Sohu.com Limited (NASDAQ: SOHU) Q2 2025 Earnings | 08/04/2025

Summary of Sohu.com Limited Q2 2025 Earnings Call

Key Financial Results:

• Total Revenue: $126M (-27% YoY, -7% QoQ)

  • Marketing Services Revenue: $16M (-21% YoY, +14% QoQ)

  • Online Game Revenue: $106M (-28% YoY, -10% QoQ)

• Net Loss (GAAP): $20M (vs. $38M loss in Q2 2024, $182M profit in Q1 2025)

• Non-GAAP Net Loss: $20M (vs. $34M loss in Q2 2024, $16M loss in Q1 2025)

Business Highlights:

1. Sohu Media Platform:

   • Focused on social network enhancement and community-building events (e.g., K-pop festivals, Hanfu competitions).

   • "Physics Class" IP expanded with high-profile dialogues (Nobel laureates, physicists).

   • Weak ad demand due to macroeconomic pressures (auto, FMCG, IT sectors cautious).

2. Online Games (Changyou):

   • TLBB PC 18th-anniversary expansion and Legacy TLBB Mobile updates drove engagement.

   • New TLBB PC version ("TLBB Return") launched July 25 to boost Q3 revenue.

   • Exploring new genres (card RPGs, sports games) and global expansion.

3. Share Buybacks:

   • Repurchased 6.6M ADS (~$83M) under current program.

Q3 2025 Guidance:

• Marketing Services Revenue: $40–50M (-20% to -25% YoY, -4% to -10% QoQ).

• Online Game Revenue: $107–117M (-8% to -16% YoY, +1% to +10% QoQ).

• Net Loss (GAAP/Non-GAAP): $25–35M.

Strategic Focus & Challenges:

• Media Platform:

  • Monetization remains challenging; break-even timeline uncertain due to non-linear user growth in social networks.

  • Leveraging AI for search and content (using open-source models), but impact is marginal.

• Games:

  • "Top Games Strategy" prioritizes TLBB IP and new genres.

  • Q3 sequential growth expected from new TLBB PC version.

• Macro Headwinds:

  • Weak ad spend persists due to consumer sentiment and competition.

  • No dividend plans; prioritizing cash reserves for user acquisition and R&D.

Key Takeaways:

• Games outperformed (high end of guidance), while ad revenue lagged.

• Events-driven user engagement (K-pop, Hanfu) aims to build long-term communities but has limited near-term monetization.

• AI adoption is incremental (games efficiency, app search) but not transformative.

• Buybacks continue, but no other shareholder returns planned.

Outlook: Sohu faces ongoing revenue declines amid macro pressures but is betting on TLBB game updates and social network growth to stabilize performance. Profitability remains elusive for the media platform, with turnaround dependent on achieving "critical mass" in user engagement.