Sohu.com Limited

Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Sohu's fourth quarter 2025 earnings conference call. At this time, all participants are in list and only mode. After management people have 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'll now turn the conference over to your host for today's conference call, Wang Pu, Investor Relations Director of Sohu. Please go ahead.

Thanks, Senator. Thank you for joining us to discuss Seoul's first quarter 2025 results. I want to call our Chairman and Chief Executive Officer, Dr. Charles Zhang, CFO General Li, and Vice President of Finance, John Stone. Also with us are Chang-Yu's CEO, Duan Chen, and CFO, Yubing Wang. Before my team begins their prepared remarks, I would like to remind you of the comments they have made in connection with today's conference call. Except for the historical information contained herein, the matters discussed on the column contain forelooking statements. These statements are based on counterplans, estimates, and projections, and therefore, you should not place undue reliance on them. Forelooking statements involve key risks and uncertainties. They 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 potential risks and uncertainties, Please refer to the committee findings with the Securities and Exchange Commission, including the most recent annual report on Forum 20F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Thanks, Huangfu, and thank you everyone for joining our call. In the first quarter of 2025, our marketing services revenues exceeded our previous guidance, while our online game revenues were in line with our expectations. Our non-GAAP bottom line performance excluding the impact of the Chang'e Youth Withholding Income Tax Reversal came in at the high end of our prior guidance. For Soho Media Platform, we continue to improve our products and algorithms to address user needs and enhance their experiences across different scenarios. We continue to host a variety of innovative events which generated abundant premium content, greatly promoted user engagement, and enabled us to capture more monetization opportunities. For our online games, we remain committed to long-term operational excellence and continue to deliver high-quality content updates and compelling experiences to our players. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. For the first quarter of 2025, the total revenue, $142 million, up 6% year-over-year and down 21% quarter-over-quarter. Marketing services revenues, $17 million, down 10% year-over-year, up 25% quarter-over-quarter. Alan gave revenues $120 million up 10% year-over-year and down 26% quarter-over-quarter. After giving effect to the reversal of previously accrued withholding income tax of approximately $285 million related to Changyong, debt net income attributable to Sohu.com Limited was $223 million, compared with a net loss of $21 million in the fourth quarter of last year, I mean 2024, and net income of $9 million in the third quarter of 2025. After giving, in fact, to the above-mentioned reversal of the withholding income tax, non-GAAP net income attributable to Soho.com Limited, $261 million. compared with a net loss of $15 million in the fourth quarter of 2024, and a net income of $9 million in the third quarter of 2025. For the full year of 2025, total revenues $584 million, down 2% compared with the, compared with 2024. Marketing services revenues $16 million down 18% compared with 2024. Online games revenues, $506 million up 1% compared with 2024. Get net income attributable to SOHO.com Limited, $394 million compared with a net loss of $100 million in 2024. non-GAAP net income attributable to SOFA.com limited $234 million compared with the net loss of $83 million in 2024. Yeah, excluding the reversal, you know, accrued income tax, the 2025 in the non-GAAP net income is $51 million loss, right? $51 million loss. 40% improvement over 20.4. So now I will go through our key businesses in more detail. First, social media platform. We continue to refine our products and enhance algorithms to address diverse user needs in various scenarios. Through a mix of vibrant Offline and online events across various verticals will continue to attract and retain a large number of users, especially younger generations. Through spontaneous and active connections and communication, we consistently improved the user experience and boosted user engagement, further strengthening the stickiness on our platform. With the above efforts, we were able to cultivate a healthy platform ecosystem with an active social atmosphere. For example, in the first quarter of 2025, we successfully hosted the year's most eye-catching finals for the 2025 Sohu K-pop Dancing Awards and 2025 Sohu Video Chinese Traditional Costume Awards. These events received widespread praise, sparked enthusiastic interaction among participants and the audience, and drove extensive discussions and disseminations across multiple social media platforms. These initiatives further consolidated our position as the most influential and preferred platform in these areas, and boosted the vigorous development of the platform. During the quarter, we also continue to host traditional signature events such as 2025 Soho Fashion Awards and 2025 Soho Finance Annual Forum. These events not only garner significant attention, but also contribute to the continuous enhancement of our brand influence. Additionally, we hold a Halloween themed American TV series party During the Social Video American TV Series month, end of fourth quarter of 2025, which brought audiences with lots of high-quality American movies, we have another TV series. We're also continuing to steadily expand our content library with American dramas, as well as other attractive TV series, original dramas, and short dramas to consistently drive traffic to our platform. Marking its fourth anniversary, the physics class, you know, I myself teach, has conducted more than 270 live broadcasts over 30 offline classes and 270 online classes, multiple university seminars, and published three books. It has continuously made physics more engaging in the general public while attracting lots leading professional broadcasters in a variety of fields of knowledge on our platform. With this highly regarded IP, we were able to further reinforce our reputation in the field of knowledge and science-based related live broadcasts and demonstrate our commitment to being a socially responsible media platform. On the monetization side, we deeply integrated advertisers' needs uh with the above mentioned events and customized marketing content we also actively explore more monetization opportunities leveraging our deep understanding of the market through the dissemination of our premium content related to the events we've facilitated advertisers brand marketing while promoting the monetization value we offer now let me uh turn to our online game business During the quarter, our online game business performed well, with revenues in line with our expectations. With fewer launches of the in-game promotional activities for TLBB PC and a natural decline of our new PC game TLBB Return, online game revenues decreased on a sequential basis. In our PC game business, we raised a player level cap for regular TLBB PC, which effectively boosted user engagement. Meanwhile, we rolled out a new character development system for TLDB Vantage, providing players with fresh goals and a more engaging experience. When TLDB returned, we introduced its first new clan and continuously refined the game based on player feedback. In our mobile game businesses, we launched featured content centered on a return to classics and streamlined gameplay for the legacy TLBB Mobile. This effectively boosted player engagement and willingness to pay, leading to a sequential revenue increase. Next quarter, we will continue to launch expansion packs and content updates for the TLBB series and other titles to keep players engaged. Looking ahead, we remain committed to our top game strategy, user-centric approach, and will continue to deliver high-quality games to players. In terms of game development, we will adhere to some methodologies and systematic R&D processes while driving the integration of our new technologies to enhance efficiency and product success rate. Regarding our pipeline, We're actively working to unlock the potential of a PLBB IT. Meanwhile, as we maintain our core competitiveness in MMORPGs, we'll continue to diversify our portfolio with multiple types of games and extended product offerings with global appeal. Now, I'd like to give an update on the ongoing share repurchase program. As of February 5th, of 2026, Soho had purchased 8.1 million ADS for the aggregate cost of approximately $106 million. So we still have to go to finish the purchase. With that, I will now turn the call over to Diana.

Thank you, Charles. I will now walk you through the key financials of our major segments for the fourth quarter and the full year of 2025. All numbers on a non-GAAP basis. You may find the reconciliation of non-GAAP to GAAP measures on our website. For social media platforms, quarterly revenues were $21 million compared with $24 million in the same quarter last year. Quarterly operating losses 72 million dollars compared with operating loss 69 million dollars in the same quarter last year. For the full year 2025, revenues were 75 million dollars compared with 91 million dollars in 2024. The full year operating loss was 283 million dollars compared with the operating loss 287 million dollars in 2024. For Changyong, Quarterly revenue $121 million, compared with $111 million in the same quarter last year. Quarterly operating profit was $45 million, compared with operating profit $48 million in the same quarter last year. For the full year 2025, revenue $509 million, compared with $506 million in 2024. The full-year operating profit was $238 million, compared with operating profit $196 million in 2024. For the first quarter of 2026, we expect marketing service revenues to be between $10 million and $11 million. This impacts annual decrease of 20% to 27%, and a sequential decrease of 35% to 41%. Online game revenues to be between $113 million and $123 million. This implies annual decrease of 4% to an annual increase of 5% and a sequential decrease of 6% to a sequential increase of 2%. Both net gap and gap net loss attributable to SOHO's outcome limit to be between $10 million and $20 million. This forecast reflects SOHO's management's current and preliminary view, which is subject to substantial uncertainty. This concludes our preparatory remarks. Operator, we would now like to open the call to questions.

Thank you, management. As a reminder, to ask questions, please dial star 11 and wait for a name to be announced. To cancel your request, you can press star 11 again. Our first question comes from the line of Thomas Chong of Jefferies. Please go ahead.

Hi, good evening. Thanks, management, for taking my question. My first question is about advertising. When I look at the Q1 advertising guidance, it seems it is relatively soft on a sequential basis compared to historical Q1. So I just want to get some color due to macro uncertainties. And can we talk about the trend for categories like auto and IT sectors in Q1? And also on the gaming guidance, because when I look at the Q1 revenue guidance on gaming, is seeing like a negative or positive kill on kill. And I just want to see what really drives the high end or the low end of the guidance and the trend we are seeing now. So that's my first question. And my second question is about AI. Given that I think there's a lot of industry discussion in overseas market with regard to whether AI will disrupt the online gaming sector. I just want to get some thoughts from management about whether AI is a productivity tool in gaming, or are we actually seeing AI may disrupt the sector in the long term? Thank you.

Okay, Thomas. The first question is about advertising. Your question about the Q1 softness, right? So, I think it's mainly due to the seasonality, because this year's Chinese New Year is kind of late. I mean, two weeks late. It's like in the middle of February. So, you know, companies, you know, not getting a lot of things done in January or February. The overall macroeconomic situation, well, remains similar to Q4, so that's why. And then the next question is about gaming, right?

So gaming revenue. Yeah.

Yeah. Since we will have no new game launching in the first quarter, so the level of the revenue of the first quarter depends on the existing games performance

including such as the performance of the new content and activities that we will launch in the first quarter for TLB-PC, TLB-D-Return, and like the TLB-D-Mobile. And so far, the performance is basically in line with our expectations. The next one is AI. From a long-term point of view, do you think AI will bring some new developments? I think so.

Anyway, from the upstream point of view, we have always

We've been pushing the application of AI, especially in terms of the creation of game design plans. which we think is the essential thing for the company's production of the gaming industry.

Thank you. Thank you.

May I quickly also ask a follow-up question back to advertising? Charles, may I ask about how we are actually seeing the trend for different advertising categories such as auto and IT sectors. I remember in the last earnings call, we are actually seeing some softness. I'm not sure if there's any improvement for auto and IT sectors. Thank you.

Yeah, there is some improvement in the auto sector. There's a higher percentage of the overall revenue split. Yeah, because, yeah, there is, so auto industry is doing better than IT and other FMCG, have a higher percentage of the total time.

Thank you. Thank you. This is Q4 we are talking about.

Yeah, Q4, yes. Got it. Thank you, Charles. Thank you. I will go back to the queue.

Okay. You're welcome.

Thank you for the question. One moment for the next question. Our next question comes from the line of Alicia Yap of CT. Please go ahead.

Hello. Thank you. Good evening, management. Thanks for taking my questions. I have a few questions. First is that I wanted to follow up on the first quarter guidance and also the 4Q. So was there any one-off revenue that were recognized in the 4Q that lead to the outperformance in the fourth quarter? So any special ad campaign by any industry vertical that outperforms during the 4Q. And then second question is on gaming, can management share with us the game pipeline and also the major expansion pack that you plan to release for the remaining of 2026 so that we can better assess the game revenue trend for the next three quarters? And then last question is on your guidance, the net loss guidance. Seems like this quarter, the 10 to 20 million net loss that you've guided is a much smaller number than previously. Usually the loss is around 20 to 30 million range. So any particular reasons why the loss is narrower than previous quarter? And also, should we expect this trend to be consistent for the remaining of 2026?

Thank you.

So your first question is about, you're trying to understand why the Q4, there's a growth, right? And then the Q1, there's a softening for the edifying, right? You were thinking about the marketing campaign, yeah.

That's right. That's why Q4 is stronger than your guidance, right? And then any particular special events that happen in 4Q.

No, I think Q4, I think we're just doing better overall. The Q1 softness or the Q1 lower forecast is purely due to the Chinese New Year, delayed the Chinese New Year this year. Chinese New Year is, you know, like February 16, right? So it's like more than two weeks late than last year. So that, you know, advertisers, you know, they just don't have much thing, you know, only after the Chinese New Year, after February and into March, they come back to work and start to plan for the year's ad marketing campaign, right? So it's purely due to Chinese New Year that our advertisers are not doing that well in Q1. even compared, even compared with last, you know, first quarter, first quarter of 2025. But the Q4 is not because there's a major, it's just like we're just doing better. Because, well, the macroeconomic situation is still similar, not, you know, it's still not very good, and a lot of uncertainties. But we are just through, there's some basically a, a change or shift of advertising industry that the traditional advertising on those media channels, those so-called is not working now. People are not spending much on that, on the brand market. But instead of, but instead, you know, we have this innovative marketing solutions like based on some you know qol or influencer or the online you know and in a viral viral you know some event offline event live streaming all these that that actually uh consistent with our products development side our user social media around them so we have this innovation innovative marketing solutions that differentiate us from others from the, you know, so that we are getting, you know, getting the, adding the brand marketing, you know, dollar, I mean, the spending. So we're just, especially like in Q4, we have some major events, some offline events that attract, you know, attract advertisers. And online, you know, online KOL accounts and those, it's live streaming, all these things. So, it's really, we are entering into a new age of marketing in the social media time. So, I hope I answered your question.

Okay. Yes, you did. Thank you.

So, next, you're going .

I'd like to ask you about the new games in 2026. Which new games will be released? What do you think of the three new games in the future?

In 2026, there will be a game called Sky Dragon, which is a more mainstream game. It may be released at the end of 2026 or at the end of 2027, depending on our development and testing conditions. At the same time, we have a few additional micro-games. China. China. China. China.

First, regarding the game pipeline, we have a card-based RPG based on TLPB IP. It's a mobile game, mid-to-hardcore game. It is expected to launch by the end of 2026 or early 2027, subject to its development process and the testing results. Meanwhile, we also have several new programs, new games in development. And we will decide if we will launch the games or when to launch the games based on their development and their testing results. And for the existing games, we will launch expansion packs similar, in a similar cadence as previous years. As for the revenue trend for this coming quarter, we can't forecast the trend right now, and it depends on the performance of the extension pack of our older gains, and also depends on whether we can launch new gains and the new gains performance.

Thank you. So for the year 2026, the average loss is similar, right?

$10,000 or $20,000 or something.

Question? Thank you for the question. with that that concludes the conference call for today thank you all for participating