Sohu.com Navigates Tough Quarter With Strategy Shift, Despite Drop In Game Revenue

Sohu.com Limited (NASDAQ: SOHU) reported a revenue decline of 22% year-over-year to $145.4 million for the third quarter of 2023. Revenue was down by 4% Q/Q.

The Chinese Internet company's adjusted loss per ADS was 30 cents, missing the consensus loss of 62 cents. 

Brand advertising revenues declined 14% Y/Y to $22 million. Online game revenues decreased 21% Y/Y to $117 million, mainly due to the natural decline of its older games.

The adjusted gross margin expanded by 500 bps Y/Y to 76% and flat Q/Q. The adjusted gross margin for online games was 87% versus 84% last year and 87% in the prior quarter.

Sohu held $1.4 billion in cash and equivalents as of September 30, 2023.

Average monthly active user accounts for Changyou PC games increased by 3% Y/Y to 2.2 million. The average MAU for Changyou mobile games fell by 9% Y/Y to 2.3 million.

Chair and CEO Dr. Charles Zhang commented, "At Sohu Video, with our "Twin Engine" strategy, we focused on the generation and distribution of compelling short-form content as well as live broadcasts."

Outlook: Sohu sees Q4 brand advertising revenue of $20 million-$23 million, an annual decrease of 20% - 31% Y/Y.

It sees Q4 online game revenues decline by 4% - 13% to $106 million-$116 million.

Sohu estimates Q4 adjusted net loss of $(10) million - $(20) million.

The stock has lost 39% YTD.

Price Action: SOHU shares traded higher by 5.84% at $9.25 premarket Monday.