Return to profitability, but this rare joy may only last a quarter. On August 10, Sohu released its financial report for the second quarter of 2020, with revenue of $421 million, a year-on-year decrease of 3%, and a net profit of $11 million under non US GAAP. However, Zhang Chaoyang, CEO of Sohu, told reporters of Beijing Business Daily that in terms of business,
from the business point of view, in the second quarter of 2020, Sohu brand advertising revenue was US $38 million, a year-on-year decrease of 14%, and a month on month increase of 48%; the privatization of online day Changyou was completed, and all profits / losses of Changyou since then belonged to Sohu. In the second quarter of 2020, Changyou adjusted the dividend distribution policy of its subsidiaries in China and made up the withholding income tax of about 88 million US dollars. According to Sohu’s financial report, after deducting the impact of Changyou’s accrued income tax, Sohu’s non US GAAP net profit is $11 million.
after calling out the slogan of profit, Sohu has been wandering in the loss margin for many times. In the fourth quarter of 2019, Sohu has ended 16 consecutive quarters of losses. In the first quarter of 2020, Sohu fell into a loss, and turned it back in the second quarter.
after comparing the data, it is found that Sohu has continued its throttling strategy. In the second quarter of 2020, the total operating expenses amounted to US $194 million, a year-on-year decrease of 12.6%, including US $105 million in product development, a year-on-year decrease of 3.7%, and a year-on-year decrease of 28.7% to US $64.58 million.
“we want investors to see the profitability of Sohu.” This is Zhang Chaoyang’s wish mentioned in many public occasions and almost every time he is interviewed by the media. Today, he also told Beijing Business Daily that “profit data is more important than revenue data”.
compared with the two earnings in the fourth quarter of 2019 and the second quarter of 2020, he praised the second one more. It’s not because Sohu’s net profit is higher in the second quarter of 2020, but because in the second quarter of 2020, the brand advertising revenue contributed by Sohu media and video business increased by 48% month on month.
Bida consulting analyst Li Jinqing also mentioned this point, “Sohu’s profit in this quarter is mainly due to its good performance in reducing expenditure. In this quarter, the growth of brand advertising revenue provided by the media and video sectors dominated by Zhang Chaoyang is a rare open source, but it still needs time to verify that it is caused by the surge in demand for brand advertising after the epidemic has eased, or it is sustainable.”.
Zhang Chaoyang explained that the growth of brand advertising revenue is, on the one hand, beneficial to the alleviation of the epidemic situation; on the other hand, Sohu has provided advertisers with some creative marketing services, such as opening up the live video and portal split screen technology, so that Sohu can start the Sohu News marathon public welfare run in four places at the same time. In his view, because of the epidemic, the month on month data of Sohu’s revenue is more meaningful than the year-on-year data.
although Zhang Chaoyang is pleased with the profit, he also revealed that Sohu is not expected to make profits in the third quarter. The reason is that “Changyou has Tetris and other new games online, pushing new games will increase costs, Changyou’s profit will not be so high, which will affect the overall profitability of Sohu, and may return to normal in the fourth quarter.”.
announced that it had received a preliminary non binding acquisition offer from Tencent to Sogou, intending to purchase the remaining shares of Sogou at a price of $9 per share. If the transaction is completed, Sogou will become a wholly-owned subsidiary of Tencent. Sohu holds 33.8% of Sogou’s shares, according to information disclosed by Sogou in April. By the good news, Sohu and Sogou share prices soared.
in Sohu’s revenue structure, Sogou search and search related advertising revenue is its largest revenue source. However, according to Sogou’s second quarter financial report disclosed on the same day, the performance did not
put aside the above capital operation. Zhang Chaoyang told Beijing Business Daily reporters that the data more concerned by the outside world was that after further deducting Sogou’s net loss, Sohu’s net profit under non US GAAP was US $12 million, net loss in the same period of last year was $41 million, and net loss in the last quarter was $8 million 。
Zhang Chaoyang did not disclose his views and specific progress on the acquisition of Sogou by Tencent, which was the focus of the market. As to whether Sohu will consider delisting from the U.S. capital market, he gave a clear answer: Sohu is willing to stay
. If the path of Hong Kong’s secondary listing is feasible, it may stay in the US capital market and re list in Hong Kong shares like Netease. Sohu, founded in 1998 and landed on NASDAQ in 2000, is the first batch of Internet companies to go public in the United States. For many reasons, the market value of Sohu has been greatly cut off by old Internet companies such as Netease, Sogou, which owns more than 30% of its shares, and new Internet enterprises. As of the press release of Beijing business daily, Sohu shares are 23.69 US dollars, with a market value of 930 million US dollars; Netease shares are 466.5 US dollars, with a market value of 63.993 billion US dollars; Sogou shares are 8.61 US dollars, with a market value of 3.299 billion US dollars.
even if the market value is more than $900 million, it is also a good thing for the stock price to rise after Tencent issued an acquisition offer for Sohu. Zhang Chaoyang laughs that he is also looking forward to the trend of Sohu’s share price after the financial report is released. He also said bluntly, “recently, the share price of Sohu has risen greatly, but the market value is still very low. Now Sohu’s cash flow is not a problem, hope to continue to make profits, so that investors fully realize the value of Sohu. “.