to allow users to generate and distribute premium content across both platforms simultaneously. This resulted in a substantial addition of high quality content to our product matrix, which in turn drove even greater content consumption and distribution. We held a variety of offline campaigns and continue to refine operations of online interest clubs in various verticals. As a result, our user matrix and interactions have steadily increased. In this quarter, we hosted various events to improve user engagement and interactions, and further built up a vigorous video social ecosystem, especially among the young generation. We successfully hosted the offline event, 2024 Spring Convention of Sohu Video Influencers, where users and live broadcasters in different verticals came together in person to share their perspectives and interact with each other. This event further fueled broadcasters' overall enthusiasm and the vitality on our platform. During this quarter, we also launched 2024 Sohu Video K-pop Masterclass, which attracted a large number of K-pop fans to participate in our events, generating lots of fascinating K-pop-related content and widespread discussions and distributions across various social media platforms. Besides, we hosted several noteworthy events promoting Hanfu, the traditional Chinese culture, Chinese customs, which also gained a lot of traction and recognition. We have consistently focused on building our unique IPs in the field of knowledge, live broadcasting, and kept exploring innovative monetization opportunities. For example, We integrated Charles' physics class, myself is giving a physics class for the last two years, into the 2024 Beijing International Automobile Exhibition, Beijing ,, which further expanded our brand influence while at the same time increasing our monetization capabilities. To cater to the needs of advertisers, we also adopted a new approach of live exhibition at the 24 China Home Appliance and Consumer Electronics Expo in Shanghai. This not only allowed audiences to gain a deeper understanding of the product and help advertisers to achieve better marketing outcomes, but it also highlighted the unique monetization value we offer. Going forward, we will continue to leverage the advantages of Sohu product matrix to provide differentiated marketing solutions for advertisers and drive advertising budgets. Next, turning to online game business. During the quarter, online game ad revenues were in line with our expectations. Winning our PC games business, we rolled out holiday events around Chinese New Year and Valentine's Day, as well as promotional events for regular TLBB PC, which increased players' willingness to pay. In addition to holiday events, we fully upgraded simulation gameplay for TLBB Vintage, which was quite popular among players. In our mobile games business, we launched an expansion pack for Legacy TLBB Mobile to celebrate the Chinese New Year and continue to optimize the skills of each clan which resulted in user engagement stabilizing. Next quarter, we will launch expansion packs and content updates for the TLBB series and other titles to keep the players engaged. For new games, we launched a licensed card-based RPG, New Westworld Journey, in the Chinese mainland on May 16 this month. Its current performance is in line with our expectations. As gaming technology rapidly advances and the market demand becomes deeper and more diversified, under our top game strategy, we will creatively explore new ways to better meet players' needs expand our portfolio for international markets, and continue to invest in professional talent development, as well as content and technology innovation in order to bring more high-quality games to the market. We'll maintain our core competitiveness in developing MMORPGs going forward. We are also producing multiple types of games, including card-based RPGs, sports games, and casual games, et cetera. Now I'd like to give an update on the ongoing share repurchase program. As of May 16, 2024, Soho had repurchased 1.7 million ADS for an aggregate cost of approximately $17 million. With that, I will now turn the call to Joanna Arcefo.