Sohu.com Limited (SOHU) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong financial metrics with a significant improvement in net income due to tax reversals, and positive year-over-year revenue growth in online games. Despite some soft Q1 guidance, management's strategic plans for game development and AI integration are promising. The Q&A highlighted confidence in gaming performance and innovative marketing strategies. The narrow net loss guidance suggests improving financial health. Overall, the positive aspects outweigh the negatives, leading to a positive stock price prediction.
Key Financial Performance
Total Revenue (Q4 2025) $142 million, up 6% year-over-year and down 21% quarter-over-quarter. The year-over-year increase was due to improved marketing services and online game revenues.
Marketing Services Revenues (Q4 2025) $17 million, down 10% year-over-year and up 25% quarter-over-quarter. The year-over-year decline was attributed to reduced advertiser spending, while the quarter-over-quarter increase was due to seasonal factors and successful events.
Online Game Revenues (Q4 2025) $120 million, up 10% year-over-year and down 26% quarter-over-quarter. The year-over-year growth was driven by high-quality content updates and player engagement, while the quarter-over-quarter decline was due to fewer in-game promotional activities and a natural decline in new game performance.
GAAP Net Income (Q4 2025) $223 million, compared to a net loss of $21 million in Q4 2024. The significant improvement was due to the reversal of previously accrued withholding income tax of approximately $285 million related to Changyou.
Non-GAAP Net Income (Q4 2025) $261 million, compared to a net loss of $15 million in Q4 2024. The improvement was primarily due to the same tax reversal as mentioned above.
Total Revenue (Full Year 2025) $584 million, down 2% compared to 2024. The decline was due to reduced marketing services revenues.
Marketing Services Revenues (Full Year 2025) $16 million, down 18% compared to 2024. The decline was attributed to reduced advertiser spending.
Online Games Revenues (Full Year 2025) $506 million, up 1% compared to 2024. The slight increase was due to consistent player engagement and content updates.
GAAP Net Income (Full Year 2025) $394 million, compared to a net loss of $100 million in 2024. The improvement was due to the reversal of accrued withholding income tax.
Non-GAAP Net Income (Full Year 2025) $234 million, compared to a net loss of $83 million in 2024. Excluding the tax reversal, the non-GAAP net income was a $51 million loss, a 40% improvement over 2024.
Sohu Media Platform Quarterly Revenues (Q4 2025) $21 million, compared to $24 million in Q4 2024. The decline was due to reduced advertiser spending.
Sohu Media Platform Full Year Revenues (2025) $75 million, compared to $91 million in 2024. The decline was due to reduced advertiser spending.
Changyou Quarterly Revenues (Q4 2025) $121 million, compared to $111 million in Q4 2024. The increase was due to improved player engagement and content updates.
Changyou Full Year Revenues (2025) $509 million, compared to $506 million in 2024. The slight increase was due to consistent player engagement and content updates.
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Operating Highlights
Sohu Media Platform: Refined products and enhanced algorithms to address diverse user needs. Hosted vibrant offline and online events, including the 2025 Sohu K-pop Dancing Awards and Sohu Video Chinese Traditional Custom Awards, which boosted user engagement and platform stickiness. Expanded content library with American dramas, original dramas, and other TV series. Physics class initiative conducted over 270 live broadcasts and 30 offline classes, reinforcing reputation in knowledge and science-based live broadcasts.
Online Games: Revenues in line with expectations. Introduced new character development systems and player level caps for TLBB PC and TLBB Vintage. Launched featured content for TLBB Mobile, boosting player engagement and revenue. Plans to launch expansion packs and content updates for TLBB series and diversify portfolio with global appeal.
Marketing Services: Quarterly revenues of $17 million, down 10% year-over-year but up 25% quarter-over-quarter. Integrated advertisers' needs with events and customized marketing campaigns to explore monetization opportunities.
Financial Performance: Total revenue for Q4 2025 was $142 million, up 6% year-over-year but down 21% quarter-over-quarter. Online game revenues were $120 million, up 10% year-over-year. Non-GAAP net income for Q4 2025 was $261 million, compared to a net loss of $15 million in Q4 2024. Full-year 2025 revenues were $584 million, down 2% from 2024. Non-GAAP net income for 2025 was $234 million, compared to a net loss of $83 million in 2024.
Share Repurchase Program: As of February 5, 2026, Sohu had purchased 8.1 million ADS for $106 million, with 1/3 of the tranche remaining.
Game Development Strategy: Focus on top game strategy and user-centric approach. Plans to integrate new technologies to enhance efficiency and diversify portfolio with games of global appeal.
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Risk or Challenges
Marketing Services Revenue Decline: Marketing services revenues decreased by 18% year-over-year for the full year 2025 and are expected to decline further by 20% to 27% in Q1 2026. This poses a challenge to the company's ability to sustain and grow its advertising business.
Quarterly Revenue Volatility: Total revenue for Q4 2025 decreased by 21% quarter-over-quarter, indicating potential instability in revenue generation across business segments.
Operating Loss in Media Platform: The Sohu Media Platform reported an operating loss of $72 million in Q4 2025, which is higher than the $69 million loss in the same quarter last year. This reflects ongoing challenges in achieving profitability in this segment.
Decline in Online Game Revenue: Online game revenues decreased by 26% quarter-over-quarter in Q4 2025 due to fewer in-game promotional activities and a natural decline in new PC game performance. This could impact the company's ability to maintain its growth in the gaming sector.
Dependence on TLBB Series: The company heavily relies on the TLBB series for its gaming revenue. Any decline in player engagement or competition in this segment could adversely affect financial performance.
Economic Uncertainty in Revenue Forecast: The Q1 2026 forecast includes a potential net loss of $10 million to $20 million, reflecting uncertainties in revenue generation and cost management.
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Guidance & Outlook
Marketing Service Revenues: Expected to be between $10 million and $11 million for Q1 2026, implying an annual decrease of 20% to 27% and a sequential decrease of 35% to 41%.
Online Game Revenues: Expected to be between $123 million and $130 million for Q1 2026, implying an annual decrease of 4% to an annual increase of 5% and a sequential decrease of 6% to a sequential increase of 2%.
Net Loss: Both non-GAAP and GAAP net loss attributable to Sohu.com Limited expected to be between $10 million and $20 million for Q1 2026.
Game Development Strategy: Plans to continue delivering high-quality games, adhering to sound methodologies, and integrating new technologies to enhance efficiency and product success rate. Actively working to unlock the potential of TLBB IP and diversify the portfolio with multiple game types and global appeal.
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Shareholder Return Plan
Share Repurchase Program: As of February 5, 2026, Sohu had purchased 8.1 million ADS for the aggregate cost of approximately $106 million. Approximately one-third of the tranche purchase remains to be completed.
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Key Q&A
Q:Why is the Q1 advertising guidance relatively soft on a sequential basis compared to historical Q1?
A:The softness is mainly due to seasonality, as the Chinese New Year was late this year (mid-February), causing companies to delay activities in January and February. The overall macroeconomic situation remains similar to Q4.
Q:What drives the high or low end of the Q1 gaming revenue guidance?
A:The Q1 gaming revenue depends on the performance of existing games, including new content and activities for TLBB PC, TLBB Return, and TLBB Mobile. So far, the performance is in line with expectations.
Q:What are management's thoughts on whether AI will disrupt the online gaming sector?
A:Management believes AI is a productivity tool in gaming, particularly in game design and content production, rather than a disruptor.
Q:What is the trend for advertising categories like auto and IT sectors?
A:The auto sector has shown improvement and constitutes a higher percentage of overall revenue compared to IT and FMCG sectors.
Q:Was there any one-off revenue recognized in Q4 that led to outperformance?
A:No, the Q4 outperformance was due to better overall performance and innovative marketing solutions, such as KOLs, influencers, live streaming, and offline events, rather than one-off revenue.
Q:What is the game pipeline and major expansion plans for 2026?
A:The game pipeline includes a card-based RPG based on TLBB IP, expected to launch by late 2026 or early 2027, and several mini-program games under development. Expansion packs for existing games will be launched at a similar cadence as previous years.
Q:Why is the net loss guidance for this quarter narrower than previous quarters?
A:The narrower net loss guidance ($10 million to $20 million) was not directly explained, but no specific reasons were provided for the trend or its consistency for the rest of 2026.
Q:Review of Unclear Management Responses
A:Management avoided directly explaining why the net loss guidance for this quarter is narrower than previous quarters and whether this trend will continue for the rest of 2026.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
American TV
Annual Forum
Awards Finance
Awards Video
Awards event
Changyou income
Changyou withholding
Media Platform
Platform product
TLBB Return
TV series
algorithm user
broadcast
class
com Limited
development
drama
effect reversal
end
field knowledge
game player
income com
income tax
line expectation
loss income
product algorithm
quality
revenue line
reversal withholding
tax income
user engagement
user need
variety
withholding income
SOHU Transcript
Sohu.com Limited (SOHU) Q4 2025 Earnings Call Transcript
Positive2-9
The earnings call revealed strong financial metrics with a significant improvement in net income due to tax reversals, and positive year-over-year revenue growth in online games. Despite some soft Q1 guidance, management's strategic plans for game development and AI integration are promising. The Q&A highlighted confidence in gaming performance and innovative marketing strategies. The narrow net loss guidance suggests improving financial health. Overall, the positive aspects outweigh the negatives, leading to a positive stock price prediction.
Sohu.com Limited (SOHU) Q3 2025 Earnings Call Transcript
Unknown11-17
The earnings call reveals mixed signals. While total revenues and online game revenues show strong growth, marketing services revenue declines significantly. The financial outlook indicates continued net losses, creating uncertainty. The share repurchase program is a positive sign, but competitive market pressures and vague management responses in the Q&A raise concerns. Overall, the financial performance is promising, but uncertainties in guidance and competition keep the sentiment neutral.
Sohu.com Limited (SOHU) Q2 2025 Earnings Call Transcript
Unknown8-4
The earnings call revealed a challenging financial performance with declining revenues across key segments. Despite a positive share repurchase program, the lack of clear guidance on breaking even in marketing services, weak advertising sentiment, and no dividend plans further dampened sentiment. The Q&A session highlighted uncertainties and vague responses from management, particularly around revenue implications and growth timelines. Although there was a sequential increase in gaming revenue, the overall outlook remains negative due to the significant year-over-year declines and market challenges.
Sohu.com Limited (NASDAQ:SOHU) Q1 2025 Earnings Call Transcript
Unknown5-20
Despite a strong share repurchase program, the negative guidance for both marketing services and online game revenues, along with anticipated losses and competitive pressures, outweighs the positives. The Q&A section highlights concerns about advertising trends and AI's limited impact on operations. The management's vague response regarding ADR delisting risks adds uncertainty. The strong GAAP net income is mainly due to a tax reversal, not operational performance. Given these factors, a negative stock price reaction is expected.
SOHU Report
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