Sohu.com Limited

Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Sohu's second 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 would now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.

Thank you for joining us to discuss SOHO's second quarter 2024 results. On the call are Chairman and Chief Executive Officer Dr. Charles Zhang, CFO John Lee, and Vice President of Finance Jim Stone. Also with us are Chang Youze, CEO Du Wenchuan, and CFO Yao Bin Wang. Before management begins their prepared remarks, I would like to remind you of the Commissary of Harbor Statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on the column contain forward-looking statements. These statements are based on current plans, estimates, and projections, and therefore, you should not place undue reliance on them. Forward-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 forward-looking statements. For more information about the potential risks and uncertainties, Please refer to the conference findings with the Securities and Exchange Commission, including the most written 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 second quarter of 2024, we hit the high end of our prior guidance in brand advertising, revenues, while our online game revenues came in well above expectations. Our bottom line performance was in line with our prior guidance. For Suhu Media and Suhu Video, leveraged by our increasingly integrated and sophisticated product matrix, we further promoted the generation and consumption of premium content and vigorously boosted social interactions among users. Benefiting from our differentiated events and marketing campaigns, we were able to continually strengthen our brand influence and explore diverse range of monetization opportunities. Online games performed well, with revenues exceeding our expectations. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the second quarter of 2024, total revenues, $172 million, up 13% year-over-year and 24% quarter-over-quarter. Brand advertising revenues, $20 million, down 17% year-over-year and 24% up quarter-over-quarter. Online game revenues, $147 million, up 24% year-over-year and 25% quarter-over-quarter. Gap net loss attributable to Soho.com Limited was $38 million compared with a net loss of $21 million in the second quarter of last year and a net loss of $25 million in the last quarter. Non-gap net loss attributable to Soho.com Limited was $34 million compared with a net loss of $18 million last year, the second quarter of last year, and a net loss of $22 million in the first quarter of this year. Now let me go through the key businesses in more detail. First, media and video together. We consistently optimized our products, introduced innovative features, and further enhanced user experiences. We have built up a close connection among the platforms, content creators, and at the same time, there are also users. These enhancements greatly promoted a continuous generation and distribution of diversified content, improved user engagement, and inspired active social interactions. During the quarter, we focused on stimulating content innovation through various online and offline events and actively explored opportunities in developing our influential online interest clubs in different verticals For example, the 2024 Soho Video K-pop Masterclass has attracted nationwide attention and recognition from a large number of K-pop fans. We'll follow this up by launching 2024 Soho K-pop Dancing Festival, the second, last year we also did that, so the second annual event this year. In early August, Besides K-pop, we have also hosted various events related to the traditional Chinese hanfu, costumes, and photography. These events have gained notable traction and recognition as younger users with same interests flocked to our flourishing online interest clubs. Meanwhile, in June, we hosted our traditional flagship event of 16th Sohu News Marathon in Shenzhen this time. During the marathon, entrepreneurs, sports celebrities, and pop stars actively shared their ideas and their pictures by broadcasting short video clips on Soho News app and Soho Video app, also the social network channel. These have provided us with abundant premium content, stimulating user engagement and social interactions across our platform, as well as attracting various advertisers at budgets. First of all, we continue to enrich our video content library by acquiring exclusive dramas, rolling out unique original content, introducing short-form dramas, short-form clips, short-form dramas. Our original drama, Present is Present, 奔向所有时空的你, and the Olympic... variety show, the topic variety show, reality show, Be a Hero, Xiangguan Junyang, were both well received by audiences and generated widespread discussions across various social media platforms. Although advertisers remain relatively cautious in the quarter, thanks to our knowledge-based video platform and advanced and live broadcasting technology, and the strong dissemination ability, we were able to strengthen our differentiated advantages and continue to explore innovative monetization opportunities. For example, we integrated our distinctive My Own Child physics class into various marketing campaigns, which were highly appreciated by other advertisers. And this class helped us capture advertising budgets because through these events, We not only helped audiences simultaneously comprehend the physics knowledge behind, you know, especially the auto industry, auto companies, the products, the cars, the physics knowledge behind the products. Also promoted branding for advertisers. So meanwhile, we kept integrating advertisers' needs into our traditional content marketing campaigns to maximize the monetization value we offered Next, turning to online game business. During the quarter, online game business performed well, with revenue succeeding prior guidance. Our TLBB series remained stable, while New Westworld Journey, a licensed card-based RPG that we launched during the quarter, performed well. In our PC game business, we launched various events for regular TLBB PC to celebrate its anniversary. We also supplemented and optimized its gameplay and content based on player feedback. With TLBB Vantage, we introduced a Team PvP event to satisfy players' demands of combat. In our mobile game business, we launched an expansion pack for Legacy TLBB Mobile for its anniversary, updating its graphics and adding a fun strategic gameplay, which were well received by players. Next quarter, we will continuously launch expansion packs and content updates for the TLBB series' new Westworld journey and other titles to keep players engaged. As market competition intensifies, the market demand becomes more diversified. We will forge ahead with our top game strategy, continuously optimizing the R&D process, enhancing execution, and expanding our international presence. In addition, we will 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 will maintain our core competitiveness on MMORPGs going forward while also seeking to make breakthroughs in multiple types of games, including card-based RPGs, sports games, and casual games, etc., Now I would like to give an update on the ongoing share repurchase program for SOHU. As of August 1st, 2024, SOHU has repurchased 2.3 million ADS for an aggregate cost of approximately $26 million US dollars. With that, I now turn the call to our CFO Joanna. Joanna, please.