Sohu.com (NASDAQ:SOHU) released first-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below.

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Summary

Sohu.com Ltd reported total revenues of $141 million for Q1 2026, representing a 4% year-over-year increase but a 1% decrease from the previous quarter.

Marketing services revenue was $13 million, down 8% year-over-year and 26% quarter-over-quarter, while online game revenues increased by 6% year-over-year to $125 million.

The company reported a net loss of $4 million for the quarter, contrasting with net incomes of $182 million and $423 million for Q1 and Q4 2025, respectively.

Strategic initiatives included integrating cutting-edge technology into social media platforms to enhance user experience and engagement, along with hosting unique offline events to bolster brand influence and monetization opportunities.

Future outlook includes a focus on maintaining revenue growth for online games through targeted content updates and promotional events, while acknowledging macroeconomic challenges impacting advertising revenues.

Management highlighted the ongoing share repurchase program, with 8.7 million ADS repurchased at a cost of approximately $116 million as of mid-May 2026.

Full Transcript

OPERATOR

Ladies and Gentlemen, thank you for standing by and good day. Thank you for joining Sohu's first quarter 2026 earnings conference call. At this time all participants are in the listen only mode. After management's prepared remarks, there will be question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time and I'd like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu.com Ltd. Please go ahead.

Huang Pu (Investor Relations Director)

Thank you. Operator, thank you for joining us to discuss Sohu's fourth quarter 2023 results. On the call are Chairman and Chief Executive Officer Dr. Charles Zhang, CFO Zhengli and Vice President of Finance James Stone. Also with us, the Chengyu CEO Du Wencheng and the CFL Bing Wang. Before Mattum begins their prepared remarks, I would like to remind you of the coming Cautionary Forward-Looking statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed may contain forward looking statements. These statements are based on current plans, estimates and projections. Therefore you should not place any reliance. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward looking statements. For more information about potential risks and uncertainties, please refer to the Company's filings with the securities and Exchange Commission, including the most recent report on forms and 10-K and 10-Q. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.

Charles Zhang (Chairman and Chief Executive Officer)

Thanks Huang Pu and thank you everyone for joining our call. In the first quarter of 2026, our marketing service revenue, online game revenue and bottom line performance all exceeded our previous guidance for the social media platform. We continue to focus on promoting a healthy and vibrant atmosphere on our platform with a series of differentiated events. At the same time, we kept refining our products to cater to users needs. Leveraging our unique events and brand influence, we were able to explore new monetization opportunities for online games. We delivered another solid quarter driven by a wealth of high quality content and targeted operational refinance that resonated with our diverse diverse player base. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance for the first quarter of 2026. Total revenues were $141 million, up 4% year over year and down 1% quarter over. Coins Marketing Services revenues were $13 million, down 8% year over year and 26% quarter over quarter. Online Game revenues were $125 million, up 6% year over year and 3% quarter over quarter Net loss attributable to SoFu.com Ltd. Was $4 million compared with a net income of $182 million in the first quarter of 2025 and a net income of $423 million in the fourth quarter of 2025. Non GAAP net loss attributable to Sohu.com Ltd. Was $4,000,000 loss and $4,000,000 loss. Net loss $4,000,000 compared with the net loss of $16 million in the first quarter of 2025 AND a net income of $261 million in the fourth quarter of 2025. Now I'll go through our key businesses in more detail. First social media platform in the first quarter of 2026 we continue to integrate resources, embed and upgrade our products with cutting edge technology. We offer users various practical and easy to use functions to optimize the user experience, enhance user engagement and further promote dissemination of content. At the same time, we kept focusing on promoting a vigorous atmosphere in our community and fostering a prosperous platform ecosystem. Benefiting from unique offline events we held, we provided users with plenty of interaction opportunities, improved their social engagement and generated abandoned premium content that was widely spread over the Internet. In March. For example, in March we successfully held the 18th SOFU News Marathon in Hong Kong and Offline Seminar of Physics Class in Hong Kong. This season's marathon attracted active participation by celebrities and broadcasters nationwide, greatly promoting social interaction on our platform. Meanwhile, the Charles Physics class made its debut at the Hong Kong University of Science and Technology, bringing in depth physics knowledge to the public. Both events were well received by audiences, thereby creating a strong synergy between our flagship IPs and further expanding our brand influence. In April, we hosted the 2026 spring convention of so called Video Influencers which has been held biannually for the past few years. We invited celebrities and gathered influencers from dealers, including verticals popular with young users such as P Pop and Hanzu, and verticals in professional fields such as science and health. The convention created a chance for broadcasters to interact in person, promoting content generation and dissemination and building genuine social connections during the quarter. We also launched the 2026 Soho K pop dancing Festival competition throughout the year and also the 2026 Chinese costume model Competition is also a year long event. To further consolidate our influence and appeal in these areas. We continue to combine offline events with online interactions, upgrade of profile and the standard of our competition. With these efforts, we garnered widespread attention and attracted some enthusiasts with shared interest to participate and interact on our platform. We continue to leverage our unique content and live broadcasting technology while exploring new business opportunities. We provided targeted marketing solutions for advertisers through our innovative and customized events and campaigns. As the physics class IP its derivatives continue to grow in influence, it's accurate goal traffic to the platform and given the unlock monetization potential Next Turning to Our Online Game Business during the quarter our online game business performed well with revenues exceeding our prior guidance in our PC games business. We rolled out various quality events around the Trans New Year and Valentine's Day as well as promotional events for the regulatory TLBB PC which helps sustain stable player engagement apart from holiday events. We also introduced a new MO plan for TLBB Zentic which boosted player enthusiasm. Meanwhile, we continue to update and refine TLBB return to ensure its long term vitality. Turning to our mobile side, the mobile game business, we launched an expansion pack for legacy TLBB Mobile to celebrate the Chinese New Year along with diverse online offline events. Learning for this game stayed largely stable on a sequential basis. Next quarter we will continue to launch expansion packs and content updates for the TLDP services and other types of Further Keep players engaged Looking ahead, we will remain committed to our top games strategy. On the product development front, we will stay anchored in a user centric approach and adhere to systematic R and D processes while driving the implementation of new technologies to enhance efficiency and product success rate. Regarding our pipeline, we seek to further unlock the potential of our tlbbit. Meanwhile, as we maintain our competitive edge in the MMR MMORPGs, we will continue to diversify our portfolio with multiple types of gains and expand our product offerings with global appeal. Now I'd like to provide an update on the ongoing share Repurchase program. As of May 13, 2026, Sohu has repurchased 8.7 million abs from aggregated cost of approximately $116 million. With that, I'll turn the call to Savo Brennan.

Savo Brennan

Thank you Charles. I will now walk you through the key financials of our major segments for the first quarter of 2026. All the numbers on a non GAAP basis. You may find a reconciliation of non GAAP to GAAP measures on our IR website for social media platform. Quarterly revenues were $16 million compared with $17 million in the same quarter last year. Quarterly operating loss was $17 million flat with the same quarter last year for Changyou. Quarterly revenue $125 million compared with $180 million in the same quarter last year. Quarterly operating profit $66 million compared with operating profit $55 million in the same quarter last year. For the second quarter of 2026, we expect marketing services revenue to be between $30 million and $40 million. This implies annual decrease of 10% to 17% and a sequential increase of 4% to 11%. Online game revenue to be between $104 million and $114 million. This implies annual decrease of 2% to an annual increase of 8% and a sequential decrease of 8% to 17%. Both non GAAP and GAAP net loss attributable to Soho.com Ltd. To be between $50 million and $25 million. This forecast reflects Sohu management current and preliminary view which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions. Thank you.

OPERATOR

If you wish to ask a question now, please press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. We will now take our first question. And our first question comes from the line of Thomas Chong at Jefferies. Please ask your question, Thomas. Your line is open.

Thomas Chong (Equity Analyst)

Hi. Thanks management for taking my question. I have a couple of questions. I think first is on our marketing services on advertising revenue. Can management comment about how we should think about the advertising outlook in second half and full year and in particular we are going soon to have World cup. Would this be a big positive to our advertising revenue in Q2 and Q3? And my second question is about the gaming business. Can we comment about the quarter to date performance so far we are seeing in Q2? Is it more likely to hit the low end or the high end of the revenue guidance? And my third question is about the earnings outlook. Given our solid performance in Q1 and we are expecting the losses to widen sequentially in Q2. I'm just wondering, is this a conservative assumption? And should we use Q2 as a benchmark for project Q3 and Q4? Bottom line? Thank you.

Charles Zhang (Chairman and Chief Executive Officer)

Okay, Thomas, so the first question about marketing services revenue, right? Q2 forecast, as Jeremiah just said, is going to be 13, right? 13 to 15 million. About 7% sequential growth compared with the Q1. First of all, the overall economy situation is kind of during the downturn, right? Economic situation and advertisers tend to be cautious in spending. We are able to maintain some growth because we have our unique and differentiated marketing solutions and events especially we can take advantage of our growing network, influencers and also some IPs like my own physics class, IP and and the offline events like the K Pop competition and Hanbo and so we have quite unique tailor made or customized marketing spend based on available in our own platform and also its activities. So your next question is about the overall year outlook. So your next question is about the overall year low outlook or just the Q2 I think will be similar Right. To last year about the the game. Right, the game. So the first quarter is good and then the second part you want to see that second part is not, you know, is that a low end or up end? Right. Oh yeah. So far the performance of the second quarter is largely in line with our expectation and the level of revenue will largely depend on the performance of the content and activities we plan to roll out for our TLBB series games to see whether they can satisfy users needs. So far we believe it is in line with our expectation also as we plan to roll out fewer promotional and revenue boosting activities in the second quarter. So we expect our gaming revenue to experience a natural decline. So the game platform return in Q1, it still had an impact, but by Q3, it gradually declined.. Yes,

Thomas Chong (Equity Analyst)

Thanks for giving me that information. Right, so you have third question Thomas burning all over. Yes, yes. On the bottom line because Q1 we are better than expected but Q2, we are seeing a sequential widening of the losses. So just want to see if Q2 is a benchmark for Q3 and Q4. Thank you.

Charles Zhang (Chairman and Chief Executive Officer)

Thank you Charles. I think this year Q2 and Q3 will be similar to last year because on the marketing service side, on the platform side we basically about the same. We're still working on our server network and make sure that we have a lot of user base so that we can have uptake. But now still we are maintaining a stable and pattern growth. So the Q2 result or the earnings decline compared with Q1 mainly because of gaming's revenue cover. Right. It's much less than Q1 as we just described.

OPERATOR

Got it. Thank you. Thank you. We will now take our next question from the line of Alicia Yop Sat. Please ask your question. Alicia, your line is open.

Alicia Yop

Hello, good evening. Good afternoon management. Thanks for taking my questions. I have two follow up on the earlier questions. So I guess you mentioned on I think the second quarter obviously the guidance it is a bit weaker than I expected in terms of the sequential trend that typically we would see from the 1q to 2q even though sequentially is growth. But then I think the year over year decline seems to be worse than the first quarter year over year decline. I'm just wondering if the macroeconomic situation gets even weaker than what you had previously expected, let's say compared to five months ago in the beginning of the year. So yeah, any color you can share with overall, the macro outlook, is that worse than what you had previously expected? And then on the operating loss, I just wanted to make sure I did not hear it wrong for this one. Q the marketing ad business is the operating loss was 17 million. I just wanted to double check on that because I think our revenue is only like 14, 16 million but then we are losing 17 million so it seems like the expense is double of the revenue. So just wanted to make sure I heard it correctly and then if so then where were the money got spent? Is it mostly on the product development or is it on the user acquisition?

Charles Zhang (Chairman and Chief Executive Officer)

Thank you. So first let's first answer your last question about the. What you have a question about the loss, the marketing expenses, what number you're talking about. Which one is it? 17 million. The op loss for the ad business. 17 million over loss of what? We don't have a 17 million. Yeah, the operating loss. Operating loss 70 million operating loss in Q1. Into $70 million. 17. 17. 1717. Yeah. Is there any. I mean it's similar right to the previous. The same quarter in last quarter. Yeah, it's similar to previous quarters. Okay. So money was spent. Yeah, yeah. We didn't spend more money just as we did before the previous quarters mostly through I think. Well we don't. It's either on user acquisition or on product development. So it's all together because we are giving actually we have three social network products. One is Video Square Video Build that Wheel and also have Sogu News app and also turn that into a, you know, the Shigen Tian app and also for each of the products, especially for the Sohu Gwenwheel we have. Yeah we do spend some money on the user acquisition and also the team, you know the cost and also product development. So it's similar to previous quarters. It's until we you know build a really until we have a really successful product that you know, I would say explode into a lot much larger scale the now the and also considering the macroeconomic situation. So the advertising dollars will not be able to cover the cost that we are you know incurred on product revenue acquisition. So that's similar the quarter. Okay, okay. And then the revenue, the guidance is that worse than you expected? That's because the benchmark from last year. Right? It's worse than last year because all the auto car companies there because of the fierce competition and the low margin of their, you know. So we are More cautious in spending less. And we have to come up with really unique, you know, events or opportunities like, you know, so like for example, I have to myself, I have to, you know to apply this physics class IP to try to explain how you say give lectures about their products and the engines and also the car, why the car is good the better. So it's and also sometimes organize our users and influencers to to have a forum, whatever. But we have to have a differentiated unique opportunity to have a marketing solution offered to them so that they attempt compared with a few years ago. A few years ago they are just. It's an easy decision to spend money to advertise but now it's very difficult. I see, I see. Just lastly to follow up, can you share with us. I know you mentioned auto is one of the industry vertical. Probably are cutting back the app budgets. Any other vertical that you actually seeing is also facing more cautious app budgets. It's across the board, all companies basically because just the Chinese consumers are spending less. Consumers are spending less. That's why those companies are not making money or have been a good not making good money. That's why they are actually reduced. There's ad reduction. Also it, fmcg and all across the board. Maybe just lastly in terms of the first quarter on your advertising revenue contribution by industry vertical, if you can rank them by the contribution percentage. 19% auto industry, 19% information technology services like home appliances and electronics and that's 19% and FMCG 14%. I see. Okay, very helpful. Thank you. There's some good sign in the IT sector because the traditional home appliances now because of the IT AI, they are all turning into an AI product with, you know, intelligence. So that's the. We have seen a lot of new kind of products that tend to market to the market to, you know, so that's why like for example, I went to the Shanghai AWE (Appliance & Electronics World Expo), the annual awe and I see a lot of new traditional home products, home appliance, electronics with the, you know, in Chinese color AI fun turning. You know, really a lot of, you know, with a lot of that opportunity.

Alicia Yop

I see, I see. And then so that is you are seeing, you know, decent budget and then in terms of, you know, in the second quarter should we also assume. Maybe you are seeing more upbeat from the IT and then maybe FMCG also. Okay, but then weaker in auto. Is that fair to assume that on the second quarter.

Charles Zhang (Chairman and Chief Executive Officer)

Yeah, the second quarter, the auto. Right, the. Yeah, auto. The fierce competition. Yes. And also the electric vehicle, you know, it's a higher more penetration of electric vehicle into the market, into the market share. And. Yeah, I would say I'm similar. Right. The auto industry is gradually improving. Right. And now they're all trying to, you know, export more to the European market or to the Middle East. Right. So domestically, the consumption, you know, consuming power is really a problem. People are not spending money. It's too saturated. Right. Because people are paying their mortgage. That's why they don't have money to spend. Right. They're all paying the high housing price mortgage. That's a major. That's the, mostly the biggest problem with China's economy. But people all have debt and have to pay back their. To pay their mortgage. So they won't have time. They don't have the money to spend on other things.

Alicia Yop

Okay. Okay. Thank you so much, Charles. Thanks for sharing.

Charles Zhang (Chairman and Chief Executive Officer)

Okay, thank you.

OPERATOR

As a reminder, please press star11 on your telephone keypad if you wish to ask a question. I am showing no further questions. And with that, we conclude our conference call for today. Thank you for your participation.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.