In view of the previously-announced Share Purchase Agreement between subsidiaries of Tencent Holdings Limited (“Tencent”) and the Company and its wholly-owned subsidiary
Fourth Quarter Highlights
- Total revenues were
US$253 million [1], up 34% year-over-year and 60% quarter-over-quarter. - Brand advertising revenues were
US$42 million , flat year-over-year and up 2% quarter-over-quarter. - Online game revenues were
US$196 million , up 49% year-over-year and 94% quarter-over-quarter. - GAAP net income from continuing operations attributable to
Sohu.com Limited wasUS$47 million , compared with a net loss ofUS$29 million in the fourth quarter of 2019 and a net loss ofUS$15 million in the third quarter of 2020. - Non-GAAP net income from continuing operations attributable to
Sohu.com Limited wasUS$53 million , compared with a net loss ofUS$6 million in the fourth quarter of 2019 and a net loss ofUS$7 million in the third quarter of 2020.
Fiscal Year 2020 Highlights
- Total revenues were
US$750 million , up 11% compared with 2019. - Brand advertising revenues were
US$147 million , down 16% compared with 2019. - Online game revenues were
US$537 million , up 22% compared with 2019. - GAAP net loss from continuing operations attributable to
Sohu.com Limited wasUS$55 million . Excluding the impact of an additional accrual of withholding income tax recognized by Changyou in the second quarter of 2020[2], GAAP net income attributable toSohu.com Limited wasUS$33 million , compared with a net loss ofUS$157 million in 2019. - Excluding the impact of the additional accrual of withholding income tax described above, non-GAAP net income from continuing operations attributable to
Sohu.com Limited wasUS$51 million , compared with a net loss ofUS$128 million in 2019.
[1] On a constant currency (non-GAAP) basis, if the exchange rate in the fourth quarter of 2020 had been the same as it was in the fourth quarter of 2019, or |
[2] Following completion of the Changyou privatization, Changyou changed its policy for its PRC subsidiaries with respect to distribution of cash dividends. As a result, Changyou recognized an additional accrual of withholding income tax of |
Dr.
Fourth Quarter Financial Results
Revenues
Total revenues were
Brand advertising revenues totaled
Online game revenues were
Gross Margin
Both GAAP and non-GAAP[3] gross margin was 79%, compared with 64% in the fourth quarter of 2019 and 66% in the third quarter of 2020.
Both GAAP and non-GAAP gross margin for the brand advertising business was 31%, flat with that of fourth quarter of 2019 and third quarter of 2020.
Both GAAP and non-GAAP gross margin for online games was 90%, compared with 75% in the fourth quarter of 2019 and 80% in the third quarter of 2020. The year-over-year increase in gross margin was mainly due to an increase in online game revenues, as well as a decrease in online game costs as a result of lower revenue-sharing payments related to TLBB Honor. The quarter-over-quarter increase in gross margin was mainly due to an increase in online game revenues, while costs remained relatively flat.
[3] Non-GAAP results exclude share-based compensation expense; non-cash tax benefits from excess tax deductions related to share-based awards; changes in fair value recognized in the Company’s consolidated statements of operations with respect to equity investments with readily determinable fair values; an impairment charge recognized for investments unrelated to the Company’s core businesses; income/expense from an adjustment of contingent consideration previously recorded for acquisitions; and interest expense recognized in connection with the one-time transition tax (the “Toll Charge”) imposed by the
Operating Expenses
For the fourth quarter of 2020, GAAP operating expenses totaled
Operating Profit/(Loss)
GAAP operating profit was
Non-GAAP operating profit was US$68 million, compared with an operating profit of US$6 million in the fourth quarter of 2019 and an operating loss of
Income Tax Expense/(Benefit)
GAAP income tax expense was
Net Income/(Loss)
GAAP net income from continuing operations attributable to
Non-GAAP net income from continuing operations attributable to
Liquidity
As of
Fiscal Year 2020 Financial Results
Revenues
Total revenues were
Brand advertising revenues were
Online game revenues were
Gross Margin
Both GAAP and non-GAAP gross margin was 71%, compared with 64% in 2019.
Both GAAP and non-GAAP gross margin for the brand advertising business was 28%, compared with 28% in 2019.
Both GAAP and non-GAAP gross margin for online games was 83%, compared with 80% in 2019.
Operating Expenses
For 2020, GAAP operating expenses totaled
Operating Profit/(Loss)
GAAP operating profit was
Non-GAAP operating profit was US$88 million, compared with an operating loss of US$69 million in 2019.
Income Tax Expense
GAAP income tax expense was
Net Income/(Loss)
GAAP net loss from continuing operations attributable to
Excluding the impact of the additional accrual of withholding income tax described above, GAAP net income from continuing operations attributable to
Supplementary Information for Changyou Results
Fourth Quarter 2020 Operating Results
- For PC games, total average monthly active user accounts[4] (MAU) were 2.3 million, an increase of 5% year-over-year and 17% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly driven by the successful launch of TLBB Vintage during the quarter, partially offset by the termination of operation of Warframe. Total quarterly aggregate active paying accounts[5] (APA) were 0.9 million, a decrease of 6% year-over-year and 4% quarter-over-quarter. The decreases were mainly due to the termination of operation of Warframe.
- For mobile games, total average MAU were 2.4 million, a decrease of 35% year-over-year and quarter-over-quarter. Total quarterly APA were 0.6 million, a decrease of 46% year-over-year and 7% quarter-over-quarter. The decreases in MAU and APA compared with the fourth quarter of 2019 reflected the natural declining life cycles of Changyou’s older games, including Legacy TLBB Mobile and TLBB Honor. Comparing with the third quarter of 2020, the decrease of MAU was mainly from Illusion Connect and the decrease of APA was mainly from TLBB Honor.
[4] Monthly active user accounts refers to the number of registered accounts that are logged in to these games at least once during the month. |
[5] Quarterly aggregate active paying accounts refers to the number of accounts from which game points are utilized at least once during the quarter. |
Fourth Quarter 2020 Unaudited Financial Results
Total revenues were
GAAP and non-GAAP gross profit were both
GAAP operating expenses were
Non-GAAP operating expenses were
GAAP operating profit was
Non-GAAP operating profit was
Fiscal Year 2020 Unaudited Financial Results
Total revenues were
GAAP gross profit was
GAAP operating expenses were
Non-GAAP operating expenses were
GAAP operating profit was
Non-GAAP operating profit was
Business Outlook
For the first quarter of 2021, Sohu estimates:
- Brand advertising revenues to be between US$27 million and
US$32 million ; this implies an annual increase of 5% to 25% and a sequential decrease of 23% to 35%. - Online game revenues to be between
US$137 million andUS$147 million ; this implies an annual increase of 3% to 10% and a sequential decrease of 25% to 30%. - Non-GAAP net income from continuing operations attributable to
Sohu.com Limited to be betweenUS$5 million andUS$15 million ; and GAAP net income from continuing operations attributable toSohu.com Limited to be betweenUS$1 million andUS$11 million .
For the first quarter 2021 guidance, the Company has adopted a presumed exchange rate of
This forecast reflects Sohu’s management’s current and preliminary view, which is subject to substantial uncertainty, particularly in view of the potential ongoing impact of the worldwide COVID-19 pandemic, which remains difficult to predict.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in
Sohu’s management believes excluding share-based compensation expense, changes in fair value recognized in the Company’s consolidated statements of operations with respect to equity investments with readily determinable fair values; an impairment charge recognized for investments unrelated to the Company’s core businesses; non-cash tax benefits from excess tax deductions related to share-based awards; income/expense from an adjustment of contingent consideration previously recorded for acquisitions; and interest recognized in connection with the Toll Charge from its non-GAAP financial measure is useful for itself and investors. Further, the impact of share-based compensation expense and changes in fair value recognized in the Company’s consolidated statements of operations with respect to equity investments with readily determinable fair values; impairment charge recognized for investments unrelated to the Company’s core businesses; 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 interest expense recognized in connection with the Toll Charge cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts that have been the basis for information Sohu provides to analysts and investors as guidance for future operating performance. As the impact of share-based compensation expense and changes in fair value recognized in the Company’s consolidated statements of operations with respect to equity investments with readily determinable fair values, an impairment charge recognized for investments unrelated to the Company’s core businesses, non-cash tax benefits from excess tax deductions related to share-based awards, and income/expense from an adjustment of contingent consideration previously recorded for acquisitions does not involve subsequent cash outflow or is reflected in the cash flows at the equity transaction level, Sohu does not factor this impact 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 measures for commissions and bonuses are based on non-GAAP financial measures that exclude share-based compensation expense and changes in fair value recognized in the Company’s consolidated statements of operations with respect to equity investments with readily determinable fair values, an impairment charge recognized for investments unrelated to the Company’s core businesses, 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, and also excluded the interest expense recognized in connection with the Toll Charge.
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, net income, net income attributable to
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 financial statements prepared in accordance with GAAP.
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, instability in global financial and credit markets and its potential impact on the Chinese economy; exchange rate fluctuations, including their potential impact on the Chinese economy and on Sohu’s reported US dollar results; recent slow-downs in the growth of the Chinese economy; the uncertain regulatory landscape in
Conference Call and Webcast
Sohu’s management team will host a conference call at
To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly. Please dial in 10 minutes before the call is scheduled to begin.
A telephone replay of the call will be available after the conclusion of the conference call at
International: | +1-646-254-3697 |
Passcode: | 9366048 |
The live Webcast and archive of the conference call will be available on the Investor Relations section of Sohu’s Website at http://investors.sohu.com/.
About
Sohu’s corporate services consist of online brand advertising on Sohu’s matrix of websites as well as bid listing and home page on its in-house developed search directory and engine. Sohu also provides multiple news and information services on mobile platforms, including Sohu News App and the mobile news portal m.sohu.com. Sohu’s online game subsidiary Changyou develops and operates a diverse portfolio of PC and mobile games, such as
For investor and media inquiries, please contact:
In
In
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | |||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||
Revenues: | |||||||||||
Brand advertising | $ | 41,810 | $ | 41,094 | $ | 41,640 | $ | 146,526 | $ | 175,056 | |
Online games | 196,063 | 101,324 | 131,689 | 536,684 | 440,902 | ||||||
Others | 15,362 | 15,476 | 15,376 | 66,680 | 57,845 | ||||||
Total revenues | 253,235 | 157,894 | 188,705 | 749,890 | 673,803 | ||||||
Cost of revenues: | |||||||||||
Brand advertising (includes share-based | 28,836 | 28,459 | 28,677 | 105,604 | 126,406 | ||||||
Online games (includes share-based compensation | 19,154 | 20,024 | 33,181 | 91,526 | 88,992 | ||||||
Others | 5,086 | 5,075 | 6,928 | 20,307 | 28,249 | ||||||
Total cost of revenues | 53,076 | 53,558 | 68,786 | 217,437 | 243,647 | ||||||
Gross profit | 200,159 | 104,336 | 119,919 | 532,453 | 430,156 | ||||||
Operating expenses: | |||||||||||
Product development (includes share-based | 65,671 | 59,532 | 58,316 | 241,941 | 234,852 | ||||||
Sales and marketing (includes share-based | 51,945 | 40,250 | 43,789 | 159,787 | 204,665 | ||||||
General and administrative (includes share-based | 15,696 | 15,176 | 15,475 | 57,354 | 54,591 | ||||||
| – | – | – | – | 7,245 | ||||||
Total operating expenses | 133,312 | 114,958 | 117,580 | 459,082 | 501,353 | ||||||
Operating profit/(loss) | 66,847 | (10,622) | 2,339 | 73,371 | (71,197) | ||||||
Other income/(expense), net | 1,738 | 7,859 | (12,563) | 25,993 | 7,963 | ||||||
Interest income | 2,670 | 1,933 | 969 | 7,369 | 6,103 | ||||||
Interest expense | (1,176) | (1,352) | (2,501) | (6,234) | (14,370) | ||||||
Exchange difference | (2,080) | (2,043) | (785) | (3,800) | 1,430 | ||||||
Income/(loss) before income tax expense | 67,999 | (4,225) | (12,541) | 96,699 | (70,071) | ||||||
Income tax expense/(benefit) | 21,416 | 11,082 | (2,908) | 133,226 | 28,428 | ||||||
Net income/(loss) from continuing operations | 46,583 | (15,307) | (9,633) | (36,527) | (98,499) | ||||||
Net income/(loss) from discontinued operations, net of | (9,212) | (42,181) | 34,989 | (91,793) | 55,108 | ||||||
Net income/(loss) | 37,371 | (57,488) | 25,356 | (128,320) | (43,391) | ||||||
Less: Net income/(loss) from continuing operations | 2 | (50) | 19,429 | 18,448 | 58,223 | ||||||
Less: Net income/(loss) from discontinued | (6,119) | (27,874) | 23,022 | (60,656) | 47,722 | ||||||
Net income/(loss) from continuing operations | 46,581 | (15,257) | (29,062) | (54,975) | (156,722) | ||||||
Net income/(loss) from discontinued operations | (3,093) | (14,307) | 11,967 | (31,137) | 7,386 | ||||||
Net income/(loss) attributable to | 43,488 | (29,564) | (17,095) | (86,112) | (149,336) | ||||||
Basic net income/(loss) from continuing operations per | $ | 1.18 | $ | (0.39) | $ | (0.74) | $ | (1.39) | $ | (3.99) | |
Basic net income/(loss) from discontinued operations | $ | (0.08) | $ | (0.36) | $ | 0.30 | $ | (0.79) | $ | 0.19 | |
Basic net income/(loss) per ADS attributable to | $ | 1.10 | $ | (0.75) | $ | (0.44) | $ | (2.18) | $ | (3.80) | |
ADS used in computing basic net income/(loss) per | 39,508 | 39,286 | 39,263 | 39,452 | 39,249 | ||||||
Diluted net income/(loss) from continuing operations | $ | 1.18 | $ | (0.39) | $ | (0.75) | $ | (1.40) | $ | (4.01) | |
Diluted net income/(loss) from discontinued operations | $ | (0.08) | $ | (0.36) | $ | 0.30 | $ | (0.79) | $ | 0.18 | |
Diluted net income/(loss) per ADS attributable to | $ | 1.10 | $ | (0.75) | $ | (0.45) | $ | (2.19) | $ | (3.83) | |
ADS used in computing diluted net income/(loss) per | 39,508 | 39,286 | 39,263 | 39,452 | 39,249 | ||||||
[6] On | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(UNAUDITED, IN THOUSANDS) | |||||
As of | As of | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 217,057 | $ | 162,662 | |
Restricted cash[7] | 330,791 | 3,290 | |||
Short-term investments | 100,745 | 321,483 | |||
Account receivables, net | 87,521 | 126,081 | |||
Prepaid and other current assets | 106,590 | 97,531 | |||
Held for sale assets (current) [8] | 1,412,168 | 1,304,621 | |||
Total current assets | 2,254,872 | 2,015,668 | |||
Long-term investments, net | 31,634 | 30,987 | |||
Fixed assets, net | 337,674 | 337,682 | |||
Goodwill | 48,434 | 47,390 | |||
Intangible assets, net | 4,842 | 9,922 | |||
Restricted time deposits | 101,519 | 240 | |||
Prepaid non-current assets | 1,006 | 1,882 | |||
Other assets | 42,140 | 30,413 | |||
Held for sale assets (non-current) [8] | – | 217,680 | |||
Total assets | $ | 2,822,121 | $ | 2,691,864 | |
LIABILITIES | |||||
Current liabilities: | |||||
Accounts payable | $ | 107,611 | $ | 121,318 | |
Accrued liabilities | 157,513 | 157,861 | |||
Receipts in advance and deferred revenue | 52,055 | 50,321 | |||
Accrued salary and benefits | 100,826 | 86,666 | |||
Taxes payable | 28,006 | 25,997 | |||
Short-term bank loans[7] | 315,550 | 114,528 | |||
Other short-term liabilities | 106,171 | 91,065 | |||
Held for sale liabilities (current)[8] | 416,998 | 453,111 | |||
Total current liabilities | $ | 1,284,730 | $ | 1,100,867 | |
Long-term accounts payable | 3,202 | 767 | |||
Long-term bank loans | 92,000 | – | |||
Long-term tax liabilities[9] | 406,353 | 277,544 | |||
Other long-term liabilities | 3,855 | 83 | |||
Held for sale liabilities (non-current) [8] | – | 5,686 | |||
Total long-term liabilities | $ | 505,410 | $ | 284,080 | |
Total liabilities | $ | 1,790,140 | $ | 1,384,947 | |
SHAREHOLDERS’ EQUITY: | |||||
| 347,369 | 428,454 | |||
Noncontrolling interest | 684,612 | 878,463 | |||
Total shareholders’ equity | $ | 1,031,981 | $ | 1,306,917 | |
Total liabilities and shareholders’ equity | $ | 2,822,121 | $ | 2,691,864 | |
[7] In | |||||
[8] On | |||||
[9] Following completion of the Changyou privatization, Changyou changed its policy for its PRC subsidiaries with respect to distribution of cash dividends. As | |||||
RECONCILIATIONS OF NON-GAAP RESULTS OFOPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES | |||||||||||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||
GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | |||||||||||
(59) | (a) | 240 | (a) | 2 | (a) | ||||||||||||||
Brand advertising gross profit | $ | 12,974 | $ | (59) | $ | 12,915 | $ | 12,635 | $ | 240 | $ | 12,875 | $ | 12,963 | $ | 2 | $ | 12,965 | |
Brand advertising gross margin | 31% | 31% | 31% | 31% | 31% | 31% | |||||||||||||
79 | (a) | 151 | (a) | 137 | (a) | ||||||||||||||
Online games gross profit | $ | 176,909 | $ | 79 | $ | 176,988 | $ | 81,300 | $ | 151 | $ | 81,451 | $ | 98,508 | $ | 137 | $ | 98,645 | |
Online games gross margin | 90% | 90% | 80% | 80% | 75% | 75% | |||||||||||||
– | (a) | – | (a) | – | (a) | ||||||||||||||
Others gross profit | $ | 10,276 | $ | – | $ | 10,276 | $ | 10,401 | $ | – | $ | 10,401 | $ | 8,448 | $ | – | $ | 8,448 | |
Others gross margin | 67% | 67% | 67% | 67% | 55% | 55% | |||||||||||||
20 | (a) | 391 | (a) | 139 | (a) | ||||||||||||||
Gross profit | $ | 200,159 | $ | 20 | $ | 200,179 | $ | 104,336 | $ | 391 | $ | 104,727 | $ | 119,919 | $ | 139 | $ | 120,058 | |
Gross margin | 79% | 79% | 66% | 66% | 64% | 64% | |||||||||||||
Operating expenses | $ | 133,312 | $ | (1,330) | (a) $ | 131,982 | $ | 114,958 | $ | (5,481) | (a) $ | 109,477 | $ | 117,580 | $ | (3,128) | (a) $ | 114,452 | |
1,350 | (a) | 5,872 | (a) | 3,267 | (a) | ||||||||||||||
Operating profit/(loss) | $ | 66,847 | $ | 1,350 | $ | 68,197 | $ | (10,622) | $ | 5,872 | $ | (4,750) | $ | 2,339 | $ | 3,267 | $ | 5,606 | |
Operating margin | 26% | 27% | -7% | -3% | 1% | 3% | |||||||||||||
Income tax expense/(benefit) | $ | 21,416 | $ | (8) | (c,d)$ | 21,408 | $ | 11,082 | $ | (642) | (c,d)$ | 10,440 | $ | (2,908) | $ | (2,737) | (c,d)$ | (5,645) | |
1,350 | (a) | 5,872 | (a) | 3,267 | (a) | ||||||||||||||
3,547 | (c) | 1,587 | (c) | (2,490) | (c) | ||||||||||||||
1,190 | (d) | 1,171 | (d) | 1,907 | (d) | ||||||||||||||
– | (e) | – | (e) | 23,154 | (e) | ||||||||||||||
Net income/(loss) before non- | $ | 46,583 | $ | 6,087 | $ | 52,670 | $ | (15,307) | $ | 8,630 | $ | (6,677) | $ | (9,633) | $ | 25,838 | $ | 16,205 | |
1,350 | (a) | 5,872 | (a) | 3,267 | (a) | ||||||||||||||
– | (b) | – | (b) | (2,688) | (b) | ||||||||||||||
3,547 | (c) | 1,587 | (c) | (2,490) | (c) | ||||||||||||||
1,190 | (d) | 1,171 | (d) | 1,907 | (d) | ||||||||||||||
– | (e) | – | (e) | 23,154 | (e) | ||||||||||||||
Net income/(loss) from | $ | 46,581 | $ | 6,087 | $ | 52,668 | $ | (15,257) | $ | 8,630 | $ | (6,627) | $ | (29,299) | $ | 23,150 | $ | (6,149) | |
Net income/(loss) from | $ | (3,093) | $ | 425 | $ | (2,668) | $ | (14,307) | $ | 1,462 | $ | (12,845) | $ | 11,686 | $ | 1,309 | $ | 12,995 | |
Net income/( loss) attributable | $ | 43,488 | $ | 6,512 | $ | 50,000 | $ | (29,564) | $ | 10,092 | $ | (19,472) | $ | (17,613) | $ | 24,459 | $ | 6,846 | |
Diluted net income/(loss) from | $ | 1.18 | $ | 1.33 | $ | (0.39) | $ | (0.17) | $ | (0.75) | $ | (0.16) | |||||||
Diluted net income/(loss) from | $ | (0.08) | $ | (0.06) | $ | (0.36) | $ | (0.33) | $ | 0.30 | $ | 0.33 | |||||||
Diluted net income/(loss) per | $ | 1.10 | $ | 1.27 | $ | (0.75) | $ | (0.50) | $ | (0.45) | $ | 0.17 | |||||||
Shares used in computing | 39,508 | 39,508 | 39,286 | 39,286 | 39,263 | 39,396 | |||||||||||||
Note: | |||||||||||||||||||
(a) To eliminate the impact of share-based awards as measured using the fair value method. This adjustment does not have an impact on income tax expense. | |||||||||||||||||||
(b) To adjust Sohu’s economic interests in Changyou attributable to the above non-GAAP adjustments. This adjustment does not have an impact on income tax expense. | |||||||||||||||||||
(c) To adjust for a change in the fair value of the Company’s investment in Hylink and the income tax effect. | |||||||||||||||||||
(d) To adjust for the effect of the | |||||||||||||||||||
(e) To adjust for the one-time impairment charge recognized for an investment unrelated to the Company’s core businesses. | |||||||||||||||||||
[10] On | |||||||||||||||||||
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES | ||||||||||||||||||
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | ||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | |||||||||||||||||
GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | |||||||||||||
177 | (a) | 22 | (a) | |||||||||||||||
Brand advertising gross profit | $ | 40,922 | $ | 177 | $ | 41,099 | $ | 48,650 | $ | 22 | $ | 48,672 | ||||||
Brand advertising gross margin | 28% | 28% | 28% | 28% | ||||||||||||||
543 | (a) | 120 | (a) | |||||||||||||||
Online games gross profit | $ | 445,158 | $ | 543 | $ | 445,701 | $ | 351,910 | $ | 120 | $ | 352,030 | ||||||
Online games gross margin | 83% | 83% | 80% | 80% | ||||||||||||||
– | (a) | – | (a) | |||||||||||||||
Others gross profit | $ | 46,373 | $ | – | $ | 46,373 | $ | 29,596 | $ | – | $ | 29,596 | ||||||
Others gross margin | 70% | 70% | 51% | 51% | ||||||||||||||
720 | (a) | 142 | (a) | |||||||||||||||
Gross profit | $ | 532,453 | $ | 720 | $ | 533,173 | $ | 430,156 | $ | 142 | $ | 430,298 | ||||||
Gross margin | 71% | 71% | 64% | 64% | ||||||||||||||
Operating expenses | $ | 459,082 | $ | (13,760) | (a) $ | 445,322 | $ | 501,353 | $ | (2,208) | (a) $ | 499,145 | ||||||
14,480 | (a) | 2,350 | (a) | |||||||||||||||
Operating profit/(loss) | $ | 73,371 | $ | 14,480 | $ | 87,851 | $ | (71,197) | $ | 2,350 | $ | (68,847) | ||||||
Operating margin | 10% | 12% | -11% | -10% | ||||||||||||||
Income tax expense[11] | $ | 133,226 | $ | (5,985) | (c,d)$ | 127,241 | $ | 28,428 | $ | (8,549) | (c,d) $ | 19,879 | ||||||
14,480 | (a) | 2,350 | (a) | |||||||||||||||
660 | (c) | (1,992) | (c) | |||||||||||||||
6,205 | (d) | 7,887 | (d) | |||||||||||||||
– | (e) | 23,154 | (e) | |||||||||||||||
Net loss before non-controlling interest | (36,527) | 21,345 | (15,182) | (98,499) | 31,399 | (67,100) | ||||||||||||
14,480 | (a) | 2,350 | (a) | |||||||||||||||
(2,868) | (b) | (2,069) | (b) | |||||||||||||||
660 | (c) | (1,992) | (c) | |||||||||||||||
6,205 | (d) | 7,887 | (d) | |||||||||||||||
– | (e) | 23,154 | (e) | |||||||||||||||
Net loss from continuing operations | $ | (55,365) | $ | 18,477 | $ | (36,888) | $ | (157,282) | $ | 29,330 | $ | (127,952) | ||||||
Net income/(loss) from discontinued | $ | (31,139) | 3,048 | $ | (28,091) | $ | 6,833 | 5,159 | $ | 11,992 | ||||||||
Net loss attributable to | $ | (86,504) | 21,525 | $ | (64,979) | $ | (150,449) | 34,489 | $ | (115,960) | ||||||||
Diluted net loss from continuing | $ | (1.40) | $ | (0.94) | $ | (4.01) | $ | (3.26) | ||||||||||
Diluted net income/ (loss) from | $ | (0.79) | $ | (0.71) | $ | 0.18 | $ | 0.31 | ||||||||||
Diluted net loss per ADS attributable to | $ | (2.19) | $ | (1.65) | $ | (3.83) | $ | (2.95) | ||||||||||
ADS used in computing diluted net | 39,452 | 39,452 | 39,249 | 39,249 | ||||||||||||||
Note: | ||||||||||||||||||
(a) To eliminate the impact of share-based awards as measured using the fair value method. This adjustment does not have an impact on income tax expense. | ||||||||||||||||||
(b) To adjust Sohu’s economic interests in Changyou attributable to the above non-GAAP adjustments. This adjustment does not have an impact on income tax expense. | ||||||||||||||||||
(c) To adjust for a change in the fair value of the Company’s investment in Hylink and the income tax effect. | ||||||||||||||||||
(d) To adjust for the effect of the | ||||||||||||||||||
(e) To adjust for the one-time impairment charge recognized for an investment unrelated to the Company’s core businesses. | ||||||||||||||||||
[11] Following completion of the Changyou privatization, Changyou changed its policy for its PRC subsidiaries with respect to distribution of cash dividends. As | ||||||||||||||||||
[12] On | ||||||||||||||||||
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