BEIJING,
Nov. 5,
2012 /PRNewswire/ --
Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, search, gaming,
community and mobile service group, today reported unaudited
financial results for the third quarter
ended September
30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20100201/CNM013LOGO
)
Third Quarter
Highlights
- Total revenues were US$285
million, up 23% year-over-year and 12%
quarter-over-quarter.
- Brand advertising revenues were US$78 million, up 2% year-over-year and 12%
quarter-over-quarter.
-
Sogou[1]
revenues were US$37 million, up 102%
year-over-year and 23% quarter-over-quarter.
- Online game revenues reached quarterly record high of
US$151 million, up 30% year-over-year
and 10% quarter-over-quarter.
- GAAP net income attributable to Sohu.com Inc. was
US$24 million, or US$0.63 per fully diluted share. Non-GAAP net
income attributable to Sohu.com Inc. was US$30 million, or US$0.77 per fully diluted share.
Dr. Charles Zhang, Chairman
and CEO of Sohu.com Inc. commented, "We are pleased with the solid
financial results we achieved in the third quarter. Total revenues
surpassed our expectations, rising 23% year-on-year. Brand
advertising revenues met the high end of our guidance and online
gaming revenues came in well ahead of our expectations."
Dr. Zhang added, "By business unit, for online video, our
newly set-up dedicated sales team is bringing in results and we
expect fourth quarter advertising revenue to be back on growth
track. Sogou maintained triple-digit year-on-year revenue growth
which was supported by improved monetization. For Changyou, strong
performance by both MMO and web games helped post new records for
both revenues and profit."
Ms. Belinda Wang,
Co-President and COO added, "In the third quarter, thanks to solid
demand from FMCG sector and the recovery of real estate sector, our
brand advertising revenues reached the high end of our prior
estimate. For the fourth quarter, although we see some weakening
signals from the auto sector where Japanese car makers cut spending
as a result of sharp decline in their sales volume, the impact is
expected to be offset by the contribution from other
sectors."
Third Quarter
Financial Results
Revenues
Total revenues for the third
quarter of 2012
were US$285 million,
up 23% year-over-year and 12%
quarter-over-quarter.
Total online advertising revenues, which include revenues
from brand advertising and search and others businesses for the
third quarter of 2012, were US$113 million, up 19% year-over-year and 15%
quarter-over-quarter.
Brand advertising revenues for the third quarter of 2012
totaled US$78 million, up 2%
year-over-year and 12% quarter-over-quarter.
Search and others revenues for the third
quarter of
2012 were US$35 million, up 92% year-over-year and 23%
quarter-over-quarter. The year-over-year increase was mainly due to
increased traffic and improved monetization of
traffic.
Online game revenues for the third
quarter of 2012 were
US$151 million, up
30% year-over-year and
10%
quarter-over-quarter.
Wireless revenues for the third
quarter of 2012 were
US$14 million, up
1% year-over-year and down
8%
quarter-over-quarter.
Gross Margin
Both GAAP and non-GAAP gross margin
was 66% for
the third quarter of
2012, compared with
61% in the second
quarter of 2012 and
71% in the
third quarter of
2011.
Online advertising gross margin for the third quarter of
2012 was 49%, compared with 32% in the second quarter of 2012 and
58% in the third quarter of 2011. Non-GAAP online advertising gross
margin for the third quarter of 2012 was 50%, compared with 31% in
the second quarter of 2012 and 58% in the third quarter of
2011.
Both GAAP and non-GAAP gross margin
for brand advertising in
the third quarter of
2012 was 52%,
compared with 26% in the
second quarter of 2012
and 61% in the
third quarter of
2011. The year-over-year
decrease in gross margin was primarily due to increases in content
and bandwidth costs. The quarter-over-quarter increase in gross
margin was primarily due to decrease in content costs. We
recognized an approximately $15
million impairment charges of video content in the second
quarter of 2012.
Both GAAP and non-GAAP gross margin for
search and others business in the
third quarter of 2012
were 44%, compared with
44% in the second
quarter of 2012 and
49% in the third
quarter of 2011. The
year-over-year decrease in margin
was mainly due to higher traffic acquisition
costs.
Both GAAP and non-GAAP gross margin for online games in
the third quarter of 2012 were
86%, compared with 87%
in the second quarter of
2012 and 87% in
the third quarter of 2011.
Both GAAP
and
non-GAAP
gross
margin
for the
wireless
business
for
the
third
quarter of
2012
were
34%,
compared with
35%
in the
second
quarter of
2012
and
39%
in the
third
quarter of
2011.
The year-over-year decrease was primarily due to
increased revenue sharing costs with
partners.
Operating Expenses
For the third quarter of 2012, operating expenses totaled
$125 million, up 36% year-over-year
and 11% quarter-over-quarter. Non-GAAP operating expenses were
$121 million, up 38% year-over-year
and 14% quarter-over-quarter. The year-over-year increase was
primarily due to an increase in the number of employees and higher
salaries and benefits expense. The quarter-over-quarter increase
was primarily due to an increase in the number of employees, higher
salaries and benefits expense and higher marketing
expense.
Operating Profit
Operating profit for the
third quarter of 2012
was US$64 million,
down 13% year-over-year and up
48%
quarter-over-quarter.
Operating margin was
22% for the third
quarter of 2012, compared
with 17% in the previous quarter
and 32% in the third
quarter of 2011.
Non-GAAP operating profit for the
third quarter of 2012
was US$68 million,
down 13% year-over-year and up
37%
quarter-over-quarter. Non-GAAP
operating margin was 24% for the
third quarter of 2012,
compared with 19% in the previous quarter
and 33% in the third
quarter of 2011.
Income Tax Expense
For the third quarter of
2012, GAAP
income tax expense was US$19
million. Excluding a
non-cash income tax expense of
US$1 million recorded for the utilization
of tax benefits from excess tax deductions related to share-based
awards, non-GAAP income tax expense was
US$18 million, flattish
with the previous
quarter.
Net Income
Before deducting the share of net income pertaining to the
Non-controlling Interest,
GAAP net income for the
third quarter of 2012
was US$52 million,
down 20% year-over-year and up 53%
quarter-over-quarter. Non-GAAP net income
for the third quarter of 2012 was US$59
million, down 15% year-over-year
and up 43% quarter-over-quarter.
GAAP net income attributable to Sohu.com
Inc. for the third quarter
of 2012 was US$24 million, or US$0.63 per fully diluted share, down 47%
year-over-year and up 123%
quarter-over-quarter. Non-GAAP net income
attributable to Sohu.com Inc. for the
third quarter of 2012
was US$30 million, or
US$0.77 per fully diluted share, down
40% year-over-year and up 80%
quarter-over-quarter.
Cash Balance
As of September 30, 2012,
Sohu Group had cash and cash equivalents of
US$773 million, compared with
US$733 million as of December 31, 2011.
Ms. Carol Yu, Co-President
and CFO of Sohu.com Inc.
commented, "Our strategic move of setting up a
dedicated video sales team from early 2012 started to bear fruits.
Our business units, including Sohu Video and Sogou, are making
solid developments as the Group consistently and carefully grooms
them. The encouraging progress validates our strategy that is to
maximize long-term shareholder value."
Other development
On August 6, 2012, Changyou
declared a special one-time cash dividend of $1.90 per Class A or Class B ordinary share, or
$3.80 per ADS. The total amount of
the special dividend declared was approximately $201 million. On September
21, 2012, Changyou paid the dividend to its shareholders.
The amount of the dividend received by Sohu was approximately
$136 million.
Supplementary Information for Online Game
Results
Third Quarter 2012 Operational
Results
- Aggregate registered accounts
for
Changyou's
games[2]
,
excluding 7Road's games,
increased
41%
year-over-year and
12%
quarter-over-quarter to 223.5 million.
- Aggregate peak concurrent
users
("PCU")
for
Changyou's
games,
excluding
7Road's
games,
decreased
5%
year-over-year
and
increased 1%
quarter-over-quarter
to
1.09
million.
- Aggregate active paying
accounts
("APA")
for
Changyou's
games,
excluding
7Road's
games,
decreased
20%
year-over-year and
8%
quarter-over-quarter to
2.41
million. The quarter-over-quarter and
year-over-year decreases reflected a decline in the number of
low-spending active paying accounts that did not make a purchase in
the third quarter of 2012 as
Changyou
continued last quarter's strategy of giving away
virtual items and reducing in-game promotions in
TLBB.
- Average revenue per active paying account
("ARPU") for
Changyou's
games,
excluding
7Road's
games,
increased
46%
year-over-year and
15%
quarter-over-quarter
to
RMB319.The
quarter-over-quarter and year-over-year increases were mainly due
to the decline in TLBB's low-spending active paying accounts and
TLBB's core players increasing their spending in the third quarter
of 2012.
Business Outlook
For the fourth quarter of 2012, Sohu estimates:
- Total revenues to be between US$288 million and US$293 million.
- Brand advertising revenues to be between $80 million and
$82 million; this implies a
sequential and annual increase of 3% to 5%.
- Sogou revenues to be around
US$40 million; this implies a sequential
increase of 7% and an annual growth of 74%.
- Online game revenues to be between
US$152 million and
US$155 million. This implies a sequential
increase of 1% to 3% and represents an annual growth of 23% to
26%.
- Before deducting the share of non-GAAP net income
pertaining to the Non-Controlling interest, non-GAAP net income to
be between US$48 million and
US$51 million.
- Non-GAAP net income attributable to Sohu.com Inc. to be
between US$23 million and
US$25 million, and non-GAAP fully diluted
earnings per share to be between US$0.60
and US$0.65.
- Assuming no new grants of share-based awards, we estimate
that compensation expenses and income tax expenses relating to
share-based awards to be around US$3.5
million to US$4.5 million. The estimated
impact of this expense is expected to reduce Sohu's fully diluted
earnings per share for the fourth quarter of 2012 under US GAAP by
9 to 11 US cents.
Non-GAAP Disclosure
Beginning in the
fourth quarter of 2011, Sohu revised its
non-GAAP reporting methodology to exclude income/expense from the
adjustment of contingent consideration, goodwill impairment,
impairment of intangibles via acquisitions of businesses and the
related tax impact, in addition to its historical practice of
excluding share-based awards from
non-GAAP results.
To supplement the unaudited consolidated financial
statements presented in accordance with accounting principles
generally accepted in the United States
of America ("GAAP"), Sohu's management uses non-GAAP
measures of gross profit, operating profit, income tax
expense, net income attributable to
Sohu.com.Inc. and net income attributable
to Sohu.com.Inc. per
share, which are adjusted from results based on GAAP to exclude the
impact of share-based awards, which consist mainly of share-based
compensation expenses and non-cash tax benefits from excess tax
deductions related to share-based awards,
income/expense from the adjustment of contingent
consideration previously recorded for acquisitions
and goodwill impairment and impairment of intangibles
via acquisitions of businesses and the related tax
impacts. These measures should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP
results.
Sohu's management believes excluding the impact of
share-based awards, non-cash tax benefits
from excess tax deductions related to share-based
awards, income/expense from the
adjustment of contingent consideration, goodwill impairment,
impairment of intangibles via acquisitions of businesses and the
related tax impact from its non-GAAP financial measure
is useful for itself and investors. Further, the impact of
share-based awards, utilization of
non-cash tax benefits from excess tax deductions related to
share-based awards, income/expense from
the adjustment of contingent consideration, goodwill impairment,
impairment of intangibles via acquisitions of businesses and the
related tax impact cannot be anticipated by management
and business line leaders and these expenses were not built into
the annual budgets and quarterly forecasts, which have been the
basis for information Sohu provides to analysts and investors as
guidance for future operating performance. As the impact of
share-based awards, non-cash tax benefits from excess
tax deductions related to share-based awards,
income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via
acquisitions of businesses and the related tax impact
does not involve subsequent cash outflow,
Sohu does not factor this in when evaluating and approving
expenditures or when determining the allocation of its resources to
its business segments. As a result, in general,
the monthly financial results for internal reporting and any
performance measure for commissions and bonuses are based on
non-GAAP financial measures that exclude the impact of share-based
awards, non-cash tax benefits from excess tax
deductions related to share-based
awards,income/expense from the adjustment
of contingent consideration, goodwill impairment, impairment of
intangibles via acquisitions of businesses and the related tax
impact.
The non-GAAP financial measures are provided
to enhance investors' overall understanding of Sohu's current
financial performance and prospects for the future. A limitation of
using non-GAAP gross profit, operating profit, income tax
expense, net income attributable to
Sohu.com Inc. and net income attributable
to Sohu.com Inc. per share, excluding the impact of
share-based awards, non-cash tax benefits from excess
tax deductions related to share-based awards,
income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via
acquisitions of businesses and the related tax impact
is that the impact of share-based awards
and non-cash tax benefits from excess tax
deductions related to share-based awards
have been and will continue to be a
significant recurring expense in Sohu's business for the
foreseeable future, income/expense from
the adjustment of contingent consideration, goodwill impairment,
impairment of intangibles via acquisitions of businesses and the
related tax impact may recur in the future. In order
to mitigate these limitations Sohu has provided specific
information regarding the GAAP amounts excluded from each non-GAAP
measure. The accompanying tables include details on the
reconciliation between the GAAP financial measures that are most
directly comparable to the non-GAAP financial measures that have
been presented.
Notes to Financial
Information
Financial information in this press release other
than the information indicated as being non-GAAP is derived from
Sohu's unaudited interim financial statements prepared in
accordance with GAAP.
Mezzanine equity consists of non-controlling
interests in 7Road and a put option that gives the non-controlling
shareholders the right to put their shares to Changyou at a
pre-determined price if 7Road achieves specified performance
milestones before the expiry of the put option and 7Road does not
complete an initial public offering on NASDAQ, the New York Stock
Exchange or The Stock Exchange of Hong
Kong by 2014. The put option will expire in 2014.
Non-controlling interests of 7Road and the put option are
classified as mezzanine equity in Changyou's consolidated balance
sheets, as redemption of the non-controlling interests is not
solely within the control of Changyou.
In accordance with ASC subtopic 480-10,
Changyou accretes the balance of non-controlling interests to its
redemption value over the period from the date of the 7Road
acquisition to the earliest exercise date of the put right. Any
subsequent changes in the redemption value are considered to be
changes in accounting estimates and are also recognized over the
same period as net income attributable to mezzanine classified
non-controlling interests.
In the third quarter of 2012, Changyou
estimated that based on 7Road's performance in the first three
quarters of 2012, 7Road will likely exceed its originally estimated
performance for year 2012 and 2013, which will be the basis to
determine the exercise price of the put option. As a result, the
Company has increased the estimated redemption value of
the mezzanine
classified non-controlling
interests in 7Road. The increase in the redemption value was
recognized prospectively over the period from the date of the
change in estimate to the earliest exercise date of the put right
as an increase in net income attributable to mezzanine classified
non-controlling interests.
Safe Harbor Statement
This announcement contains forward-looking statements. It
is currently expected that the Business Outlook will not be updated
until release of Sohu's next quarterly earnings announcement;
however, Sohu reserves right to update its Business Outlook at any
time for any reason. Statements that are not historical facts,
including statements about Sohu's beliefs and expectations, are
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 any forward-looking statement. Potential
risks and uncertainties include, but are not limited to, the
current global financial and credit markets crisis and its
potential impact on the Chinese economy, the uncertain regulatory
landscape in the People's Republic of
China, fluctuations in Sohu's quarterly operating results,
and Sohu's reliance on online advertising sales, online games and
wireless services (most wireless revenues are collected from a few
mobile network operators) for its revenues. Further information
regarding these and other risks is included in Sohu's annual report
on Form 10-K for the year ended December
31, 2011, and other filings with
the Securities and Exchange Commission.
Conference Call and Webcast
Sohu's management team will host a conference
call on the same day at 8:30 a.m.
U.S. Eastern Time, November 5, 2012
(9:30 p.m. Beijing/Hong
Kong time, November 5, 2012)
following the quarterly results
announcement.
The dial-in details for the live conference
call are:
US Toll-Free:
|
+1-866-519-4004
|
International:
|
+1-718-354-1231
|
Hong Kong:
|
+852-2475-0994
|
China Mainland
|
+86-800-819-0121 /
+86-400-620-8038
|
Passcode:
|
SOHU
|
Please dial in 10 minutes before the call is
scheduled to begin and provide the passcode to join the
call.
A telephone replay of the call will be
available after the conclusion of the conference call at
11:30 a.m. Eastern Time on
November 5 through November 13, 2012.
The dial-in details for the telephone replay
are:
International:
|
+61-2-8235-5000
|
Passcode:
|
47409010
|
The live webcast and archive of the conference call will
be available on the Investor Relations section of Sohu's website
at http://corp.sohu.com/.
About Sohu.com
Sohu.com Inc. (NASDAQ: SOHU) is China's premier online brand and indispensable
to the daily life of millions of Chinese, providing a network of
web properties and community based/web 2.0 products which offer the
vast Sohu user community a broad array of choices regarding
information, entertainment and communication. Sohu has built one of
the most comprehensive matrices of Chinese language web properties
and proprietary search engines, consisting of the mass portal and
leading online media destination
www.sohu.com; interactive search engine
www.sogou.com; #1 games information
portal www.17173.com; the top real estate
website www.focus.cn; #1 online alumni
club www.chinaren.com; wireless
value-added services provider
www.goodfeel.com.cn; leading online mapping
service provider www.go2map.com; and
developer and operator of online games
www.changyou.com/en/.
Sohu corporate services consist of online brand
advertising on its matrix of websites as well as bid listing and
home page on its in-house developed search directory and engine.
Sohu also offers wireless value-added services such as news,
information, music, ringtone and picture content sent over mobile
phones. Sohu's online game subsidiary, Changyou.com (NASDAQ: CYOU)
has a diverse portfolio of online games that includes Tian Long Ba Bu, one of the most popular
massively multi-player online ("MMO") games in China, and DDTank and Wartune (also known as
Shen Qu), which are two popular web
games in China. Sohu.com,
established by Dr. Charles Zhang,
one of China's internet pioneers,
is in its sixteen year of operation.
For investor and media inquiries, please
contact:
In China:
Mr. Eric Yuan
|
Sohu.com Inc.
|
Tel:
|
+86 (10) 6272-6593
|
E-mail:
|
ir@contact.sohu.com
|
In the United
States:
Mr. Jeff Bloker
|
Christensen
|
Tel:
|
+1 (480) 614-3003
|
E-mail:
|
jbloker@ChristensenIR.com
|
[1]
Sogou operates search and others business and
offers Internet value-added services
("IVAS") with respect to Web games developed by third-party
developers. Search and others business include search
and Sogou Web Directory. In statements of
operations, revenues from search and Sogou Web Directory are
recorded as "search and others" revenue, and revenue from IVAS is
recorded as "others" revenue.
[2]
Excludes 7Road's games and
comprises the following games operated in China: Tian Long Ba
Bu ("TLBB"), Duke of Mount Deer
("DMD"), Blade Online, Blade Hero 2, Tao Yuan,
Da Hua Shui Hu, Zhong Hua Ying
Xiong, Immortal Faith, and Legend of Ancient
World.
SOHU.COM INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED, IN
THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
Three Months Ended
|
|
|
Sep. 30, 2012
|
|
Jun. 30, 2012
|
|
Sep. 30, 2011
|
Revenues:
|
|
|
|
|
|
|
Online advertising
|
|
|
|
|
|
|
Brand advertising
|
$
|
77,874
|
$
|
69,312
|
$
|
76,572
|
Search and others
|
|
35,284
|
|
28,763
|
|
18,410
|
Subtotal
|
|
113,158
|
|
98,075
|
|
94,982
|
Online games
|
|
151,093
|
|
137,172
|
|
115,798
|
Wireless
|
|
14,312
|
|
15,598
|
|
14,210
|
Others
|
|
6,815
|
|
4,882
|
|
7,870
|
Total
revenues
|
|
285,378
|
|
255,727
|
|
232,860
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
Online advertising
|
|
|
|
|
|
|
Brand
advertising (includes stock-based compensation
expense of $150, $-175 and $232,
respectively)
|
|
37,476
|
|
50,963
|
|
30,221
|
Search and others (includes stock-based
compensation
expense of $21, $38 and $0,
respectively)
|
|
19,736
|
|
16,192
|
|
9,478
|
Subtotal
|
|
57,212
|
|
67,155
|
|
39,699
|
Online games (includes stock-based compensation
expense
of $61,
$61
and $21, respectively)
|
|
21,026
|
|
18,301
|
|
14,578
|
Wireless (includes stock-based compensation expense
of
$0, $0, and $0,
respectively)
|
|
9,474
|
|
10,208
|
|
8,727
|
Others (includes stock-based compensation expense of
$0,
$0 and
$0, respectively)
|
|
9,037
|
|
4,180
|
|
4,469
|
Total cost of revenues
|
|
96,749
|
|
99,844
|
|
67,473
|
|
|
|
|
|
|
|
Gross profit
|
|
188,629
|
|
155,883
|
|
165,387
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Product development (includes stock-based
compensation
expense of $1,316,
$1,531 and $1,633, respectively)
|
|
46,994
|
|
43,340
|
|
28,943
|
Sales and marketing (includes stock-based
compensation
expense of $582,
$497 and $874,
respectively)
|
|
58,250
|
|
48,999
|
|
47,150
|
General and administrative (includes stock-based
compensation
expense of $1,713, $1,477 and $1,617,
respectively)
|
|
19,666
|
|
17,508
|
|
15,686
|
Impairment of
acquired intangibles via
acquisition of
businesses
|
|
-
|
|
2,906
|
|
-
|
Total
operating expenses
|
|
124,910
|
|
112,753
|
|
91,779
|
|
|
|
|
|
|
|
Operating profit
|
|
63,719
|
|
43,130
|
|
73,608
|
|
|
|
|
|
|
|
Other income/(expense)
|
|
(111)
|
|
1,818
|
|
3,249
|
Interest income
|
|
5,974
|
|
7,223
|
|
4,314
|
Exchange difference
|
|
667
|
|
45
|
|
(2,420)
|
Income before income tax expenses
|
|
70,249
|
|
52,216
|
|
78,751
|
Income tax expense
|
|
18,727
|
|
18,467
|
|
14,441
|
Net Income
|
|
51,522
|
|
33,749
|
|
64,310
|
|
|
|
|
|
|
|
Less: Net income attributable to the mezzanine
classified
noncontrolling interest shareholders
|
|
4,495
|
|
1,095
|
|
1,092
|
Net income attributable to the noncontrolling interest
shareholders
|
|
21,146
|
|
19,872
|
|
16,406
|
Net income attributable to Sohu.com
Inc.
|
|
25,881
|
|
12,782
|
|
46,812
|
|
|
|
|
|
|
|
Basic net income per
share attributable to Sohu.com Inc.
|
$
|
0.68
|
$
|
0.34
|
$
|
1.22
|
Shares used in computing basic net income per share
attributable to Sohu.com
Inc.
|
|
38,022
|
|
38,002
|
|
38,298
|
|
|
|
|
|
|
|
Diluted net income
per share attributable to Sohu.com Inc.
|
$
|
0.63
|
$
|
0.28
|
$
|
1.17
|
Shares used in computing diluted net income per share
attributable to Sohu.com
Inc.
|
|
38,344
|
|
38,347
|
|
38,844
|
Note:
(a)
The classification of certain comparative
figures of online advertising expenses has been changed to conform
to the current period presentation.
|
SOHU.COM INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED, IN THOUSANDS)
|
|
|
|
|
|
|
|
As of Sep. 30, 2012
|
|
As of Dec. 31, 2011
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
773,469
|
$
|
732,607
|
Restricted time deposits
|
|
115,124
|
|
-
|
Short term investments
|
|
41,930
|
|
17,560
|
Investment in debt securities
|
|
78,852
|
|
79,354
|
Accounts receivable, net
|
|
98,090
|
|
87,066
|
Prepaid and other current assets
|
|
44,969
|
|
53,894
|
Total current assets
|
|
1,152,434
|
|
970,481
|
Fixed assets, net
|
|
170,415
|
|
152,652
|
Goodwill
|
|
158,104
|
|
158,905
|
Intangible assets, net
|
|
79,774
|
|
69,762
|
Restricted time deposits
|
|
110,633
|
|
-
|
Prepaid non-current assets
|
|
268,002
|
|
270,282
|
Other assets
|
|
11,323
|
|
11,212
|
Total assets
|
$
|
1,950,685
|
$
|
1,633,294
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
|
58,918
|
$
|
31,179
|
Accrued
liabilities
|
|
103,076
|
|
95,409
|
Receipts in advance and deferred revenue
|
|
80,177
|
|
75,809
|
Accrued salary and benefits
|
|
55,738
|
|
45,300
|
Taxes payable
|
|
34,768
|
|
47,213
|
Deferred tax liability
|
|
8,701
|
|
-
|
Short-term bank loans
|
|
113,000
|
|
-
|
Other short-term liabilities
|
|
56,176
|
|
35,816
|
Contingent consideration
|
|
76
|
|
476
|
Total current liabilities
|
$
|
510,630
|
$
|
331,202
|
|
|
|
|
|
Long-term accounts payable
|
|
15,042
|
|
3,612
|
Long-term bank loans
|
|
109,353
|
|
-
|
Deferred tax liabilities
|
|
8,096
|
|
5,146
|
Contingent consideration
|
|
-
|
|
17,009
|
Total long-term liabilities
|
$
|
132,491
|
$
|
25,767
|
Total
liabilities
|
$
|
643,121
|
$
|
356,969
|
|
|
|
|
|
MEZZANINE
EQUITY
|
|
56,895
|
|
57,254
|
SHAREHOLDERS' EQUITY:
|
|
|
|
|
Sohu.com Inc. shareholders' equity
|
|
1,045,339
|
|
1,008,425
|
Noncontrolling Interest
|
|
205,330
|
|
210,646
|
Total
shareholders' equity
|
$
|
1,250,669
|
$
|
1,219,071
|
|
|
|
|
|
Total liabilities, mezzanine equity and
shareholders' equity
|
$
|
1,950,685
|
$
|
1,633,294
|
SOHU.COM INC.
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION
MEASURES TO THE NEAREST COMPARABLE GAAP
MEASURES
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sep. 30,
2012
|
|
Three Months Ended Jun. 30,
2012
|
|
Three Months Ended Sep. 30,
2011
|
|
|
GAAP
|
|
Non-GAAP Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
(a)
|
|
|
|
|
(175)
|
(a)
|
|
|
|
|
232
|
(a)
|
|
Brand advertising gross profit
|
$
|
40,398
|
$
|
150
|
$
|
40,548
|
$
|
18,349
|
$
|
(175)
|
$
|
18,174
|
$
|
46,351
|
$
|
232
|
$
|
46,583
|
Brand advertising gross margin
|
|
52%
|
|
|
|
52%
|
|
26%
|
|
|
|
26%
|
|
61%
|
|
|
|
61%
|
|
|
|
|
21
|
(a)
|
|
|
|
|
38
|
(a)
|
|
|
|
|
|
|
|
Search and others gross profit
|
$
|
15,548
|
$
|
21
|
$
|
15,569
|
$
|
12,571
|
$
|
38
|
$
|
12,609
|
$
|
8,932
|
$
|
-
|
$
|
8,932
|
Search and others gross margin
|
|
44%
|
|
|
|
44%
|
|
44%
|
|
|
|
44%
|
|
49%
|
|
|
|
49%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171
|
(a)
|
|
|
|
|
(137)
|
(a)
|
|
|
|
|
232
|
(a)
|
|
Online advertising gross profit
|
$
|
55,946
|
$
|
171
|
$
|
56,117
|
$
|
30,920
|
$
|
(137)
|
$
|
30,783
|
$
|
55,283
|
$
|
232
|
$
|
55,515
|
Online advertising gross margin
|
|
49%
|
|
|
|
50%
|
|
32%
|
|
|
|
31%
|
|
58%
|
|
|
|
58%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
(a)
|
|
|
|
|
61
|
(a)
|
|
|
|
|
21
|
(a)
|
|
Online games gross profit
|
$
|
130,067
|
$
|
61
|
$
|
130,128
|
$
|
118,871
|
$
|
61
|
$
|
118,932
|
$
|
101,220
|
$
|
21
|
$
|
101,241
|
Online games gross margin
|
|
86%
|
|
|
|
86%
|
|
87%
|
|
|
|
87%
|
|
87%
|
|
|
|
87%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless gross profit
|
$
|
4,838
|
$
|
-
|
$
|
4,838
|
$
|
5,390
|
$
|
-
|
$
|
5,390
|
$
|
5,483
|
$
|
-
|
$
|
5,483
|
Wireless gross margin
|
|
34%
|
|
|
|
34%
|
|
35%
|
|
|
|
35%
|
|
39%
|
|
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others gross profit
|
$
|
-2,222
|
$
|
-
|
$
|
-2,222
|
$
|
702
|
$
|
-
|
$
|
702
|
$
|
3,401
|
$
|
-
|
$
|
3,401
|
Others gross margin
|
|
-33%
|
|
|
|
-33%
|
|
14%
|
|
|
|
14%
|
|
43%
|
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232
|
(a)
|
|
|
|
|
(76)
|
(a)
|
|
|
|
|
253
|
(a)
|
|
Gross profit
|
$
|
188,629
|
$
|
232
|
$
|
188,861
|
$
|
155,883
|
$
|
(76 )
|
$
|
155,807
|
$
|
165,387
|
$
|
253
|
$
|
165,640
|
Gross margin
|
|
66%
|
|
|
|
66%
|
|
61%
|
|
|
|
61%
|
|
71%
|
|
|
|
71%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,429
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
3,843
|
(a)
|
|
|
|
|
2,906
|
(b)
|
|
|
|
|
4,377
|
(a)
|
|
Operating profit
|
$
|
63,719
|
$
|
3,843
|
$
|
67,562
|
$
|
43,130
|
$
|
6,335
|
$
|
49,465
|
$
|
73,608
|
$
|
4,377
|
$
|
77,985
|
Operating margin
|
|
22%
|
|
|
|
24%
|
|
17%
|
|
|
|
19%
|
|
32%
|
|
|
|
33%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,843
|
(a)
|
|
|
|
|
3,429
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
973
|
(c)
|
|
|
|
|
2,268
|
(b)
|
|
|
|
|
4,377
|
(a)
|
|
|
|
|
|
2,195
|
(d)
|
|
|
|
|
1,471
|
(c)
|
|
|
|
|
294
|
(c)
|
|
Net income before Non-Controlling
Interest
|
$
|
51,522
|
$
|
7,011
|
$
|
58,533
|
$
|
33,749
|
$
|
7,168
|
$
|
40,917
|
$
|
64,310
|
$
|
4,671
|
$
|
68,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,043
|
(a)
|
|
|
|
|
2,610
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
973
|
(c)
|
|
|
|
|
1,520
|
(b)
|
|
|
|
|
3,483
|
(a)
|
|
|
|
|
|
1,471
|
(d)
|
|
|
|
|
1,471
|
(c)
|
|
|
|
|
294
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Sohu.com Inc for
diluted net income per share
(e)
|
$
|
24,015
|
$
|
5,487
|
$
|
29,502
|
$
|
10,755
|
$
|
5,601
|
$
|
16,356
|
$
|
45,254
|
$
|
3,777
|
$
|
49,031
|
Diluted net
income per share attributable
to Sohu.com Inc.
|
$
|
0.63
|
|
|
$
|
0.77
|
$
|
0.28
|
|
|
$
|
0.42
|
$
|
1.17
|
|
|
$
|
1.26
|
Shares used in computing diluted net
income per share attributable to
Sohu.com Inc.
|
$
|
38,344
|
|
|
|
38,480
|
|
38,347
|
|
|
|
38,504
|
|
38,844
|
|
|
|
39,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
(a)
To eliminate the impact of share-based
awards as measured using the fair value method.
(b)
Beginning in the fourth quarter of 2011,
the Company revised its non-GAAP reporting methodology to exclude
goodwill impairment, impairment of intangibles via acquisitions of
businesses and the related tax impact, non-cash tax benefits from
excess tax deductions related to share-based awards and
income/expense from the adjustment of contingent consideration
previously recorded for acquisitions, in addition to its historical
practice of excluding share-based compensation expense from
non-GAAP results. For the three months ended June 30, 2012, there
were $2.9 million of impairment of intangibles via acquisitions of
businesses. For the three months ended March 31, 2012, there were
no goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact, non-cash tax benefits
from excess tax deductions related to share-based awards and
income/expense from the adjustment of contingent consideration
previously recorded for acquisitions."
(c)
To adjust non-cash tax benefits from
excess tax deductions related to share-based
awards.
(d)
To adjust income/expense from the
adjustment of contingent consideration previously recorded for
acquisitions.
(e)
To adjust Sohu's economic interest in
Changyou and Sogou under the treasury stock method and
if-converted method,
respectively.
(f)
The classification of certain comparative
figures of online advertising expenses has been changed to conform
to the current period presentation.
|
SOURCE Sohu.com Inc.