SOHU.COM LIMITED SOHU.COM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | ||||
Revenues: | 41,094 | 38,001 | 46,366 | |||
Brand advertising | $ | $ | $ | |||
Online games | 101,324 | 105,937 | 108,012 | |||
Others | 15,476 | 16,023 | 13,121 | |||
Total revenues | 157,894 | 159,961 | 167,499 | |||
Cost of revenues: | ||||||
Brand advertising (includes stock-based compensation | ||||||
expense of $240, $36, and $4, respectively) | 28,459 | 22,790 | 31,992 | |||
Online games (includes stock-based compensation | 20,024 | 23,959 | 23,286 | |||
expense of $151, $152, and nil, respectively) | ||||||
Others | 5,075 | 6,348 | 6,746 | |||
Total cost of revenues | 53,558 | 53,097 | 62,024 | |||
Gross profit | 104,336 | 106,864 | 105,475 | |||
Operating expenses: | ||||||
Product development (includes stock-based compensation | ||||||
expense of $2,469, $2,075, and $95, respectively) | 59,532 | 58,325 | 55,734 | |||
Sales and marketing (includes stock-based compensation | 40,250 | 32,969 | 54,261 | |||
expense of $496, $93, and $35, respectively) | ||||||
General and administrative (includes stock-based | ||||||
compensation expense of $2,516, $1,606, and $24, | 15,176 | 14,302 | 12,967 | |||
respectively) | ||||||
Total operating expenses | 114,958 | 105,596 | 122,962 | |||
Operating profit/(loss) | (10,622) | 1,268 | (17,487) | |||
Other income, net | 7,859 | 10,720 | 9,944 | |||
Interest income | 1,933 | 1,383 | 1,166 | |||
Interest expense | (1,352) | (1,431) | (2,631) | |||
Exchange difference | (2,043) | (171) | 1,516 | |||
Income/(loss) before income tax expense | (4,225) | 11,769 | (7,492) | |||
Income tax expense4 | 11,082 | 86,166 | 14,646 | |||
Net loss from continuing operations | (15,307) | (74,397) | (22,138) | |||
Net income/(loss) from discontinued operations, net of tax5 | (42,181) | (8,692) | 33,938 | |||
Net income/(loss) | (57,488) | (83,089) | 11,800 | |||
Less: Net income/(loss) from continuing operations | (50) | 2,640 | 11,320 | |||
attributable to the noncontrolling interest shareholders | ||||||
Less: Net income/(loss) from discontinued operations | (27,874) | (5,799) | 23,399 | |||
attributable to the noncontrolling interest shareholders | ||||||
Net loss from continuing operations attributable to Sohu.com | (15,257) | (77,037) | (33,458) | |||
Limited | ||||||
Net income/(loss) from discontinued operations attributable | (14,307) | (2,893) | 10,539 | |||
to Sohu.com Limited | ||||||
Net loss attributable to Sohu.com Limited | (29,564) | (79,930) | (22,919) | |||
Basic net loss from continuing operations per ADS | $ | (0.39) | $ | (1.96) | $ | (0.85) |
attributable to Sohu.com Limited | ||||||
Basic net income/( loss) from discontinued operations per | $ | (0.36) | $ | (0.07) | $ | 0.27 |
ADS attributable to Sohu.com Limited | ||||||
Basic net loss per ADS attributable to Sohu.com Limited | $ | (0.75) | $ | (2.04) | $ | (0.58) |
ADS used in computing basic net income/(loss) per ADS | 39,286 | 39,271 | 39,254 | |||
attributable to Sohu.com Limited | ||||||
Diluted net loss from continuing operations per ADS | $ | (0.39) | $ | (1.96) | $ | (0.85) |
attributable to Sohu.com Limited | ||||||
Diluted net income/( loss) from discontinued operations per | $ | (0.36) | $ | (0.07) | $ | 0.26 |
ADS attributable to Sohu.com Limited | ||||||
Diluted net loss per ADS attributable to Sohu.com Limited | $ | (0.75) | $ | (2.04) | $ | (0.59) |
ADS used in computing diluted net income/(loss) per ADS | 39,286 | 39,271 | 39,254 | |||
attributable to Sohu.com Limited |
- 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 US$88 million for the second quarter of 2020.
- On September 29, 2020, the Company entered into a Share Purchase Agreement with Tencent's subsidiary TitanSupernova Limited ("Parent"), pursuant to which the Company's wholly-owned subsidiary Sohu.com (Search) Limited agreed to sell all of the Sogou Class A ordinary shares and Sogou Class B ordinary shares owned by it to Parent at a purchase price of $9.00 per share. In view of the Share Purchase Agreement, the results of operations for Sogou have been excluded from the Company's results from continuing operations in the condensed consolidated statements of operations for the third quarter and are presented in separate line items as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Unless indicated otherwise, results presented are related to continuing operations only.
SOHU.COM LIMITED
RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Sep. 30, 2020 | Three Months Ended Jun. 30, 2020 | Three Months Ended Sep. 30, 2019 | ||||||||||||||||
GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | GAAP | Non-GAAP | Non- | ||||||||||
Adjustments | GAAP | Adjustments | GAAP | Adjustments | GAAP | |||||||||||||
240 | (a) | 36 | (a) | 4 | (a) | |||||||||||||
Brand advertising gross profit | $ | 12,635 | $ | 240 | $ | 12,875 | $ | 15,211 | $ | 36 | $ | 15,247 | $ | 14,374 | $ | 4 | $ | 14,378 |
Brand advertising gross margin | 31% | 31% | 40% | 40% | 31% | 31% | ||||||||||||
151 | (a) | 152 | (a) | 0 | (a) | |||||||||||||
Online games gross profit | $ | 81,300 | $ | 151 | $ | 81,451 | $ | 81,978 | $ | 152 | $ | 82,130 | $ | 84,726 | $ | 0 | $ | 84,726 |
Online games gross margin | 80% | 80% | 77% | 78% | 78% | 78% | ||||||||||||
0 | (a) | 0 | (a) | 0 | (a) | |||||||||||||
Others gross profit | $ | 10,401 | $ | 0 | $ | 10,401 | $ | 9,675 | $ | 0 | $ | 9,675 | $ | 6,375 | $ | 0 | $ | 6,375 |
Others gross margin | 67% | 67% | 60% | 60% | 49% | 49% | ||||||||||||
391 | (a) | 188 | (a) | 4 | (a) | |||||||||||||
Gross profit | $ | 104,336 | $ | 391 | $ | 104,727 | $ | 106,864 | $ | 188 | $ | 107,052 | $ | 105,475 | $ | 4 | $ | 105,479 |
Gross margin | 66% | 66% | 67% | 67% | 63% | 63% | ||||||||||||
Operating expenses | $ | 114,958 | $ | (5,481) | $ | 109,477 | $ | 105,596 | $ | (3,774) | $ | 101,822 | $ | 122,962 | $ | (154) | $ | 122,808 |
5,872 | (a) | 3,962 | (a) | 158 | (a) | |||||||||||||
Operating profit/(loss) | $ | (10,622) | $ | 5,872 | $ | (4,750) | $ | 1,268 | $ | 3,962 | $ | 5,230 | $ | (17,487) | $ | 158 | $ | (17,329) |
Operating margin | -7% | -3% | 1% | 3% | -10% | -10% | ||||||||||||
Income tax expense9 | $ | 11,082 | $ | (642) | )$ | 10,440 | $ | 86,166 | $ | (3,140) | )$ | 83,026 | $ | 14,646 | $ | (2,468) | )$ | 12,178 |
5,872 | (a) | 3,962 | (a) | 158 | (a) | |||||||||||||
1,587 | (c) | (3,619) | (c) | 448 | (c) | |||||||||||||
1,171 | (d) | 1,934 | (d) | 2,618 | (d) | |||||||||||||
Net loss before non-controlling | ||||||||||||||||||
interest | $ | (15,307) | $ | 8,630 | $ | (6,677) | $ | (74,397) | $ | 2,277 | $ | (72,120) | $ | (22,138) | $ | 3,224 | $ | (18,914) |
5,872 | (a) | 3,962 | (a) | 158 | (a) | |||||||||||||
- | (b) | (421) | (b) | 2 | (b) | |||||||||||||
1,587 | (c) | (3,619) | (c) | 448 | (c) | |||||||||||||
1,171 | (d) | 1,934 | (d) | 2,618 | (d) | |||||||||||||
Net loss from continuing | ||||||||||||||||||
operations attributable to | $ | (15,257) | $ | 8,630 | $ | (6,627) | $ | (77,092) | $ | 1,856 | $ | (75,236) | $ | (33,492) | $ | 3,226 | $ | (30,266) |
Sohu.com Limited for diluted net | ||||||||||||||||||
Net income/(loss) from | ||||||||||||||||||
discontinued operations | ||||||||||||||||||
attributable to Sohu.com Limited | ||||||||||||||||||
for diluted net loss per ADS 10 | $ | (14,307) | $ | 1,462 | $ | (12,845) | $ | (2,894) | $ | 997 | $ | (1,897) | $ | 10,285 | $ | 1,351 | $ | 11,636 |
Net loss attributable to Sohu.com | ||||||||||||||||||
Limited for diluted net loss per | $ | (29,564) | $ | 10,092 | $ | (19,472) | $ | (79,986) | $ | 2,853 | $ | (77,133) | $ | (23,207) | $ | 4,577 | $ | (18,630) |
ADS | ||||||||||||||||||
Diluted net loss from continuing | ||||||||||||||||||
operations per ADS attributable to | $ | (0.39) | $ | (0.17) | $ | (1.96) | $ | (1.92) | $ | (0.85) | $ | (0.77) | ||||||
Sohu.com Limited | ||||||||||||||||||
Diluted net income/(loss) from | ||||||||||||||||||
discontinued operations per ADS | $ | (0.36) | $ | (0.33) | $ | (0.07) | $ | (0.05) | $ | 0.26 | $ | 0.30 | ||||||
attributable to Sohu.com Limited | ||||||||||||||||||
Diluted net loss per ADS | $ | (0.75) | $ | (0.50) | $ | (2.04) | $ | (1.96) | $ | (0.59) | $ | (0.47) | ||||||
attributable to Sohu.com Limited | ||||||||||||||||||
Shares used in computing diluted | ||||||||||||||||||
net income/(loss) per ADS | ||||||||||||||||||
attributable to Sohu.com Limited | 39,286 | 39,286 | 39,271 | 39,271 | 39,254 | 39,254 |
Note:
- 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.
- 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.
- To adjust for a change in the fair value of the Company's investment in Hylink and the income tax effect.
- To adjust for the effect of the U.S. TCJA.
- 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 US$88 million for the second quarter of 2020.
10 On September 29, 2020, the Company entered into a Share Purchase Agreement with Tencent's subsidiary TitanSupernova Limited ("Parent"), pursuant to which the Company's wholly-owned subsidiary Sohu.com (Search) Limited has agreed to sell all of the Sogou Class A ordinary share and Sogou Class B ordinary shares owned by it to Parent at a purchase price of $9.00 per share. In view of the Share Purchase Agreement, the results of operations for Sogou have been excluded from the Company's results from continuing operations in the condensed consolidated statements of operations for the third quarter and are presented in separate line items as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Unless indicated otherwise, results presented are related to continuing operations only.
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Sohu.com Ltd. published this content on 16 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2020 10:22:02 UTC
